Now that you have transitioned to the Uniform Grants Guidance?

Now that you have transitioned to the Uniform Grants Guidance? 2016 Georgia Association of Business Officials Annual Conference Augusta Marriott Convention Center Augusta, Georgia November 8-11, 2016

Uniform Grant Guidance Ken Banter, EdD Title I Program Manager kbanter@doe.k12.ga.us (404) 472-2372 Alan Abercrombie, CFE, CRMA Federal Internal Auditor aabercrombie@doe.k12.ga.us (404) 463-3377

Purpose of this Session • This session will explore the Uniform Administrative Grants Requirements for cost principles, and audit requirements for federal awards [2 C.F.R. Part 200]. The session will provide a walk-through for ensuring your district is in compliance with 2 C.F.R. Part 200 financial management systems, inventory management systems, procurement systems and cost principals including time distribution and travel documentation.

Why Uniform Grant Guidance? Eliminate duplication and conflicting guidance Focus on performance over compliance Encourage efficient use of information technology and shared services Consistent and transparent treatment of costs Limit allowable costs to make the best use of resources

Why Uniform Grant Guidance? Set standard business processes using data definitions Encourage non-Federal entities to have family-friendly policies Strengthen oversight Target audit requirements on risk of waste, fraud, and abuse

Developing Processes and Procedures • Should be developed with all stakeholders’ input • Finance Director • Department Heads working with federal programs • Administrative Assistants • Bookkeepers (district and school level) • Principals • Should include what actually occurs (and follows CFR 200 guidelines) • Should include procedures developed for CAPs in prior years

Significant Changes • Changes in organization/terminology • Internal control requirements • New procurement standards • Subrecipient monitoring/management • Minor changes to cost principles • Numerous threshold changes to single audit

Significant Changes • Combined all related OMB guidance into one location (2 C.F.R. Part 200) including: • Administrative requirements (A-102, A-110) • Federal cost principles (A-21, A-87, A-122) • Single audit (A-133, A-89, parts of A-50)

Uniform Administrative Requirements, Cost Principles, and Audit Requirements • One purpose of 2 C.F.R. Part 200 is to streamline the federal guidance on administrative requirements, cost principles, and audit requirements • According to the Council on Financial Assistance Reform (COFAR), the Uniform Grants Guidance eliminates about 80 pages “of overlapping, duplicative, and conflicting provisions”

“Eliminating” 80 Pages

The Road to Compliance

Local districts’ procedures must address: • Standards for Financial and Program Management • Property Standards (Inventory Management System) • Procurement Standards • Cost Principals including personnel time and effort and travel

2 C.F.R. Part 200 Requires Procedures Written policies and procedures are required! • Written Cash Management Procedure - §200.302(b)(6) and §200.305 • Written Allowability Procedures - §200.302(b)(7) • Written Procedures for managing equipment § 200.313(d) • Written Conflicts of Interest Policy - §200.318(c) • Written Procurement Procedures - §200.319(c) • Written Method for Conducting Technical Evaluations of Proposals and Selecting Recipients - §200.320(d)(3) • Written compensation and leave policies §200.430 • Written Travel Policy - §200.474(b)

Financial Management System • Track Funds • Complete Financial Reporting • Reliable Data • Budget Control and Reconciliation • Internal Controls • Follow Cash Management Improvement Act • Accounting Records (Source Documents)

Financial Management System • Internal controls: • Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award

Procedures for Financial Management • Include information on: • Your accounting system(s) • How budgets are loaded onto the system • Process for comparing budgets to expenditures • Process for drawing down funds • Process and authorizations for budget revisions • Period of performance and when obligations are made • Process for carryover • Incorporate state/agency requirements

Property StandardsInventory/Property Management§200.313 • Property Classifications • Shared Use of Equipment • Inventory Procedures • Loss, Damage or Theft • Disposition • Document

Equipment and Supplies • Equipment – No change in definition §200.33 • Anything that is not equipment is considered supplies§200.94 • NEW: Computing devices • Machines used to acquire, store, analyze, process, public data and other information electronically • Includes accessories for printing, transmitting and receiving or storing electronic information • Computing devices are supplies if less than $5,000 • BUT….

Equipment and Supplies • Regardless of the cost, the grantee must maintain effective control and “safeguard all assets and assure that they are used solely for authorized purposes.” • §200.302(b)(4)

Inventory/Property Management • Must have inventory management system • Property records §200.313(d)(1) • Description of the property • Serial number or other identification number • Source of funding for the property (including the FAIN), • Who holds title • Acquisition date • Cost of the property • Percentage of federal participation in the project costs for the federal award under which the property was acquired • Location, use and condition of the property • Any ultimate disposition data including the date of disposal and sale price of the property

Inventory/Property Management • Must have inventory management system • Physical inventory • At least every year in Georgia • Control system to prevent loss, damage, theft • All incidents must be investigated

Disposition-Equipment §200.313 • When property no longer needed, must follow disposition rules: • Transfer to another federal program • Over $5,000 – pay federal share • Under $5,000 – no prior approval on federal inventory items • NEW:Non-federal entity must request disposition instructions from the federal awarding agency if required by the terms of the grant

Inventory Procedures Include Process for: • Requisition of equipment • Elements included in Inventory Management System • Entry of information into Inventory Management System • Off-site use of equipment • Physical inventory • Equipment disposition • Transfer, loss, damage or theft of equipment • Equipment use for Title I, Part A targeted assistance programs • Equipment use for private schools • Disseminating the Inventory Procedures including allowable use of Title I purchased equipment to Title I staff.

Procurement §200.318 - 200.326

Procurement Standards • NEW: Uniform Grant Guidance -- All non-federal entities must have documented procurement procedures which reflect applicable Federal, State, and local laws and regulations. §200.318(a). • Open competition • Conflict of Interest • Solicitation • Cost/Price Analysis • Vendor Selection • Required Contract Provisions • Contract Administration

Procurement “Claw” (Section 200.320) • >$150K • Fixed price or cost reimbursement • RFP with evaluation methods 3. Sealed Bids 4. Competitive Proposals 2. Small Purchases 5. Sole Source • > $150K • Construction ------projects • Price is a major factor 1. Micro Purchases • Up to $150K • Rate quotations • No cost or price --analysis • Unique • Public emergency • Authorized by agency (or PTE) • No competition • $3.5K • No quotations • Equitable distributions

Micro-Purchase 200.320(a) • May be awarded without soliciting competitive quotations if the nonfederal entity considers the cost reasonable • Acquisition of supplies and services under $3,500 or less • This was updated per the Federal Acquisition Regulations (FAR) 48 CFR Subpart 2.1 on October 1, 2015 (200.67)

Small Purchase Procedures 200.320(b) • Goods or services that costs less than The Simplified Acquisition Threshold ($150,000 & under 200.88) • Organization may set lower threshold • Must obtain price or rate quotes from an adequate number of qualified sources (usually 2 or more) • “Relatively simple and informal”

Sealed Bids 200.320(c) • Bids are publically solicited. • Appropriate when: • A complete, adequate and realistic specification or description of good or service is available; • Two or more responsible bidders are willing and able to compete effectively for the business • Selection of vendor can be made principally based on price and it’s a firm fixed price contract.

Competitive Proposals 200.320(d) • Award contract to responsible vendor whose proposal is most advantageous to the program, considering price and other factors. • Generally used when sealed bid is not appropriate.

Competitive Proposals (cont.) • Request for proposal (RFP) must be publicized and identify all evaluation factors and their relative importance. • Proposals must be solicited from an adequate number of sources. • Must have method for evaluating proposals and selecting the vendor. • Contracts must be awarded to the responsible vendor whose proposal is most advantageous to the program, considering price and other factors.

Sole Sourcing Should Be Limited! UGG- 200.320(f) • Noncompetitive Proposals • Procurement through solicitation of a proposal from only one source and may be used ONLY when one or more of the following circumstances apply: • The item is available only from a single source; • The public emergency for the requirement will not permit a delay resulting from competitive solicitation; • The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to written requires from nonfederal entity; or • After soliciting a number of sources, competition is determined inadequate.

Contract Administration §200.318 (Changed) Non-federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of the contract

Procurement Conflict of Interest: 200.318 (c)(1) Sub-recipients spending federal funds must maintain written standard of conduct, including conflict of interest policy. A conflict of interest arises when any of the following has a financial or other interest in the firm selected for award: • Employee, officer or agent • Any member of that person’s immediate family • An organization which employs or about to employ, any of the above or has financial interest in the firm selected for award

Suspension and Debarment (as of 10/11/16) 2 CFR 180.220 Procurement contracts included as covered transactions: • Any contract or subcontract expected to equal or exceed $25,000 must be checked against the System for Award Management (SAM) for suspension or debarment • Evidence of the verification can be in the form of a date/time stamped print screen or other digital method that is readily available. • Documentation should include who checked, when it was checked and the query criteria

Cost Principals – General Provisions

Allowable Section 200.302 (b)(7) All sub-recipients must have written procedures for determining allowability of costs that explain the process used throughout the grant development, budget and claiming process in accordance with Subpart E – Cost Principles Procedures cannot simply restate the Uniform Grant Guidance regulation

Factors Affecting Allowability of Costs-§200.403 All costs must be: • Necessary & Reasonable & Allocable • Conform with grant terms • Legalunder federal, state and local law; be consistent with federal, state, and local policies and procedures that apply to the grant • Be consistently treated concerning identification as a direct or indirect cost (cannot charge direct costs to a program if similar charges are indirect under state programs) • Be in accordance with generally accepted accounting principles (GAAP) • Not be used to meet cost sharing or matching requirements of any other grant program • Must Be Documented

Necessary & Reasonable • Necessary and Reasonable • Must be necessary for the performance or administration of the grant or follow sound business practices • Fair market prices • Act with prudence under the circumstances • No significant deviation from established prices

Reasonable Prudent Person Test A “prudent person” is someone who has responsibility for somebody else’s money. In our case, the funds are provided to us by federal government taxpayers. So, what would another person do in the same situation given the same circumstances.

Necessary and Reasonable In other words, the cost must be able to withstand public scrutiny, i.e. would someone outside the organization agree that the cost was appropriate based on the situation.

Allocable Section 200.405 A cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received. Was the cost incurred specifically for that Federal award? Was the cost necessary to the overall operation of that Federal award?

Allocable In other words, a cost is “allocable” to a Federal award if the goods/services involved are assignable to that Federal award in accordance with the relative benefit received.

Direct Costs Direct costs are covered in §200.413. This section is largely unchanged from previous OMB cost principles • Direct costs are identified specifically with the Federal award or can be easily and accurately assigned to activities of the award. Typical direct costs include employee compensation, fringe benefits, materials and other items attributable to the award • If directly related to a specific award, certain costs that would otherwise be included with an indirect cost rate can be direct charged, such an extraordinary utility consumption, cost of materials supplied from stock or services from specialized facilities or other institutional service operations

Indirect Costs Indirect costs are covered in §200.414. This section is largely unchanged from previous OMB cost principles. • Facilities: depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements and maintenance expenses. • Administration: general administration and general expenses such as the director’s office, accounting, personnel and all other types of expenditures not listed specifically under a subcategory of facilities

Documenting Time and Effort Records to Document Time Distribution must be kept on all personnel paid in part or whole with federal funds (200.430) Individual or group form may be used

Documenting Time and Effort • If an employee worked on a single cost objective then a semi-annual certification is required

Documenting Time and Effort • If an employee worked on multiple cost objectives then a monthly personnel activity report (PAR) is required

What is a cost objective? “Program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capital projects, etc.” §200.28

Semi-annual Certifications • The form must be signed by either the employee or by a “supervisory official who has first hand knowledge of the work performed by the employee” • The form must be signed after-the-fact • The form cannot cover a period longer than six (6) months • The form must clearly state the cost objective (i.e. program or grant) worked on by the employee

Now that you have transitioned to the Uniform Grants Guidance?