Source: http://docplayer.net/11493452-Frequently-asked-questions-updated-september-2015.html
Timestamp: 2018-12-12 18:57:24
Document Index: 217026361

Matched Legal Cases: ['art 30', 'art 30', 'art 50', 'art 200', 'art 6', 'art 205']

Frequently Asked Questions Updated: September PDF
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1 Frequently Asked Questions Updated: September 2015 For The Office of Management and Budget s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards At 2 CFR 200 The following are frequently asked questions presented by the COFAR on OMB s Uniform Guidance at 2 CFR 200. Please note that in case of any discrepancy, the actual guidance at 2 CFR 200 governs. If there is a question pertaining to the application of the guidance to a particular Federal award, that question should be addressed to the Federal awarding agency or pass-through entity in the case of a subrecipient. This document is intended to provide additional context and background for the guidance as Federal and non-federal entities seek to understand the policy changes and will be referenced as an addition to the Uniform Guidance at 2 CFR 200 in the 2015 issuance of Appendix XI to Part Compliance Supplement. Note: New FAQS as of September, 2015 are indicated by an *. Revised FAQs by **. In addition, the following FAQs have be renumbered without a change in content: FAQs through 6 have been renumbered.320-3, and and FAQs through 5 have been renumbered.414-4, and Table of Contents Cognizant Agency for Indirect Cost * Vendor vs Contractor and Generally Accepted Accounting Principles (GAAP) (previously Q III-1) Vendor vs Contractor Clarification Indian Tribes Removed from Definition of State Implications for Tribal Law Indian Tribes Removed from Definition of State- GAAP (previously Q III-6) Tribes Removed from Definition of State- Implications for Applications Determination of Modified Total Direct Cost (MTDC) for Subaward(s) * Eligibility of Institutions of Higher Education (IHE) for Funding Opportunities which are Limited to Nonprofit Organizations *
2 Applicability of Uniform Guidance to Federal Acquisition Regulation (FAR) based contracts (also applicable to ) Audit Requirements of FAR based contracts in addition to the Uniform Guidance Audit Requirement (also applicable to ) Cost Accounting Standards (CAS) and the Uniform Guidance Effective Dates and Indirect Cost Rates Effective Dates and Indirect Cost Rate Proposals Effective Dates and Disclosure Statements (DS-2s) Effective Dates and Applications Effective Dates, Applications, and DS-2s Effective Dates and Grace Period for Procurement ** Effective Dates and Incremental Funding Effective Dates and Formula & Entitlement Programs Effective Dates and Consistent Implementation (Federal) Effective Dates and Consistent Implementation (States) Effective Dates and Subawards (updated from previous Q II-1) Effective Dates (Previously Q II-2) Effective Dates and Federal Awards Made Previously (Previously Q II-3) Effective Dates and Pre-Existing Guidance (Updated from the previous Q II-4) Single Audit Compliance Supplement and Audit Resolution Conflict of Interest Conflict of Interest Scientific Collaborations * Fixed Amount Awards Fixed Amount Awards and Cost-share or Match Fixed Amount Awards and End of Award Certifications (a) Notices of Funding Opportunities Review of Risk Posed by Applicant- Financial Stability
3 Should vs Must and Internal Controls (previously Q III-5) Should vs. Must In General (Previously Q III-4) Should vs Must and the Green book Application of (b) advance payments to payments by States * Exceptions in Statute for restrictions on cost sharing or matching Fees and Royalties and Bayh-Dole (Updated from the previous Q III-2) Period of Performance and No-Cost Extension Equipment and Conditional Title Changes to Equipment Inventory Systems (Previously Q III-7) Equipment and A-110 Screening Procedures Methods of Procurement Micro vs Small vs Over Threshold Methods of Procurement- Sole Source for Research ** Methods of Procurement and Strategic Sourcing and Shared Services Methods of Procurement and Charge Cards Methods of Procurement and Indirect Costs Negotiation of profit * Pass-through Entities, Indirect Cost Rates, and State Funds Limits on layers of Subrecipients for Indirect Costs Delayed Federal funds and Indirect Cost Rates Indirect Cost Rates and Blended Subawards Indirect Cost Rates and Entities Who Do Not Have Indirect Costs Pass-through Entities and Indirect Cost Rate Negotiation Indirect Cost Rates and non-compliance with Guidance
4 Fixed Amount Subawards Fixed Amount Subawards and Profit Dual Role of Students and Post-Doctoral Staff (Previously Q III-3) Profit and Nonprofits Fixed Amount Awards and Cost Principles Requirement for Compliance with Applicable Laws and Regulations * What Counts as Prior Approval De Minimis Rate and Governments Indirect Cost Rate Extensions Current and one-time Documentation Required for Extension Timing of Request for Extension Extensions and Fixed-Rates with Carry-Forward (Previously Q IV-3) Extensions and Old Rates, Shorter Extensions Extensions of Final Rates* (Also applicable to ) Federally negotiated indirect cost rates voluntary under-charging or waiving IDC * De Minimis Rate and Breaks in Federal Relationship * De Minimis Rate and Period of Applicability * De Minimis Rate and non-federal entity with Single Function * Authorization to Legally Bind the non-federal entity Audits not Required in Accordance with Single Audit * Financial Statement Audit * Performance Audits * Financial Statement Audits by Entities Exempted from Single Audit and Subpart F * Internal Audit Functions *
5 Authorization of Changes to Time and Effort Systems Time and Effort and Tribes Fringe Benefits and Indirect Costs ** Charging Payments of Unused Leave to Employees Terminating or Retiring * Depreciation and Cost Sharing (Previously Q IV-1) Depreciation and Cost Sharing Prior Approval for Fluctuations in Exchange Rates Salaries and wages for Tribal Councils Interest Costs for Computer Software Development * Pre-Award Costs (Previously Q IV-2) Uncommitted Cost Sharing Basis for determining Federal awards expended * Audited Financial Statements not required by Single Audits * Tribes Opting out of Online Report Publication- Definition of Tribal Entities Availability of Reports for Public Inspection Waivers for low-risk auditee standards (Previously Q V-1) Application of Option Not to Publish for Tribes (Previously Q V-2) Single Audit Accountable Official Government Wide Audit Quality Project * Compliance with GAAP * Appendix III
6 Appendix III-1 Utility Cost Adjustment Appendix III-2 Utility Costs Adjustment Determination * Appendix III 3 Salaries above the HHS/NIH Statutory Limitation Inclusion in MTDC Base* Appendix V Appendix V-1 SWCAP For Tribes Previous FAQs Background on Uniform Guidance I - Process and Background Q I-1: When and why did we begin this process? Q I-2: How have we engaged stakeholders over the past two years? Q I-3: How does this reform complement OMB s work on the Evidence Agenda? Q I-4: Did OMB hold formal consultations with Indian Tribes? Q I-5: Who will be impacted by this reform? Q I-6: Where can I get more information about the policies that are changed? Q I-7: What is the impact of this reform? How does this reform reduce administrative burden and risk of waste, fraud, and abuse? Q I-8: Why and how did the COFAR reach some of the particular policy recommendations that they did? What are the major differences between the final guidance and the proposed guidance? Can you give us an example of a policy call where the COFAR had to make some tough tradeoffs and share some of the thinking behind the decision? Q I-9: What are the other COFAR priorities this year? Q I-10: Reponses to comments. Beyond the preamble to the Federal Register notice publishing CFR 200 (and the provisions themselves), does OMB plan any further responses to the comments of those who responded to the February 2013 version? Attachment 1: Procurement Bear claw Cognizant Agency for Indirect Cost * If the Federal awarding agency serving as the cognizant agency for indirect costs for a non-federal entity (as described in section Cognizant agency for indirect costs) does not allow the non-federal entity to claim indirect costs, is this Cognizant agency still responsible for negotiating indirect cost rates? Yes. When a Federal awarding agency is the Cognizant agency for indirect costs and does not allow recipients to recover indirect costs on their awards, it is the responsibility of the cognizant agency for indirect costs to negotiate indirect costs rates. 6
7 Vendor vs Contractor and Generally Accepted Accounting Principles (GAAP) Does the elimination of the term "vendor" in favor of "contractor" require non-federal entities (such as states) to change their longstanding practice of awarding "contracts" to nonprofits which they treat substantively as "subawards" for purposes of this guidance? Would continuing this practice be contrary to GAAP? No, this policy does not require such a change, nor would it be in conflict with GAAP. States may call an agreement with a nonprofit however they like, so long as the agreement is audited according to the appropriate policies under the Uniform Guidance based on the determination made in accordance with section See also which states A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract (previously Q III-1) Vendor vs Contractor Clarification What clarification can OMB and COFAR provide regarding changes to the term contractor and the elimination of the term vendor? In existing guidance, the COFAR has found that some confusion results from the fact that OMB Circular A-133 makes a distinction between subrecipients and vendors while other circulars describe either subawards or subcontracts. For purposes of the Uniform Guidance, when a non-federal entity provides funds from a Federal award to a non- Federal entity, the non-federal entity receiving these funds may be either be a subrecipient or a contractor. The term contractor is used for purposes of consistency and clarity to replace areas in the previous guidance that referred to vendors, though substantively in the previous guidance, these two terms have always had the same meaning. Section Subrecipient and Contractor Determinations, as well as section Contract and Subaward provide guidance on making subrecipient and contractor determinations. This language was largely taken from existing guidance in OMB Circular A-133 on subrecipient and vendor determinations. As described in the Uniform Guidance in the sections noted above, it is the substance of the award that determines how it should be treated, even though the pass-through entity or non-federal entity receiving the award may call it by a different name. So, if a pass-through entity makes an award that it calls a contract, but which meets the criteria under section to be a subaward to a subrecipient, the non-federal entity must comply with the provisions of the Uniform Guidance relevant to subawards, regardless of the name used by the pass-through entity to refer to the award agreement. Likewise, any Federal awards that meet the criteria under section for the non-federal entity to be considered a contractor, whether the non-federal entity providing the funds calls it a vendor agreement or a subcontract, the non-federal entity must comply with the provisions of the Uniform Guidance relevant to a contractor Indian Tribes Removed from Definition of State Implications for Tribal Law In section , of the published guidance, Indian tribes were removed from the definition of state. Several sections of the guidance refer to state law, does this include tribal law? Yes, in some cases. The COFAR will review the Uniform Guidance and, when Federal agencies issue implementing regulations, make technical edits as necessary to ensure that references to tribal law are explicitly included where intended. 7
8 .54-2 Indian Tribes Removed from Definition of State- GAAP Also related to section , the previous guidance allowed non-federal entities to submit financial statements under a cash basis. Does this new definition scope Indian tribes out of using the cash or modified-cash basis method of submitting financial statements? No. Neither the Single Audit Act Amendments of 1996 (SAA) nor the Uniform Guidance require non-federal entities to submit financial statements in accordance with generally accepted accounting principles (GAAP). Cash or modified-cash basis financial statements may be submitted to meet the requirements of 2 CFR 200 subpart F. However, the SAA (31 USC 7502(e)(1)) and the Uniform Guidance (2 CFR (b)) require the auditor to determine whether the financial statements submitted to comply with the SAA are presented fairly in all material respects in accordance with GAAP. See also section Factors Affecting Allowability of Costs, paragraph (e) (previously Q III-6) Tribes Removed from Definition of State- Implications for Applications In section Indian tribes were removed from the definition of a state. How will this impact the application process for funds reserved for states? Will tribes no longer qualify? This should have no impact on the application process for funds reserved for states. These definitions are applicable only to the Uniform Guidance at 2 CFR 200 unless specifically indicated otherwise Determination of Modified Total Direct Cost (MTDC) for Subaward(s) * In the definition of Modified Total Direct Cost (MTDC) base, does the "regardless of the period of performance of subawards under the award" mean that if the subaward(s) to the subrecipient is made up of several separately executed funding agreements, in the course of the period of performance does each separate subaward agreement require including up to $25K in the MTDC base for the award segment even if the scope of the subaward(s) remains the same? Yes. If the subaward needs to be separately negotiated or renegotiated over the period of performance, this would support including an additional $25K in MTDC for each subaward negotiation. The allowance of $25K is for the life of the award, or for each period of performance. Renewals of subawards may be considered, for determining the $25K inclusion in MTDC, if they need to be formally renegotiated within the period of performance of the grant Eligibility of Institutions of Higher Education (IHE) for Funding Opportunities which are Limited to Nonprofit Organizations * The definition of nonprofit organizations (200.70) specifically excludes IHEs. IHE s are defined at 20 U.S.C and require IHEs to be either a public or other nonprofit institution. Does the exclusion of IHEs from the definition of nonprofit organizations in the Guidance render IHE s ineligible for Funding Opportunities, which are limited to nonprofit organizations? No. The exclusion of IHEs from the definition of nonprofit organizations in the Uniform Guidance was to avoid potential confusion when the provisions of the Uniform Guidance differ from those for IHEs and other non-profit organizations. For example, certain cost principles are different for IHEs than those that apply generally to nonprofit organizations and indirect costs for IHEs are treated separately than those for nonprofit organizations. The exclusion of IHEs in the definition of nonprofit organization was not intended to limit the eligibility of IHEs for Funding Opportunities which are available to nonprofit organizations. Accordingly, the exclusion of IHEs from the definition of nonprofit organizations does not change their status as nonprofit organizations when applying for Funding Opportunities. If agencies intend to exclude IHEs from an opportunity that is otherwise open to other nonprofit organizations, they will specify this in the Notice of Funding Opportunity. 8
9 Applicability of Uniform Guidance to Federal Acquisition Regulation (FAR) based contracts If the Federal agency awards a FAR based contract to the contractor, a non-federal entity, to what extent is the Uniform Guidance applicable to the contract? The cost principles in Subpart E, and the audit requirements in Subpart F, of the Uniform Guidance are applicable to the FAR based contracts awarded by a Federal agency to a non-federal entity that is an educational institution; state, local, or Federally recognized Indian Tribal government; or nonprofit organization. While the Subpart E cost principles are applicable to FAR based contracts, their practical impact is on negotiated prime contracts and subcontracts thereof; as a practical matter, the cost principles are not applicable in certain instances, e.g., when the contract or subcontract is for the acquisition of a commercial item, a firm, fixed price contract or subcontract is awarded on the basis of adequate price competition without the submission of certified cost or pricing data, or the price is set by law or regulation. While the Subpart F audit requirements are applicable to FAR based contracts, those audit requirements are not sufficient to meet FAR contract audit requirements as a practical matter. (See FAQ Audit Requirements of FAR based contracts in addition to the Uniform Guidance Audit Requirement.) The other subparts of the Uniform Guidance are applicable to the FAR based contracts awarded by a Federal agency, and any subcontracts awarded in accordance with any flow down requirements from the prime contract or higher tier subcontract but only to the extent that the Uniform Guidance provision is not inconsistent with the terms and conditions of the contract and FAR requirements. The terms and conditions of the contract and FAR requirements must be given effect as they cannot be read out of the contract, modified or superseded by the Uniform Guidance provision. Any Uniform Guidance provision that addresses the same matter as covered by the terms of the contract and FAR requirements are, at the most, supplemental requirements secondary to, and in addition to, the FAR contract requirements (also applicable to ) Audit Requirements of FAR based contracts in addition to the Uniform Guidance Audit Requirement Does an audit conducted in accordance with Subpart F of the Uniform Guidance which implements the Single Audit Act (SAA) requirements satisfy the contract audit requirements of FAR based contracts awarded by a Federal agency? Generally, the practical answer is NO; the audit required by Subpart F of the Uniform Guidance does not satisfy the audit requirements required by the terms of the FAR based contract and FAR requirements, including, but not limited to, the Cost Accounting Standards (CAS), Truth in Negotiations Act (TINA), contractor business systems, incurred costs, and indirect costs/overhead rates (see section (c)). Despite the name which implies a single audit, the SAA (31 U.S.C. 7503(b) Relation to other audit requirements) gives a Federal agency, Inspector General, or the Government Accountability Office (GAO) the authority to conduct additional audits beyond the single audit required by the SAA when the additional audits are necessary for the agency to carry out its responsibilities under Federal law or regulation. See section (b) of the Uniform Guidance (also applicable to ) Cost Accounting Standards (CAS) and the Uniform Guidance What is the relationship of the Cost Accounting Standards (CAS) to the Uniform Guidance? The Cost Accounting Standards Board (CASB) is an independent board in the Office of Federal Procurement Policy (OFPP) in the Office of Management and Budget (OMB) established by statute (41 U.S.C. 1501, et seq.) The CASB has the exclusive authority to prescribe, amend, and rescind cost accounting standards (CAS), and interpretations of the standards, designed to achieve uniformity and consistency in the cost accounting standards governing the measurement, assignment, and allocation of costs to contracts with the Federal Government. The CAS are mandatory for use by all executive agencies and by contractors and subcontractors in estimating, accumulating, 9
10 and reporting costs in connection with the pricing and administration of contracts and subcontracts when they are subject to CAS. As provided by its exclusive statutory authority, actions taken by the CASB to prescribe or amend rules, regulations, cost accounting standards (CAS), and modifications thereof, have the full force and effect of law. Section of the Uniform Guidance provides only a brief summary of the CAS regulations; for authoritative CAS guidance and additional details, see 48 CFR 9900, et seq. and 48 CFR Part 30 (FAR Part 30) Effective Dates and Indirect Cost Rates How does the effective date apply to indirect cost rates? Existing negotiated indirect cost rates will remain in place until they are due to be re-negotiated. The effective date of changes to indirect cost rates must be based upon the date that a newly re-negotiated rate goes into effect for a specific non-federal entity s fiscal year. Therefore, for indirect cost rates and cost allocation plans, Federal awarding and indirect cost rate negotiating agencies will use the Uniform Guidance both in generating proposals for and negotiating a new rate (when the rate is due to be re- negotiated) for non-federal entity fiscal years starting on or after December 26, For example, the Uniform Guidance eliminates the concept of use allowance for depreciation. Nevertheless, for non-federal entities with negotiated rates that are based on use allowance, they would continue to use their existing rate, based on use allowance, until the rate is due to be re-negotiated Effective Dates and Indirect Cost Rate Proposals When may non-federal entities begin to submit proposals for indirect cost rates based on the Uniform Guidance? Non-Federal entities may begin to submit actual cost proposals based on the Uniform Guidance when they are due for fiscal years that begin on or after December 26, For example, if a non-federal entity is required to submit a rate proposal based on FY 2014 actual costs to set rates for FY 2016, the rate proposal can be developed using the provisions in the Uniform Guidance Effective Dates and Disclosure Statements (DS-2s) When may institutions of higher education (IHEs) begin to submit revised DS2s based on the Uniform Guidance? IHEs subject to the requirements of section should begin after December 26, 2014 to revise their DS2 statements for fiscal years beginning on or after December 26, IHE's with $50 million or more in aggregate of CAS covered-contracts should submit their revised DS-2 as soon as possible after 12/26/2014, but in any event no later than prior to the award of a CAS-covered contract or subcontract. In addition, IHE's making voluntary changes in cost accounting practices other than those required in the Uniform Guidance or submitting indirect cost rate proposals that are currently due should submit their DS-2 (or revised pages of the DS-2 for changes that are not extensive) 6 months before the effective date of proposed changes. IHEs that do not meet the CAS covered contract threshold or are not submitting indirect cost rate proposals and that are only revising their DS-2 to meet the requirements of the Uniform Guidance do not need to submit their revised DS-2 unless requested to do so by their cognizant agency for indirect costs. If not requested by the cognizant agency for indirect costs to submit by an earlier date, the DS-2 must be submitted with the next submission of the IHE s indirect cost rate proposals. The cognizant agency for indirect costs will determine if a review and approval is necessary for the submitted DS Effective Dates and Applications Should applications submitted prior to 12/26/2014 for Federal awards which will be made after 12/26/2014 reflect the Uniform Guidance? 10
11 Yes. All awards made on or after 12/26/2014 will be made with terms and conditions subject to the Uniform Guidance. Applications that are submitted before 12/26/2014 for Federal awards to be made on or after 12/26/2014 should be developed in accordance with the Uniform Guidance Effective Dates, Applications, and DS-2s May IHEs submit applications that are inconsistent with their DS-2 statement if that application is made in order to reflect the Uniform Guidance? For example: May IHE's submit applications with budgets that include administrative support or computing devices in the proposal budget? Yes. All awards made on or after 12/26/2014 will be made according to the new uniform guidance, and applications for Federal awards that would be granted after that date should reflect the new guidance. The new guidance will apply to new Federal awards made after that date and, if a Federal awarding agency considers its incremental funding actions to be opportunities to change terms and conditions on previously made awards, the new guidance will apply to that Federal awarding agency s incremental funding actions also. DS-2 statements that need to be revised to reflect new policies should be revised as soon as possible after 12/26/2014. Non-Federal entities will not be penalized for discrepancies between their approved DS-2 and actual charging practices in accordance with the new uniform guidance, provided that an updated DS-2 (consistent with actual charging practices) has been revised and submitted in accordance with FAQ Effective Dates and Grace Period for Procurement ** Will the Federal government provide a grace period after the effective date for non-federal entities to comply with the procurement standards in the Uniform Guidance? Yes, for two full fiscal years after the effective date of the Uniform Guidance. In general non-federal entities must comply with the terms and conditions of their Federal award, which will specify whether the Uniform Guidance applies. However, in light of the new procurement standards, for procurement policies and procedures, for the non-federal entity s first full fiscal year that begins on or after December 26, 2014, the non-federal entity must document whether it is in compliance with the old or new standard, and must meet the documented standard. For example, the second full fiscal year for a non-federal entity with a June 30th year end would be the year ending June 30, The Single Audit Compliance Supplement will instruct auditors to review procurement policies and procedures based on the documented standard. For future fiscal years, all non-federal entities will be required to comply fully with the uniform guidance Effective Dates and Incremental Funding How does the effective date apply to incremental funding? I have an award with three more years of expected funding. Normally I would keep the same account number for all five years, with the incremental funding for each year added as it comes in. Do I have to keep my funding subject to the old OMB Circulars in a separate account from the funding awarded after the Uniform Guidance goes into effect? Or can I just assume that the new rules apply as soon as I get my first post-uniform Guidance increment of funds? Can I apply those rules to any residual balance of old funds as well as the new monies? The new rules apply as of the Federal award date (see ) to new awards and, for agencies that consider incremental funding actions on previously made awards to be opportunities to change award terms and conditions, the first funding increment issued on or after 12/26/14. For agency incremental funding actions that are subject to the Uniform Guidance, non-federal entities are not obligated to segregate or otherwise track old funds and new funds but may do so at their discretion. For example, a non-federal entity may track the old funds and continue to apply the Federal award flexibilities to the funding awarded under the old rules (e.g., local ability to issue fixed price subawards, non-federal entity determination of the need to incur administrative and clerical salaries based on major project classification). For Federal awards made with modified award terms and conditions at the time of incremental funding actions, Federal awarding agencies may apply the Uniform Guidance to the entire Federal award that is uncommitted or unobligated as of the Federal award date of the first increment received on or after 12/26/14. 11
12 Effective Dates and Formula & Entitlement Programs How does the effective date impact formula and entitlement programs? The effective date in section effective/applicability date applies to formula and entitlement awards that are covered by the Uniform Guidance as it does to other awards Effective Dates and Consistent Implementation (Federal) What processes and procedures are (or will be) in place to ensure that the changes in the OMB Guidance will be consistent across the different Federal agencies? OMB is working with the COFAR and other Federal agencies across the government to ensure consistent implementation of the Uniform Guidance across Federal agencies Effective Dates and Consistent Implementation (States) What processes and procedures are (or will be) in place to ensure that the changes in the OMB Guidance will be consistently interpreted across all of the states? The COFAR is working with non-federal stakeholders that includes representatives of state governments to provide outreach and training to facilitate consistent implementation across non-federal entities. Please visit the COFAR website at CFO.gov/COFAR for more information Effective Dates and Subawards How does the Uniform Guidance apply to Federal awards made prior to December 26 when some subawards are made prior to December 26 and others are made after December 26? The effective date of the Uniform Guidance for subawards is the same as the effective date of the Federal award from which the subaward is made. The requirements for a subaward, no matter when made, flow from the requirements of the original Federal award from the Federal awarding agency (updated from previous Q II-1) Effective Dates When does the Uniform Guidance become effective? The effective date is covered in section , Effective/applicability date. Federal agencies must implement the requirements to be effective by December 26, Subpart F, Audit requirements, will apply to audits of non-federal entity fiscal years beginning on or after December 26, The revised audit requirements are not applicable to fiscal years beginning prior to that date. Administrative requirements and cost principles will apply to new awards and to funding increments, in cases where the Federal agency considers funding increments to be an opportunity to modify the terms and conditions of the Federal award, to existing awards made on or after Dec 26, Existing Federal awards that do not receive incremental funding with new terms and conditions will continue to be governed by the terms and conditions of the Federal award (Previously Q II-2) Effective Dates and Federal Awards Made Previously Will this apply only to awards made after the effective date, or does it apply to awards made earlier? Once the Uniform Guidance goes into effect for non-federal entities, it will apply to Federal awards or funding increments after that date, in cases where the Federal agency considers funding increments to be an opportunity to modify the terms and conditions of the Federal award. It will not retroactively change the terms and conditions for funds a non-federal entity has already received. 12
13 We would anticipate that for many of the changes, non-federal entities with both old and new awards may make changes to their entity-wide policies (for example to payroll or procurement systems). Practically speaking, these changes would impact their existing/older awards. Non-Federal entities wishing to implement entity-wide system changes to comply with the Uniform Guidance after the effective date of December 26, 2014 will not be penalized for doing so (Previously Q II-3) Effective Dates and Pre-Existing Guidance Should we continue using 2 CFR 220, 225, and 230 until December 2014, even though these regulations have now been removed from the CFR? The terms and conditions of the Federal award always govern, and even once the Uniform Guidance goes into effect, Federal agencies will need to ensure that all non-federal entities have full access to the terms and conditions of Federal awards made prior to the Uniform Guidance becoming effective. The original circulars are also available on the OMB website at Federal agencies may not impose the Uniform Guidance prior to the effective date (Updated from the previous Q II-4) Single Audit Compliance Supplement and Audit Resolution What are the next steps for the single audit Compliance Supplement and single audit resolution? The COFAR has made a commitment that for the rest of this year, work will focus primarily on initiatives that support smooth implementation of this Uniform Guidance. The 2015 Compliance Supplement is expected to be released in April 2015 and will implement changes to complement the Uniform Guidance, such as streamlining the audit objectives and procedures for the 14 types of compliance requirements. OMB outreach in developing the 2015 Supplement is including non-federal stakeholders. The COFAR is also working to draft best practices around cooperative audit resolution, and exploring possibilities for publishing a list of links to Federal agency audit resolution policies. The Federal Audit Clearinghouse (FAC) is working to develop additional analytical tools to better support audit resolution and provide data for outcome based metrics to allow Federal agencies to track the effectiveness of audit finding follow-up over time. The COFAR will be working with the FAC and the auditing profession to explore ways to combine the single audit reporting package (i.e., Schedule of Expenditures of Federal Awards and Auditor s Summary) with the reporting to the FAC in the data collection form to reduce duplication and improve the accuracy of FAC data. Finally, the COFAR plans to consider how to better coordinate the process of issuing management decision letters governmentwide Conflict of Interest Section states The Federal awarding agency must establish conflict of interest policies for Federal awards. The non-federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy. Does this policy refer to scientific conflicts of interest that might arise in the research community? No, however Federal agencies may have special policies or regulations specific to scientific conflicts of interest, such as HHS's policy at 42 CFR Part 50. The conflict of interest policy in 2 CFR refers to conflicts that might arise around how a non-federal entity expends funds under a Federal award. These types of decisions include, for example, selection of a subrecipient or procurements as described in section
14 Conflict of Interest Scientific Collaborations * Section states The Federal awarding agency must establish conflict of interest policies for Federal awards. The non-federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy. FAQ confirmed that this requirement does not refer to scientific conflicts of interest that may apply to projects supporting research. Scientific collaborations on research and development projects are generally the result of close collaboration prior to the submission of applications for support. Accordingly, virtually all of these collaborations might be considered to include a potential conflict of interest. The potential conflict is mitigated by the disclosure of these collaborations pursuant to agency requirements. Does Section apply when a pass-through entity awards a subaward to support scientific collaboration on a research and development project? Yes. When a subaward for scientific collaboration on a research and development project is included in the application for assistance or requested for prior approval and approved by the Federal awarding agency, the disclosure of any potential nonscientific conflict of interest, if required by the Federal awarding agency, provides sufficient information to the Federal awarding agency for the purpose of compliance with section Fixed Amount Awards Section (b)(1) states that fixed amount awards and subawards can be used when there is a specific project scope and adequate cost, historical or unit price data is available to assure that the recipient or subrecipient will realize no increment above actual cost. What standards will an agency use (or should passthrough entities use) when deciding when a project scope is specific and what constitutes adequate cost, historical, or unit price data? The wording in this section was not intended to create a new, higher standard for budgeting. Fixed amount (fixed price) awards are appropriate when the work that is to be performed can be priced with a reasonable degree of certainty. Samples of appropriate mechanisms to establish an appropriate price include the non-federal entity s past experience with similar types of work for which outcomes and their costs can be reliably predicted, or the non-federal entity can easily ability to obtain price estimates (e.g., bids, quotes, catalog pricing) for significant cost elements Fixed Amount Awards and Cost-share or Match Section (b)(2) states that a fixed amount award (or subaward) cannot be used in programs that require a mandatory cost-share or match. Do salary costs that exceed a Federal awarding agency s salary cap constitute mandatory cost-sharing for the purpose of determining whether a fixed amount award or subaward can be used? No, salary costs above a Federal awarding agency s cap are not a mandatory cost-share or match but, instead, are the result of limitations on the amount of salary costs that may be charged to the Federal award, and are paid at the discretion of the non-federal entity. Since these salary costs above a Federal awarding agency s cap are not a mandatory cost-share or match, a fixed amount award or subaward can be used Fixed Amount Awards and End of Award Certifications Section (b)(3) states: The non-federal entity must certify in writing to the Federal awarding agency or pass-through entity at the end of the Federal award that the project or activity was completed or the level of effort was expended. If the required level of activity or effort was not carried out, the amount of the Federal award must 14
15 be adjusted. What reporting and documentation requirements should the non-federal entity provide to the awarding agency? The Federal awarding agency or pass-through entity may specify the form or format required to certify completion or that the level of effort was expended, in the case of Federal awarding agencies through an OMB-approved information collection. If no format is specified, the recipient should certify completion to the Federal awarding agency (or the subrecipient should certify to the pass-through entity) as a part of the closeout process. Consistent with section (c)(3), a reduction of more than 25% of the level of effort must be reported to the Federal awarding agency and would require an adjustment. In other cases where an adjustment is necessary, typical mechanisms would include basing the adjustment on the percentage of completed work, actual costs incurred to date, or on another documented basis (a) Notices of Funding Opportunities This section of the guidance specifies that Federal awarding agency must display the following Information posted on the OMB-designated government-wide website for finding and applying for Federal financial assistance. How does this guidance relate to the use of the current federal system called Grants.gov and OMB s requirements that Agencies utilize that system to post funding opportunity announcements and allow applicants to apply through the system? While the guidance does not specify a particular system for finding and applying for Federal financial assistance, the current system of Grants.gov remains the federal government s central portal for discretionary financial assistance find and apply functionalities. In accordance with OMB Memorandum M and M Federal agencies are required to use Grants.gov Find functionality and directed to use the Apply functionality for discretionary grants. OMB Memorandum M documented the technical boost for Grants.gov in response to the Recovery Act and reinforced expectations for agency use of Grants.gov, stating, Federal grant-making agencies are instructed to resume using the Apply functionality of Grants.gov for all the programs that previously used this functionality prior to the memorandum (M-09-14), by no later than April 30, Federal agencies shall also continue using the Find functionality of Grants.gov to post all discretionary grant opportunities Review of Risk Posed by Applicant- Financial Stability In section , Federal awarding agency review of risk posed by applicants, what guidelines are auditors given to determine financial stability? The guidance in this section applies to Federal awarding agency pre-award review of risk posed by applicants, not the risk assessment process used by auditors. Guidance given to auditors for reviewing risk can be found in Subpart F of the Uniform Guidance and generally accepted government auditing standards (GAGAS) Should vs Must and Internal Controls According to auditing standards, "should" really means "must unless there is a well-documented reason why not". Is this the case in the Uniform Guidance? Does the "should" in section referencing guidance provided by GAO and COSO really mean "must"? See should vs must answer in below for the meaning of should in the Uniform Guidance. COFAR will review the guidance and consider whether technical corrections are needed related to the use of "should" (previously Q III-5) Should vs. Must In General The word should is used throughout section 200. Does it really mean must? 15
16 No. The word must is used throughout part 200 to indicate requirements. The word should is used to indicate best practices or recommended approaches that the COFAR wanted non-federal entities to be aware of, but not necessarily required to comply with (Previously Q III-4) Should vs Must and the Green book In section Internal Controls, what is the expectation about a non-federal entity s compliance with the guidance in the Green Book? The requirement is that the non-federal entity must establish and maintain effective internal controls over Federal awards that provide reasonable assurance that awards are being managed in compliance with Federal statutes, regulation and the terms and conditions of the Federal award. The Uniform Guidance also refers non-federal entities to the following three documents for best practices: - Standards for Internal Control in the Federal Government (Green Book) issued by the Comptroller General. - Internal Control Framework issued by the Committee on Sponsoring Organizations (COSO). - Appendix XI, Compliance Supplement Part 6 Internal Control (which currently follows COSO but will consider both the Green Book and COSO in the 2015 update ( (c)(1)). While non-federal entities must have effective internal control, there is no expectation or requirement that the non-federal entity document or evaluate internal controls prescriptively in accordance with these three documents or that the non-federal entity or auditor reconcile technical differences between them. They are provided solely to alert the non-federal entity to source documents for best practices. Non-Federal entities and their auditors will need to exercise judgment in determining the most appropriate and cost effective internal control in a given environment or circumstance to provide reasonable assurance for compliance with Federal program requirements Application of (b) advance payments to payments by States * Does (b), including the requirement to consider advance payments to subrecipients, apply to States? No, requirements for states are provided at (a) For states, payments are governed by Treasury-State CMIA agreements and default procedures codified at 31 CFR Part 205 Rules and Procedures for Efficient Federal- State Funds Transfers and TFM 4A-2000 Overall Disbursing Rules for All Federal Agencies Exceptions in Statute for restrictions on cost sharing or matching Section 2 CFR (a)(5) stated as one of the criteria for matching is that it cannot be paid by the Federal Government under another award, except when authorized by Federal statute to be used for cost sharing or matching. Section (a)(5) states this criteria a little differently: matching cannot be paid by the Federal government under another Federal award, except where the Federal statute authorizing a program specifically provides that Federal funds made available for such program can be applied to matching or cost sharing requirements. Is this a change in policy? No Fees and Royalties and Bayh-Dole According to the Bayh-Dole Act (35 USC 202(c)(7)), for nonprofit organizations (e.g., IHEs, Nonprofit research institutions, other research performers), a portion of the license fees and royalties on patents are required to be returned to the inventor and the balance is to be used for education and research. Therefore, should the income from license fees and royalties be excluded from the definition of program income? 16
17 Yes, income from license fees and royalties on research funded by a Federal award should be excluded from the definition of program income. U.S. law or statute takes precedent over the Uniform Guidance (Updated from the previous Q III-2) Period of Performance and No-Cost Extension Section Period of Performance says that costs may be incurred only during the period of performance. Does this mean that the agency regulations will no longer be able to allow no-cost extensions as a normal course of business? No. A Federal agency may allow no-cost extensions of the period of performance to the extent such no-cost extension does not violate applicable laws and regulations Equipment and Conditional Title Section (a) of the guidance specifies that title for equipment acquired under a Federal award will vest upon acquisition in the non-federal entity as a conditional title. This is new terminology for those non-federal entities that have followed Circular A-110. What is meant by conditional title and will this affect how non-federal entities have historically accounted for equipment ownership? There is no change intended in the Uniform Guidance for how non-federal entities should account for equipment ownership. The concept of conditional title always has been in effect, and simply means that equipment ownership vests in the non-federal entity at the time of acquisition and that it is contingent on meeting the requirements for use, management, and disposition of the equipment as required in section Changes to Equipment Inventory Systems Section (d)(1) of the guidance specifies the attributes that must be maintained in the property records of the non-federal entity. For non-federal entities that have followed Circular A-110, there are two changes: - percentage of Federal participation in the project costs (Uniform Guidance) versus information from which one can calculate the percentage of Federal participation in the cost of the equipment (A (f)(1)(vi)), and - the location, use and condition of the property (Uniform Guidance) versus location and condition of the equipment and the date the information was reported (A (f)(1)(vii)). Are non-federal entities expected to change the attributes of their property records and ultimately be required to implement costly changes to their existing equipment inventory systems? No. The requirements for property records have not substantively changed in the Uniform Guidance. The requirements for property records are meant to ensure that the non-federal entity maintains an equipment inventory system that demonstrates the non-federal entity has an effective system of controls to account for and track equipment that has been acquired with Federal funds. Non--Federal entities are not expected to change their equipment inventory systems or the data elements contained in those systems, if they are in compliance with the current requirements in Circular A-110. In the examples in the question: - The percentage of Federal participation in the cost of equipment in Circular A-110 was identical to the percentage of Federal participation in the cost of the original project or program. One could infer that from the amount of compensation a recipient was required under 2 CFR (g) to make to a Federal agency at the time of disposition i.e., compensation shall be computed by applying the percentage of Federal participation in the cost of the original project or program to the current fair market value of the equipment. The A-110 requirement in 2 CFR for the recipient s records to have information from which one could calculate the percentage of Federal participation in the cost of the equipment then required two numbers, the percentage of Federal participation in the original project or program and information from which one could derive the current fair market value. The Uniform Guidance makes that more explicitly clear through the definition of Federal interest in 2 CFR ; and 17
18 - the location, use and condition of the property is referring to an indicator in the property records that the specific equipment item is active and linked with the appropriate Federal award, identical to the requirement in Circular A-110. The COFAR will review these sections and consider whether any technical corrections are needed for clarity in the Uniform Guidance (Previously Q III-7) Equipment and A-110 Screening Procedures Does the insertion of "or duplicative" in the first sentence of (d) mean that universities will have to revert to equipment screening procedures that were eliminated under the Federal Demonstration Project over 20 years ago? The Uniform Guidance in section (d) states that the non-federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach. The above language does not require any specific equipment screening procedures Methods of Procurement Micro vs Small vs Over Threshold How are procurements of micro-purchase and small purchases under the simplified acquisition threshold less burdensome than those above it? In summary, all purchases under the simplified acquisition threshold (including micro-purchases) require fewer terms and conditions, have a lesser competition standard than purchases over the simplified acquisition threshold, can be solicited informally, and do not require a cost or price analysis. Section describes the five methods of procurements (1) micro-purchase (less than to $3,000), (2) small purchase (less than $150,000), (3) sealed bids purchases (more than $150,000), (4) competitive proposal purchases(more than $150,000), and (5) Noncompetitive purchases (special circumstances which are applicable for all purchase levels). All five procurement types must comply with the Procurement Standards in section , which can be summarized generally as follows: (1) the purchase complies with the non-federal entity s documented procedures in place, (2) purchases are necessary, (3) open competition (to the extent required by each method), (4) conflict of interest policy and (5) proper documentation for the purchases. Purchases of supplies or services under $3,000 are treated as micro-purchases. The purchase orders may be awarded without soliciting any competitive quotations if the non-federal entity considers the costs to be reasonable. The non-federal entity must, to the extent practicable, distribute these purchases equitable among qualified suppliers. For example, a purchase of computer paper in the amount of $2,000 can be treated as a micro-purchase. No rate competitive quotations are necessary for the purchase. A cost or price analysis is not required. However, in accordance with the non-federal entity s written policies, which may include strategic sourcing or bulk purchase arrangements as described in section and addressed in FAQ.320-4, the non- Federal entity must consider whether to make the purchase from any one of a number of office supply stores.. Such policies may dictate the purchase of computer paper to rotate among qualified suppliers if they offer the same rates. Purchases under the simplified acquisition threshold are purchases for goods or services meeting the small purchase threshold (currently at $150,000). Therefore, all purchases between $3,000 and $150,000 can use the small purchase procedures stated in section (b) which describes the procedures as relatively simple and informal. It states that price or rate quotations must be obtained from an adequate number of qualified 18
19 sources. It leaves the discretion of the non-federal entity written policy to determine the adequate number of qualified sources (i.e., any number greater than one) and the methods of methods of obtaining the price or rate quotations (e.g., it can be in writing, orally, vendor price list on website, or generated via online search engine). Section also excludes the small purchases from any requirements for cost or price analysis. For example, a purchase order for chlorine supplies in the amount $10,000 can treated a small purchase order. This purchase order requires a rate quote from at least two sources, which can be obtained in writing from two suppliers or research done on a public websites. A cost or price analysis is not required. In addition, if the chlorine is of special quality that is offered by only one company or only one company can deliver in the time frame required for the project, the purchase order can be made under the sole source purchase provision in section (f). For purchases over the simplified acquisition threshold (currently at $150,000), the more prescriptive methods of either sealed bids (if the non-federal entity has very specific parameters for the purchase) or competitive proposals apply. For a visual of this FAQ, see the Procurement Bearclaw attachment Methods of Procurement- Sole Source for Research ** Procurement by noncompetitive proposals: Frequently, researchers need to acquire items from a particular source for scientific reasons (for example when a service or item is only available with the required quality from one source or only one source can provide the items or service in the time frame required). Would this constitute a valid reason for a procurement by noncompetitive proposals? Is this method of procurement available for procurements of any dollar amount? Yes. This would be a valid reason. This option is available at all dollar amounts, provided it complies with the general procurement standards under section , including documentation requirements in section (i) Methods of Procurement and Strategic Sourcing and Shared Services Do the requirements for competition in the methods of procurement apply to each individual item I purchase, or may I apply them to broader procurement decisions in order to leverage strategic sourcing agreements, shared services arrangements, or other practices that result in more efficient use of the funds? Yes, the requirements for competition apply to broader procurement decisions. Section General Procurement Standards paragraphs (d) and (e) explicitly encourage non-federal entities to build into their procurement policies practices that consolidate procurements where appropriate to make most efficient use of Federal funds Methods of Procurement and Charge Cards Does the Uniform Guidance require non-federal entities to limit charge card purchases to a particular threshold amount? No. The Uniform Guidance provides requirements for the internal control framework that surround any purchase, but does not provide any guidance around whether the non-federal entity uses cash, charge cards, checks, or any other payment medium for the transaction Methods of Procurement and Indirect Costs Does the Uniform Guidance procurement standards apply to procurements made for indirect costs (for example: would a non-federal entity need to follow them when hiring a plumber to fix a broken pipe in the headquarters building?) 19
20 No. The Uniform Guidance procurement standards do not apply to procurements made in indirect cost areas. They apply to procurements for goods and services that are directly charged to a Federal award Negotiation of profit * Section , paragraph (b) requires that the non-federal entity must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed. Is the negotiation of profit required for all sole source procurements above $3,000 up to the small purchase threshold of $150,000? No. Section , paragraph (a) states that a cost or price analysis is required for procurement actions in excess of the simplified acquisition threshold Pass-through Entities, Indirect Cost Rates, and State Funds When a pass-through entity uses Federal and non-federal funds to make a subaward to a nonprofit as a subrecipient, is the requirement in section (a)(4) for pass-through entities to provide an indirect cost rate applicable for only for the portion of the funds from Federal award that are utilized or the total funds? Federal Uniform Guidance including section (a)(4) applies to Federal funds as specified in the terms and conditions of the Federal award Limits on layers of Subrecipients for Indirect Costs Is there a limit on the number of layers of subrecipients at which the requirement to pay indirect costs is no longer applicable? For example, a state may pass-through Federal grant funds to a local government. The local government may then pass all or some of the funds through to a local nonprofit, which then also utilizes the services of other nonprofit providers as subrecipients. No, there is no limit under the Uniform Guidance, but the Federal award may have a limit Delayed Federal funds and Indirect Cost Rates When the awarding of Federal funds is held up due to the delayed approval of the Federal budget or other reasons, so states must use state funds in order to provide continued services in the interim, are those dollars considered state or Federal with regard to meeting the OMB requirements? For example, if temporarily using state funds while waiting for Federal funds, is the state required to reimburse subrecipients for their indirect costs as directed in the Uniform Guidance? Yes, any costs ultimately charged to a Federal award must comply with the terms and conditions of that Federal award, including the Uniform Guidance. Pre-award costs are governed by section , and the Cash Management Improvement Act and its implementing regulations at 31 CFR Part Indirect Cost Rates and Blended Subawards States often blend several Federal funding streams to pay for services performed by nonprofit organizations. Each Federal funding stream may have a different set of requirements, particularly as it relates to indirect costs some with statutory caps on indirect costs and others without a cap and are covered by the new provision in the Uniform Guidance. How should a pass-through entity calculate the indirect cost rate it must reimburse the nonprofit? Each Federal award is subject to its own terms and conditions, and the funding streams would be tracked accordingly. For payments of indirect cost to the subrecipients, the pass-through entity must follow any statutory caps required by the funding streams. If a non-federal entity wishes to blend funds from multiple Federal awards 20