New Responsibilities of Pass Through Entities Under the Uniform Grant Guidance

1. New Responsibilities of Pass Through EntitiesUnder the Uniform Grant Guidance Jennifer S. Mauskapf, Esq. jmauskapf@bruman.com Brustein & Manasevit, PLLC Fall Forum 2014

2. AGENDA • What is a pass-through entity? • New responsibilities for pass-through entities under the UGG: • Required Information in Subaward Notifications • Risk assessment • Enhanced monitoring/performance metrics • Enforcement

3. What is a pass-through entity?

4. Definitions 200.74, Pass-through entity - non-Federal entity that provides a subaward to a subrecipient to carry out part of a Federal program. 200.93,Subrecipient-a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal program. 200.23, Contractor (replaces term “vendor” (used in A-133)) – means an entity that receives a contract.

5. How a does a pass-through entity’s responsibilities change under the Uniform Grant Guidance?

6. Types of Grant Agreements • 200.201, Pass-through entity must decide on the appropriate instrument for the Federal Award: • Grant agreement • Cooperative agreement • Contract • Fixed amount awards (New) (See 200.332 and 200.45) • Requires prior approval from Federal awarding agency • Payments are based on meeting specific requirements of the Federal Award • Accountability is based on performance and results • Award amount is negotiated using cost principles as a guide up to $150,000 (Simplified Acquisition Threshold) • No governmental review of the actual costs incurred • Significant changes must receive prior awarding entity written approval

7. Must make a case-by-case determination whether each agreement casts the party as a subrecipient or contractor. Look at the nature of the relationship. It does not matter what the agreement is called. Determination of Nature of Funding 200.330

8. Subaward vs. Contract • Subrecipients 200.330(a) • Must determine who is eligible to participate in a federal program • Has its performance measured against whether the objectives of the federal program are met • Is responsible for programmatic decision making • Is responsible for complying with federal program requirements • Uses the federal funds to carry out a program as compared to providing goods or services for a program

9. Subaward vs. Contract (cont.) • Contractor 200.330(b) • Provides the goods and services within normal business operations • Provides similar goods or services to many different purchasers • Operates in a competitive environment • Provides goods or services that are ancillary to the operation of the federal program • Is not subject to compliance requirements of the federal program

10. OMB/COFAR shifted many new responsibilities to the pass-through

11. 1. Subaward Notifications –Information Requirements

12. Information that Must be Included in Subawards (200.331(a)) • Federal award identification information: • Subrecipient name (must match registered name in DUNS) • Subrecipient DUNS # • Federal Award Identification Number (FAIN) • Federal Award Date

13. Information that Must be Included in Subawards (200.331(a)) • Period of performance start and end dates • Amount of federal funds ‘obligated by this action’ • Total amount of federal funds ‘obligated to the subrecipient’ • Total amount of the federal award • Federal award project description (FFATA)

14. Information that Must be Included in Subawards (200.331(a)) • Name of federal awarding agency, pass-through entity, and contact official • CFDA Number and Name • Is the award for “research and development” • The indirect cost rate

15. Information that Must be Included in Subawards (200.331(a)) Requirements of the federal grant imposed upon subrecipient Any additional requirements imposed by the pass-through (e.g., identification of any required financial and performance reports)

16. Information that Must be Included in Subawards (200.331(a)) Approved indirect cost rate for subrecipient Required assurance from subgrantees that access will be provided to records and financial statements Appropriate terms and conditions concerning closeout of the subaward

17. 2. New Risk Management Requirements for Pass-Through Entities

18. Pass-Through Entity Risk Management Requirements (200.331(b)) • Pass-through must evaluate each subrecipient’s risk of non compliance for purposes of determining appropriate monitoring • Timing: before applicant receives funding

19. Pass-Through Entity Risk Management Requirements (200.331(b)) • Risk Factors, may include consideration of: • Subrecipient’s prior experience with the grant program • Results of previous audits • New personnel or substantially changed systems • Results of federal monitoring

20. Specific Subaward Conditions 200.331(b) & 200.207 Pass-through must consider imposing additional federal award conditions, if appropriate, such as: • Require reimbursement; • Withhold funds until evidence of acceptable performance; • More detailed reporting; • Additional monitoring; • Require grantee to obtain technical or management assistance; or • Establish additional prior approvals.

21. The ED/RMS Approach: Entity Risk Report (ERR) • ERR is ED’s Pre-Award Risk Assessment Rubric • Incorporates information from multiple data sources (data drive decision making) • Focuses on both compliance and performance, working to incorporate more focus on performance • Used by both RMS and OIG • RMS uses ERR looking forward • OIG uses ERR looking backward

22. ED/RMS Approach—Risk Factors Repeat findings Program Specific Findings $ amount of questioned costs as % of award Missing audit(s) Adverse/disclaimed opinion of financial statements Going concern statement (financial stability/bankruptcy) Poor financial management Substandard performance

23. ED/RMS Approach—Scoring/Color Key

24. The ED/RMS Approach: Entity Risk Report (ERR) ERR is ED’s Risk Assessment Rubric Incorporates information from multiple data sources (data drive decision making)

25. The ED/RMS Approach: ED Clarifiers re: ERR • Not a decision or scoring tool • Not designed to deny awards • Highlights evidence of potential risks in implementing grant • Helps identify conditions that can help make awarding of grant more successful • Need to incorporate better program performance data • Program Reviews • Performance Reports • Education Statistics Reporting

26. 3. New Enhanced Monitoring/ Performance Metrics

27. Monitoring Requirements (200.331(d)) Pass-through must monitor its subrecipients to assure compliance and performance goals are achieved

28. Monitoring Requirements (200.331(d)) • Monitoring must assure compliance and performance goals are achieved • Must include: • Review financial and programmatic reports • Ensure corrective action • Issue a “management decision” on audit findings

29. Performance Reports Required 200.328(b)(2) • “Performance reports” required to be submitted • at least annually • using “OMB-approved government-wide standard information collections”

30. Measuring Performance: “Performance Metrics” 200.328 “Performance reports” must include: • Comparing actual accomplishments to the objectives established by the federal award • Where accomplishments can be quantified, a computation of the cost may be required • May require performance trend data

31. Measuring Performance: “Performance Metrics” 200.328 (cont.) • The reasons why established goals were not met, if appropriate • Additional pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs • Significant developments • Problems, delays, adverse conditions • Favorable developments

32. Monitoring Tool Recommendations (200.331(e)) • Depending on assessment of risk, the following monitoring tools may be useful: • Training + technical assistance on program-related matters • On-site reviews • Arranging for “agreed-upon-procedures” engagements

33. Audit Resolution (200.331(e)) Pass-through must verify all required subrecipients have single audits Audit threshold raised from $500K (A-133 circular) to $750K (Uniform Grant Guidance) – Places greater burden on pass-through

34. Issuance of Management Decisions, 200.521 Management Decision must state: • Whether audit finding sustained • Reasons for decision • Expected auditee action • If corrective action not yet complete, timetable Must be issued within six months of acceptance of the audit report Corrective action must begin immediately

35. Changes to Compliance Supplement Requirements? Uniform Grant Guidance NPRM (February 1, 2013) proposed reduction in number of types of compliance requirements in the compliance supplement. Many pass-throughs opposed this reduction because of burden on them. Outcome? To be determined…

36. 200.331(g) Pass-through must adjust its own financial records based on audits monitoring, on-site reviews

37. 4. Enforcement (new for IHEs, Hospitals and Non-Profits)

38. 200.331(h) • Pass-throughs must consider taking enforcement action based on noncompliance • Temporarily withhold cash payments pending correction • Disallow all or part of the cost • Wholly or partly suspend the award • Recommend to federal awarding agency suspension/debarment • Withhold further federal awards • Other remedies that may be legally available

39. 200.339 The pass-through may terminate the award for “cause,” notice and opportunity for hearing (200.340 and 200.341)

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