New York State Education Department - PowerPoint Presentation

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New York State Education DepartmentOctober 8, 2014

“The Omni Circular: What You Need to Know to Administer a 21st Century Education Program”

Presented by

Michael Brustein, Esq.

mbrustein@bruman.com

Brustein & Manasevit, PLLC

www.bruman.com

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Focus on OutcomesPerformance

MetricsRisk AssessmentsFinancial Management PoliciesEquipment Use

Micro

PurchasesCorrective ActionFamily Friendly PoliciesFalse Claims CertificationsAudit Thresholds

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The Major Themes Impacting Federal Grants ManagementSlide3

Key Dates:Dec 26, 2013 Federal Register

http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf June 26, 2014 ED Draft EDGAR ChangesAugust 29, 2014 COFAR Releases FAQDec 26, 2014 Final EDGAR Published

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Date of Applicability of Revised RulesOMB stated on 12/20/13 All Drawdowns, after December 26, 2014

? ? ?

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What is covered?

A-102 – Administrative Rules State / Local – Part 80 – EDGARA-110 – Administrative Rules Postsecondary – Part 74 – EDGARA-87 – Cost Rules – State / LocalA-21 – Cost Rules – Rules – PostsecondaryA-122 – Cost Rules – NonprofitA-133 – Audit Rules (>$750,000)

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Who is covered?All “nonfederal entities” expending federal awards

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Reasons for the Change?

SimplicityConsistencyObama Executive Order on Regulatory ReviewIncrease EfficiencyStrengthen Oversight

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2 CFR Part 2008

Structure of Omni-Circular (p. 78608)Slide9

(p. 78608)9

Subpart A – DefinitionsSubpart B – General ProvisionsSubpart C – Pre Award RequirementsSubpart D – Post Award RequirementsSubpart E – Cost PrinciplesSubpart F – Audit RequirementsSlide10

Key Definitions10

Cognizant Agency for Audit 200.18 (78611)Cognizant Agency for Indirect 200.19 (78611)Computing Devices 200.20 (78612)Cooperative Audit Resolution 200.25 (78612)Cost Objective 200.28 (78612)Slide11

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Internal Control Over Compliance 200.62 (78615)Major Program 200.65 (78615)Micro Purchase 200.67 (78615)Modified Total Direct Cost 200.68 (78615)Non-Federal Entity 200.69 (78615)Slide12

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Conflict of Interest200.112 (78621)Slide13

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Mandatory Disclosures200.113 (78621)Slide14

Financial Management Controls

The Key Component to Federal GrantsSlide15

Quick Overview of New Financial Management Requirements:

Performance MetricsRisk ManagementAugmented Pass-Through ResponsibilitiesEmphasis on Immediate Corrective ActionCooperative Audit Resolution

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WHY??All oversight will examine financial management controls:

OIG AuditSingle AuditFederal Program Monitoring“Pass Through” Monitoring

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New Risk Assessment Will be Based on Financial Management Controls

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The more attention paid to financial management controls, fewer headaches down the road!!!

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Crosswork Between 34 CFR 80.20 (b) and CFR 200.302(b)

34 CFR 80.20 (b)Financial ReportingAccounting RecordsInternal Control

Budget Control

Allowable CostSource DocumentationCash Management2 CFR 200.302 (b)

Identification of Awards

Financial Reporting

Accounting Records (Source Docs)

Internal Control

Budget Control

Written Cash Management Procedures

Written Allowability Procedures

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1) Identification of Awards (New)All federal “awards” received and expendedThe name of the federal “program”

Identification # of awardCFDA Title and NumberFederal Award I.D. #Fiscal Year of AwardFederal AgencyPass-Through (If S/A)

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2) Financial ReportingNew shift to OMB approved performance metrics

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2) Financial Reporting (cont.)

Accurate, current, complete disclosure of financial results of each award(Old) in accord with the financial reporting requirements of the grant(New) in accord with 200.327 and 200.328200.327 – Federal awarding agency can only collect OMB approved data elements, no less than annually, no more than quarterly200.328 – N

on federal entity must submit performance reports at intervals required by federal agency or pass through. Annual performance reports due 90 days after reporting period; Quarterly performance reports due 30 days after reporting period

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2) Financial Reporting (cont.)Performance Metrics:

Compare actual accomplishments to objectives. (quantify to extent possible)Reasons goals were not met if appropriateAdditional pertinent information (e.g. analysis and explanation of cost overruns, high unit costs)

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2) Financial Reporting (cont.)

Significant developmentsProblems, delays. Adverse conditions that would impair ability to meet objective of the awardFavorable developments. Finishing sooner or at less cost24Slide25

2) Financial Reporting (Cont.)OMB Allows ED to waive “performance metrics” not required.

How will ED reconcile performance metrics with accountability / performance indicators of ESEA, IDEA, CTE, AEFLA25Slide26

3) Accounting Records (Source Documentation)

Combines 80.20 (b)(2) and 80.20 (b)(6)Source Documentation on:Federal AwardsAuthorizations

Obligations

Unobligated balancesAssetsExpendituresIncomeInterest (New)Eliminated liabilities

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4) Internal ControlEssentially same as 80.20 (b) (3)Effective control over and accountability for:

All fundsPropertyOther assetsMust adequately safeguard all assetsUse assets solely for authorized purpose

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4) Internal Control 200.303 (cont.)Cross reference 200.303 (New)Internal controls “should” be in compliance with Comptroller General’s “Standard for Internal Control Integrated Framework” and “Internal Control Integrated Framework” issued by the Committee of Sponsoring

Organizations of the Treadway Commission 28Slide29

4) Internal Control 200.303 (cont.)Comply with federal statutes, regs, terms of the award

Evaluate and monitor complianceTake prompt action when instances of noncompliance are identifiedSafeguard protected personally identifiable information29Slide30

5) Budget ControlSame as 80.20 (b)(4)Comparison of expenditures with budget amounts for each award

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6) Written Cash Management Procedures (New)Written Procedures to implement the requirements of 200.305

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6) Written Cash Management Procedures (cont.)

For states, payments are governed by Treasury – State CMIA agreements 31 CFR Part 205No Change32Slide33

6) Written Cash Management Procedures (cont.)For all other non federal entities, payments must

minimize time elapsing between draw from G-5 and disbursement (not obligation)

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6) Written Cash Management Procedures (cont.)

Written procedures must describe whether non-federal entity uses:Advance Payments (preferred) Limited to minimum amounts needed to meet immediate cash needs Reimbursement

Pass through must make payment within 30 calendar days after receipt of the billing

Working Capital AdvanceThe pass through determines that the nonfederal entity lacks sufficient working capital. Allows advance payment to cover estimated disbursement needs for initial period

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6) Written Cash Management Procedures (cont.) Non federal entity must use existing resources before requesting an advance: program income, refunds, rebates, interest earned

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6) Written Cash Management Procedures (cont.)36

For all other non federal entities, payments must minimize time elapsing between draw from G-5 and disbursement (not obligation).Slide37

6) Written Cash Management Procedures (cont.)Payments must not be withheld from nonfederal entities unless finding of noncompliance debt to the U.S. (Treasury Offset Program), or nonfederal entity is withholding payment to a vendor to assure satisfactory completion of work

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6) Written Cash Management Procedures (cont.)

Advances must be maintained in insured accountsPass through cannot require separate depository accountsAccounts must be interest bearing unless:Aggregate federal awards under $120,000Account not expected to earn in excess of $500 per year

Bank require minimum balance so high, that such account not feasible

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6) Written Cash Management Procedures (cont.)

Interest earned must be remitted annually to HHSInterest amounts up to $500 may be retained by non federal entity for administrative purposes39Slide40

7) Written Allowability Procedures (New)Written procedures for determining

allowability of costs in accord with Subpart E – Cost Principles (see p. 78639 – 78662)40Slide41

7) Written Allowability Procedures (Cont.)

Not a restatement of Subpart EBut a GPS through grant development and budget process Training tool for employees41Slide42

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Payment200.305 (78625)Slide43

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Program Income200.307 (78627)Slide44

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Revision of Budget and Program Plans200.308 (78628)Slide45

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Period of Performance200.309 (78629)Compare to EDGAR 34 CFR 76.708Slide46

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Insurance Coverage200.311 (78629)Compare to 34 CFR 76.708Slide47

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Equipment200.313 (78629)Significant changes on use and dispositionSlide48

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Supplies200.314 (78630)Covers computersSlide49

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Contract vs. Grant 200.330Note the difference!!Slide51

Pass-Through Agency Responsibilities

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A pass-through entity means a non-federal entity that provides a subaward to a subrecipient to carry out part of a federal program.

-200.74(e.g. ESEA, IDEA, CTE, AEFLA)

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Under EDGAR / A-102, pass through responsibilities primarily described in 34 CFR 80.40 – Monitoring of Subgrantees (Note – Part 76* on S/A programs will not change significantly)

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But OMB / COFAR shifted many new responsibilities to the pass-through, over and above 80.40

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Omni Circular NPRM (February 1, 2013) proposed reduction of the number of types of compliance requirements in the compliance supplement

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Many pass-throughs opposed this reduction because of burden on them. OMB punted p. 78608

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Monitoring Responsibilities of the Pass-Through 200.328 34 CFR 80.40

Non federal entity is responsible for oversight of the operations of the federally supported activities

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New Risk management Requirements for Pass-Throughs

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Pass-through must evaluate each subrecipient’s risk of non compliance (federal statute / regulations / terms of award) for purpose of monitoring

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200.331Risk Factors:Subrecipient’s prior experience with the grant program

Results of previous auditsNew personnel or substantially changed systemsResults of federal monitoring

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200.331Pass-through may impose conditions on subgrant based on risk assessment:

Shift to reimbursementWithhold payments until evidence of acceptable performanceRequire more reportingRequire additional monitoring

Require additional technical or management assistance

Establish additional prior approvals61Slide62

200.331Pass-through must monitor its subrecipients to assure compliance and performance goals are achieved

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200.331Monitoring must include:

Review financial and programmatic reportsEnsure corrective actionIssue a “management decision” on audit findings if the award is from the pass-through

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200.331Types of monitoring tools (depending on risk assessment)

Providing training and technical assistanceOn-site reviewsArranging for “agreed upon procedures” (less than $750,000)

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200.331Pass-through must verify all subrecipients (> $750,000) have single audits

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200.331Pass-through must adjust its own financial records based on audits, monitoring, on-site reviews

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200.331Pass-through must consider taking enforcement action based on non compliance:

Temporarily withhold cash payments pending correctionDisallow all or part of the costWholly or partly suspend the awardRecommend to federal awarding agency suspension / debarment

Withhold further federal awards

Other remedies that may be legally available

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200.339The pass-through may terminate the award for “cause”, notice and opportunity for hearing (200.340 and 200.341)

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Record Retention (78636)69

Retention 200.333Collection and Transmission 200.335Access 220.336Slide70

Non-Compliance (78637)70

Remedies 200.328Termination 200.339Notification 200.340Appeals 200.341Suspension 200.342Collection of Amounts Due 200.345Slide71

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Subpart E – Cost Principles (78639)Slide72

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Policy Guide 200.400 (78639)Slide73

Basic Considerations (78640)73

Composition of Costs 200.402Allowability 200.403Reasonable Costs 200.404Allocability 200.405Applicable Credits 200.406Prior Written Approval 200.407Slide74

Direct and Indirect Costs (78642)74

Composition of Costs 200.412Direct Costs 200.413Indirect Costs 200.414Slide75

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False Claims Certifications 200.415 (78643)Slide76

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Promotional Costs 200.421 (78645)Slide77

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Personnel Compensation200.430 (78646)Slide78

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Conferences200.432 (78650)(see Attachment)Slide79

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Costs of Appeals200.435 (78651)Slide80

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Employee Morale200.437 (78652)Slide81

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Memberships200.454 (78657)Slide82

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Student Activity Costs200.469 (78660)Slide83

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Travel Costs200.474 (78661)Slide84

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Audits200.500 (78662)Slide85

Questions?

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Disclaimer

This presentation is intended solely to provide general information and does not constitute legal advice. Attendance at the presentation or later review of these printed materials does not create an attorney-client relationship with Brustein & Manasevit, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.

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