Transparency in the News
Transparency has been in the news a lot lately!
It might even feel like that expecting transparency with federal funding is the norm.
In truth, the focus on transparency for federal grants is a relatively new development from being able to track spending on USASpending.gov to reporting executive compensation on the top-earners at your organization or the reporting with the DATA Act or the OPEN Act from the federal agencies.
The History of Transparency
Though it may seem like it’s been around for a while, the expectation of transparency as a goal of federal grant management is a relatively new development.
Prior to the Freedom of Information Act (FOIA) in 1966, taxpayers didn’t have the recognized “right” to request spending information from the Federal Government.
Twenty four years after FOIA, the CFO Act created the requirement that federal agencies report their spending details.
And finally, in 2006, the Federal Funding Accountability and Transparency Act (FFATA) ushered in the requirement to report spending in a publically available database.
FFATA was introduced by then-Senator Barrack Obama, among others, and signed into law in September of 2006. The new law required the Office of Management and Budget (OMB) to create a publically accessible, searchable, no-cost, website that included various types of information for each Federal Award of $25,000 and over.
Transparency Act Requirements Expanded
In 2008, follow up legislation was passed to expand the requirements of the original law. With the passage of the American Recovery and Reinvestment Act (ARRA) in 2009, Award Recipients were required to make new and unprecedented levels of information available to the public on all ARRA funds spent. The basic purpose of this expansion was to make information about how “stimulus funds” were being spent readily available to the public through USAspending.gov.
Following the American Recovery and Reinvestment Act (ARRA) requirements for additional reporting broadened for grant recipients. In October 2010, FFATA expanded to include ALL recipients of non-Recovery Act-funded grants, cooperative agreements, and competitive supplements of $25,000 or more.
Organizations receiving ARRA funds already had a taste of the extensive reporting requirements covered under the FFAFTA. The new requirements covered everything from reporting executive compensation to disclosing who your subrecipients were and what chunk of federal dollars is flowing to them.
What are the Expanded Reporting Requirements with the Federal Funding Accountability and Transparency Act (FFATA)?
The expansion of the FFATA included the following types of new requirements:
- Provide information on spending by award recipients and first-tier subrecipients.
- Report total compensation for both the recipient’s and the subrecipient’s five most highly compensated executives for the preceding completed fiscal year. (Subject to some exclusions, such as the information is already available through SEC filings.)
- Report executive compensation for the prime awardee in the profile for your organization.
- Notify potential subrecipients of the requirement for a DUNS number.
The goal of the legislation is to make sure that people can access information related to institutions and organizations receiving federal funding and grants.
This expansion increases the expectation of transparency for grant recipients by increasing the power to each individual to see how individual federal agencies and grant recipients are spending taxpayer funds in the form of federal grants and contracts.
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Lucy Morgan CPA, MBA
CEO, Compliance Warrior