GAQC Alert No. 241 

GAQC Alert
OMB's New Uniform Grant Guidance Subparts A-D and Other Key Related Information
Feb. 11, 2014
GAQC Alert #241
In This Alert
Background and Overview of the Uniform Grant Guidance
Where to Find the Uniform Grant Guidance and Related Materials
Effective Dates of the Uniform Grant Guidance
What's New in Subparts A Through D?
Status of Proposed Reduction of Types of Compliance Requirements
Preparing Staff and Clients for Changes
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Dear Center Members
In late December, we sent GAQC Alert #236 alerting you that the U.S. Office of Management and Budget (OMB) issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Grant Guidance or Guidance). Since that time GAQC staff and Executive Committee members have been working to analyze the Guidance. This GAQC Alert is the first of several that is intended to inform you about important areas of focus in the Uniform Grant Guidance. Because of the length and complexity of the new Guidance, this GAQC Alert will focus primarily on the new sections of the Guidance covering acronyms and definitions; general provisions; and changes in the administrative requirements affecting both federal agencies and non-federal entities. Future GAQC Alerts will cover changes to the OMB Cost Principles, as well as the new single audit requirements. In this GAQC Alert you'll learn about:
The background and overview of the new Uniform Grant Guidance;
Where to find the Uniform Grant Guidance and related materials;
The effective date(s) of the Uniform Grant Guidance;
Summary of significant changes to acronyms, definitions, general provisions, and administrative requirements;
Status of the proposed reduction to the types of compliance requirements; and
How to begin preparing your staff and clients for these changes.
Background and Overview of the Uniform Grant Guidance
OMB grant reform efforts have moved relatively quickly since the establishment of the Council of Financial Assistance Reform (COFAR) in October 2011. The goal of this reform was to streamline guidance for federal awards while easing administrative burden and to strengthen oversight over the more than $500 billion expended annually in federal funds to reduce risks of waste, fraud, and abuse.

Several rounds of due process on the OMB reform proposals were undertaken by COFAR and OMB as further described in GAQC Alert #193 and GAQC Alert #211. OMB received more than 300 comments on the most recent proposal which COFAR and OMB considered in developing the final Uniform Grant Guidance. If you would like to read more about how COFAR and OMB addressed comments received, read the Supplementary Information section included at the beginning of the Uniform Grant Guidance.

The Uniform Grant Guidance supersedes and streamlines requirements from eight different grant circulars into one set of guidance contained in Title 2 of the Code of Federal Regulations (CFR) (see Subtitle A, Chapter II, Part 200) as follows:
Subpart A, covered in this GAQC Alert, contains acronyms and definitions used throughout the Guidance.
Subpart B, covered in this GAQC Alert, discusses general provisions including the purpose of the Guidance, its applicability, and effective date.
Subpart C, covered in this GAQC Alert, covers administrative requirements directed primarily at federal agencies including pre-award activities and requirements for the contents of federal awards.
Subpart D, covered in this GAQC Alert, includes many of the administrative requirements that will be areas of focus for your clients including procurement, internal control, and subrecipient monitoring.
Subpart E, to be included in a future GAQC Alert, includes reforms to the Cost Principles previously found in Circulars A-21, A-87, and A-122; and
Subpart F, to be included in a future GAQC Alert, includes the reforms to single audit requirements which were previously found in Circulars A-133 and A-50.
Where to Find the Uniform Grant Guidance and Related Materials
If you are interested in easily accessing individual sections of the Guidance electronically, you can go to the electronic Code of Federal Regulations (e-CFR). Accessing the PDF version of the Federal Register Notice in its entirety is another option. The following supporting documents will also be helpful in understanding the changes to grant reform. Access these documents at:
Uniform Guidance Crosswalk from Predominant Source in Existing Guidance
Uniform Guidance Crosswalk to Predominant Source in Existing Guidance
Uniform Guidance Cost Principles Text Comparison
Uniform Guidance Audit Requirements Text Comparison
Uniform Guidance Definitions Text Comparison
Uniform Guidance Administrative Requirements Text Comparison
Effective Dates of the Uniform Grant Guidance

The GAQC staff has received many questions related to the effective dates of the Uniform Grant Guidance. Because the Uniform Grant Guidance applies to federal agencies, non-federal entities, and auditors, there are different effective dates to allow the federal agencies time to implement and adopt the guidance before non-federal entities are required to apply the guidance to new federal awards and incremental funding and then be audited under the new audit rules. Below is a timeline of when the guidance will become effective for various users of the guidance.

Federal Agencies. The federal agencies are required to adopt the guidance and implement policies and procedures by promulgating regulations to be effective December 26, 2014. Note that all federal agencies are expected to implement the guidance in unison to provide for a smooth transition for entities that are required to comply.

Non-Federal Entities. The Uniform Grant Guidance defines non-federal entities as states, local governments, Indian tribes, institutions of higher education, or nonprofit organizations that carry out a federal award as a recipient or subrecipient. Non-federal entities will need to implement the new administrative requirements and Cost Principles for all new federal awards and to additional funding to existing awards (referred to as funding increments) made after December 26, 2014. Based on the number of questions we have received, we believe this effective date may be challenging both from an auditee and auditor perspective. For example, some non-federal entities may end up having funding subject to the old Cost Principles and the new Cost Principles within the same fiscal year. We expect that OMB will issue additional clarifying guidance relating to the effective date for non-federal entities in a future frequently asked questions document it has stated will be issued. The GAQC will inform you of any new guidance in this area.

Single Audits. The audit requirements in Subpart F will be effective for fiscal years beginning on or after December 26, 2014. Therefore, auditees subject to a single audit with December 31, 2015, year ends will be required to undergo the first single audits conducted under the Uniform Grant Guidance. Early implementation of Subpart F is not permitted.

What's New in Subparts A Through D?

The Uniform Grant Guidance will have a significant impact on you, your staff, and your clients as all parties will need to learn about and implement the Uniform Grant Guidance. As noted above, this GAQC Alert is intended to focus only on Subparts A through D which cover new acronyms, definitions, general provisions, federal agency requirements, and other administrative requirements.

Subpart A—Acronyms and Definitions (Sections 200.0 through 200.99) —Subpart A is now the one place to go to find the definitions of terms used throughout the Uniform Grant Guidance. Auditors should note that certain terms used in Subpart F such as "cluster of programs" are now defined in this Subpart. Below are just of few of the definitions included in Subpart A that have been revised or streamlined. For a thorough comparison of the text changes, see the Definitions Comparison Chart issued by OMB.

o 200.21, Compliance Supplement - Previously it was called the Circular A-133 Compliance Supplement and was included as Appendix B to Circular A-133. The Compliance Supplement will now be Appendix XI to Part 200 of the Uniform Grant Guidance.
o 200.23, Contractor - Note that the term "vendor" as used in Circular A-133 (in contrast to a subrecipient) is no longer used. The term "contractor" is defined here and will be used instead of "vendor" going forward. See also section 200.330 in Subpart D which further discusses subrecipients versus contractors.
o 200.79, Personally Identifiable Information (PII) and 200.82, Protected Personally Identifiable Information – These terms, which were not previously defined in grant guidance, are now defined. These definitions will be important to auditors and auditees as single audit reporting packages submitted under the new guidance will be publically available (with exceptions for Indian tribes) and the Guidance states that auditors and auditees must ensure that no protected personally identifiable information is included in their respective parts of the reporting package.
o 200.80, Program Income – A definition of program income, which was not previously defined in Circular A-133, is now defined.
o 200.90, State - The definition of State no longer includes Indian tribes as Circular A-133 had done. Instead, Indian tribes are now defined separately in section 200.54.
Subpart B—General Provisions (Sections 200.100 through 200.113) - This Subpart discusses the purpose, applicability, exceptions, and effective date of the Uniform Grant Guidance. A chart is included in section 200.101 that indicates which Subparts are applicable to different types of awards. This section also clarifies that the terms and conditions of federal awards flow down to subrecipients unless the Uniform Grant Guidance or the terms and conditions of a federal award specifically indicate otherwise. Auditors and auditees should pay close attention to section 200.101, Applicability, as exceptions to the Uniform Grant Guidance are only identified there and not elsewhere in the Guidance. See above section of this GAQC Alert, "Effective Dates of Uniform Guidance," for more information on the effective dates.
Subpart C—Pre-Federal Award Requirements and Contents of Federal Awards (Sections 200.200 through 200.211) - This Subpart provides more streamlined guidance to federal agencies on information that is required to be provided to non-federal entities for the purpose of applying for and receiving federal awards. Some of the requirements include determining the instrument to be used (e.g., grant agreements, cooperative agreements, or contract) and standard formats to announce funding opportunities. Federal agencies will also be required to consider risk (such as financial stability, prior performance, and management systems) posed by each applicant prior to making an award. The terms and conditions of the award may be impacted by this risk assessment.
Subpart D—Post-Award Requirements for Financial and Program Management (Sections 200.301 through 200.345) - The following presents a summary of Subpart D. Members should refer to the Uniform Grant Guidance and related companion materials for complete information on this section. All of the areas covered should be of great interest to your clients.

o 200.303, Internal controls - In response to commenters suggesting that efforts to mitigate risks of waste, fraud, and abuse would be strengthened by a more explicit reference to internal control frameworks such as those issued by Government Accountability Office (GAO) and the Committee of Sponsoring Organizations of the Treadway Commission (COSO), this section requires that non-federal entities establish and maintain effective internal control that provides assurance that an entity is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of federal awards. This is a much more explicit internal control requirement for auditees than that described in the current grant-related requirements. The new Guidance goes on to state that non-federal entity internal controls should be in compliance with COSO and the GAO's Green Book (Standards for Internal Control in the Federal Government). However, in a recent OMB/COFAR training Web event, presenters indicated that the term "should," as used in the new guidance, was not intended to be presumptively mandatory. OMB is expected to further address this in its future frequently asked questions document referred to above and at the end of this GAQC Alert.

Because many auditees are not yet aware of this new more explicit internal control section, you should consider informing your clients as a client service. COSO was revised in 2013 and currently the GAO is in the process of modifying the Green Book in light of the recent COSO revision (comments are due to GAO by February 18, 2014, and should be sent to Access the Green Book Exposure Draft. You should become more familiar with both COSO and the Green Book and consider commenting on the Green Book Exposure Draft while there is still time. Depending on your client's current internal control situation, this may be an area that they need to focus on prior to the effective date of the new Guidance for non-federal entities.
o Sections 200.317 through 200.326, Procurement Standards - States will follow the same policies and procedures they use for procurements from non-federal funds (i.e., state procurement statutes). For other non-federal entities there are five procurement methods outlined in the Guidance including small purchase procedures which are subject to the Simplified Acquisition Threshold, micro-purchases, sealed bids, competitive proposals, and noncompetitive proposals. In general, the new procurement standards adopt the majority of the language used from Circular 102. Therefore, non-federal entities that are currently subject to Circular A-110 will likely be affected more significantly. However, all auditees should review these changes carefully to determine the impact on their procurement procedures, in particular those relating to procurement card programs.
o Section 200.330 through 200.332, Subrecipient Monitoring and Management - Guidance on determining subrecipients versus contractors is now included in Section 200.330. Note that today subrecipient monitoring guidance is primarily located within the audit requirements (i.e., Circular A-133 and the OMB Compliance Supplement). The Uniform Grant Guidance adds more prominence to these requirements and expands upon them in Section 200.331. For example, 200.331 is very explicit about what information needs to be included by a pass-through entity in its subawards at the time the subaward is made such as federal award identification, all requirements imposed by the pass-through entity, certain indirect cost information, access requirements, and terms and conditions surrounding closeout. Finally, requirements are included in this section regarding a pass-through entity's responsibility to evaluate each subrecipient's risk and develop appropriate subrecipient monitoring in response to the assessed risk. If you have clients that are pass-through entities, this is another area that you should consider informing your clients about as a client service. Depending on your client's current subrecipient monitoring activities, efforts may be needed to bolster these activities and related processes to ensure compliance with the requirements in this Subpart by the effective date.
Status of Proposed Reduction of Types of Compliance Requirements
Some members have asked us about the status of the previously proposed reduction in the types of compliance requirements appearing in the OMB Compliance Supplement from the current fourteen requirements to potentially six. In the Supplementary Information section of the Uniform Grant Guidance, COFAR recommends that additional further public outreach be made before making substantial changes to the Compliance Supplement and that any changes made in this area be made based on available evidence of past findings and the potential impact of noncompliance. We anticipate that the 2014 Compliance Supplement will not undergo any substantial changes to the number of compliance requirements covered. Instead, OMB is currently considering its options and will likely develop a proposal for change that will be released for some level of public exposure. Any significant changes to the Compliance Supplement relating to a reduction in compliance requirements would not likely be made until the 2015 Compliance Supplement.
Preparing Staff and Clients for Changes
We hope you found the information in this GAQC Alert useful. The GAQC will continue to analyze the Uniform Grant Guidance and communicate with you on the other Subparts and sections in future GAQC Alerts. Before we close, here are a few steps you can take now to learn more about the Uniform Grant Guidance and to start preparing your staff and clients for implementation.
Review and share the materials described in the section above "Where Can I Find the Uniform Grant Guidance and Related Materials."
As it relates to the information described in this GAQC Alert, spend some time really focusing on the information contained in Subparts A through D of the Guidance and consider discussing the main areas of emphasis with your clients and staff.
Go to the COFAR Mailing List link to register for the COFAR mailing list to receive future announcements, information on upcoming webcasts, and other COFAR resources.
Access an archive of a recent OMB Web event and the related presentation materials that walked participants through the contents of the various Subparts and requirements contained in the Uniform Grant Guidance, including the information contained in Subparts A through D described above. Look for the heading, "Links to the Uniform Guidance 1-27-14 Training Webcast," on the COFAR Home Page to access the archive.
As noted earlier, OMB and COFAR plan to issue a frequently asked question and answer document at some point in the future. If you have questions on the Uniform Grant Guidance that you would like to have addressed by OMB, send them to Let the GAQC team know as well at
Save the date for Wednesday, June 18, 2014, from 1:00 PM - 3:00 PM (Eastern) for a GAQC Web event that will cover the 2014 Compliance Supplement and other important updates relating to the Uniform Grant Guidance.
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