By Judy Monteux, RCAC rural development specialist – financial
It’s a bird…..it’s a plane…..it’s the super circular!!
On Dec. 26, 2013, the Office of Management and Budget (OMB) published uniform administrative requirements, cost principles and audit requirements for federal awards. This is the culmination of a two-year effort on the part of the OMB and the Council on Financial Assistance Reform (COFAR) to “rethink and reform the rules that govern the stewardship of federal dollars.” This one comprehensive, consolidated document combines and replaces eight existing OMB Circulars (A-21, A-87, A-110, A122, A-89, A-102, A-133 and A-50) and provides a single location for these requirements – Title 2 of the Code of Federal Regulations. This government-wide framework for grants management includes provisions that were developed to ensure that discretionary grants and cooperative agreements are awarded based on merit; management increases focus on performance outcomes; rules governing the allocation of federal funds are streamlined; and the single audit oversight tool is focused to reduce waste, fraud and abuse.
The COFAR and the OMB collected input from federal and non-federal communities in response to two directives from the President: (1) streamline the guidance for federal awards to ease administrative burden; and (2) strengthen federal funds oversight to reduce risks of waste, fraud and abuse. The following are the nine objectives that came out of this effort and how the new guidance addresses these directives, and how they might impact you as a Mutual Self-Help award recipient:
1. Improve consistency and eliminate overlapping, duplicative and conflicting provisions
All federal agencies must implement the new guidance in unison. If you have more than one federal funding source, you will not have to wonder when each one’s regulations will change because it is supposed to happen across all federal agencies at the same time no later than Dec. 26, 2014.
2. Focus on performance over compliance
The super circular allows for new types of awards including fixed amount awards (that rely more on performance to ensure accountability), performance measurement guidance, and pay-for-performance approaches for innovative program designs. It also requires federal agencies to provide grantees with clear performance goals, indicators and milestones.
3. Encourage efficient use of electronic information and information technology systems
You can define computing devices (e.g. computers) that fall under your capitalization threshold or $5,000 (whichever is less) as supplies (with less burdensome administrative requirements) rather than as equipment.
4. Provide for consistent and transparent treatment of costs
The guidance includes a 10 percent indirect cost rate for non-federal entities without a negotiated indirect cost. In addition, pass-through entities are required to provide an indirect cost rate to sub-recipients. If you have not already negotiated an indirect cost rate for your organization, you may be required to use the 10 percent indirect cost rate for grant proposals.
5. Limit allowable costs to make the best use of federal resources
The super circular includes some clarification on allowable costs including conference spending and it eliminates allowable employee morale costs.
6. Setting standard business processes using data definitions
The guidance provides that standard terms and acronym definitions be used by all federal awarding agencies in their management of federal awards. In addition, all Notices of Funding Opportunities (NOFAs) will use a standard set of data elements, which should make notices easier for non-federal entities to compare and understand.
7. Encourage non-federal entities to have family-friendly policies
Your organization will be able to charge costs incurred for finding (but not offering) child care at your conference. Also, under certain circumstances, temporary dependent care costs that result directly from travel to conferences are allowable.
8. Strengthen oversight over federal awards
This guidance moves internal control requirements from the audit section (often only considered after the federal funds have been spent) to the administrative section. Federal agencies and pass-through entities are required to review the risk associated with a potential recipient prior to making an award. Non-federal entities will be required to disclose any instances of conflict of interest or relevant violations of Federal criminal law as part of the application process.
9. Focus audit requirements where there is greatest risk of waste, fraud and abuse
Agencies with federal awards of $750,000 or more are required to have a single audit. The circular also changes the way a “major program” is defined to focus audits on areas with internal control deficiencies and that have been identified as material weaknesses by the auditor.
This new guidance became effective and binding on the federal awarding agencies on Dec. 26, 2013. Next, the federal agencies must draft their own implementing regulations and submit them to OMB for their review by June. Once OMB approves the individual federal awarding agencies’ revised regulations, they will become effective for non-federal recipients of federal awards. This will occur no later than Dec. 26—one year after the announcement of the reforms. These new regulations will be published in the awarding agencies’ respective sub-chapters within Title 2 of the Code of Federal Regulations. These new rules will apply to grant awards made after this occurs. The new audit rules will apply to audits of fiscal years that begin after Dec. 26.
Stay tuned for more specifics about the new guidance and how it might impact your organization!