Federal Agencies Implementation of the Super Circular & the JIR Presenter: Paul H. Calabrese Rubino & Company, CPAs & Consultants Senior Manager Tel: 301-214-4137 pcalabrese@rubino.com www.linkedin.com/pub/paul-calabrese/20/293/645/ https://twitter.com/paulcompliance 2 1
Sources 2 CFR 200 Uniform Administrative, Cost Principles & Audit Requirements for Federal Awards COFAR FAQs Joint Interim Rule (JIR) HHS is 45 CFR 75 4 2
Overview When does the new rules become effective COFAR FAQ Interpretations Impact of Joint Interim Rule General Provisions provide over-arching guidance for the new rules via table Technical fixes Agencies exceptions and additions The Path Forward Next Steps 5 The Super Circular 3
Super Circular: Structure at a Glance Subpart A: Definitions Subpart B: General Conditions Subpart C: Pre-Award Conditions Subpart D: Post-Award Requirements Subpart E: Cost Principles Subpart F: Audit Requirements Appendix IV: (4) Allocation Methods for Nonprofit Entities 7 When to Implement the Super Circular 4
When is it effective? COFAR FAQ:Q II-1 (2/12/14) Federal agencies implement by 12/26/2014 Subpart F Audit Requirements become applicable with audits of fiscal years beginning on or after 12/26/2014 or effectively 1/1/15 end 12/31/15 Administrative (pre/post award) requirements and cost principles apply on new awards or additional / incremental funding on or after 12/26/14 same for all Federal sub-awards FAQ.110-11 Existing awards before 12/26/14 follow existing terms and conditions which are covered by the prior OMB Circulars A-110, A-122 and A-133 audits 9 When is it effective? COFAR FAQ: (8/29/14) The older terms & conditions always govern even when new rules take effect until they are modified. FAQ.110-14 Incremental Funding FAQ.110-7 Agency can change terms & conditions upon the first incremental funding mod to new rules, post 12/26/14 Once the old award has been modified with the new rules, no need to follow old rules and can set up compliance for new rules for uncommitted and unobligated funds for the remainder of the award 10 5
COFAR FAQ Interpretations of the New Super Circular When is it effective? COFAR FAQ: (11/26/14) For new applications submitted before 12/26/14 that will be awarded post 12/26/14, you must comply with the uniform guidance (new rules) FAQ.110-4 Should IHE s submit applications with budgets that include administrative support (under the direct charge of administrative staff per 200.413(c)) and computing devices as supplies per 200.453? FAQ.110-5 YES per the first bullet above. FAQ.110-15: The next steps is the 2015 Compliance Supplement which is suppose to be out in April 2015 Implement changes per the uniform guidance and streamline audit objectives and 14 types of compliance requirements 12 6
When is it effective? COFAR FAQ:Q II-2 (2/12/14) Non-Federal entities wishing to implement entity-wide system changes (e.g. payroll and procure-ment FAQ.110-13) to comply with the uniform guidance (Super Circular) on or after 12/26/2014 will not be penalized by Federal agencies, in that they may still have older agreements covered by the prior OMB Circulars FAQ Q III-5: Words in the uniform guidance: Must is a requirement. Should is a best practice or recommended approaches COFAR Fixes some shoulds to musts in the Joint Interim Rule (JIR) dated 12/19/14 13 When is it effective? COFAR FAQ: (8/29/14) Compatibility with the Federal Acquisition Regulation (FAR) FAQ.101-1 and 101-2 FAR-based contracts awarded to recipients who are not commercial entities would follow Subpart E Cost Principles and Subpart F Audit Requirements These rules are not applicable for: acquisition of a commercial item, fixed price contract awarded on adequate price competition, without cost or pricing data Audit requirements do not address TINA, CAS, contractor business systems, incurred costs, and indirect costs/overhead rates 14 7
When is it effective? COFAR FAQ: (11/26/14) Super Circular compatibility with the Federal Acquisition Regulation (FAR) FAQ.101-1 With respect to the FAR terms and conditions and the FAR requirements, They cannot be read out, modified or superseded by the Uniform Guidance Does the Single Audit under the super circular satisfy the contract audit requirements under the FAR? FAQ.101-2 No. 15 When is it effective? COFAR FAQ: (11/26/14) Conflicts of Interest (200.112) FAQ.112-1 They do not apply scientific Conflicts of Interest (COI) pertaining to research HHS has a policy for scientific COI per 42 CFR 50 16 8
When is it effective? COFAR FAQ: (11/26/14) Fixed Amount Awards (200.201) FAQ.201-1 Are appropriate when the work to be performed can be priced with a reasonable degree of certainty Examples of NFE pricing mechanisms are: (1) Past experience with similar types of work and outcomes with reliably predicted costs (2) NFE can easily obtain price estimates (bids, quotes, catalog pricing) for the significant cost elements 17 When is it effective? COFAR FAQ: (11/26/14) Fixed Amount Awards (200.201) FAQ.201-2 Salaries subject to, e.g. ACF or NIH statutory limits, are not mandatory cost-share or match Rather they are statutory limitations that cap charges to a Federal award Amounts above the cap are paid at the discretion of the NFE Since the statutory salary caps are not match, they can be used in fixed amount awards 18 9
When is it effective? COFAR FAQ: (11/26/14) Fixed Amount Awards & End of Award Certifications (200.201) FAQ.201-3 If the FAA does not prescribe the requirements for an end of fixed award certification then: (1) The recipient or sub should certify completion (2) Per 200.308(c)(3), a reduction of more than 25% of the level of effort must be reported to the FAA and requires a downward adjustment Reduction methods may include: (a) Adjustment based on percentage of completed work (b) Adjustment based on actual costs incurred-to-date 19 When is it effective? COFAR FAQ: (11/26/14) Procurement (200.320) FAQ.320-1 All (5) procurement types have the following stds: 1. Purchase complies with NFE s documented procedures in place 2. Purchases are necessary (direct charge to grant) 3. Open competition as required for any of the methods 4. Conflict-of-Interest policy 5. Proper documentation of the purchases The standards from the uniform guidance do not apply to procurements of indirect cost FAQ.320-6 20 10
When is it effective? COFAR FAQ: (11/26/14) Procurement (200.320) FAQ.320-1 [1] Micro-purchases under $3,000 (supplies or services) 1. Purchase orders may be awarded without soliciting any competitive quotations if the NFE considers the cost to be reasonable. 2. To the extent practicable, the NFE must distribute their purchases equitably among qualified suppliers 21 When is it effective? COFAR FAQ: (11/26/14) Procurement (200.320) FAQ.320-1 [1] Micro-purchases under $3,000 (supplies or services) EXAMPLE: Purchase of a laptop in the amount of $2,000 can be treated as a micro-purchase No competitive price quotations are required for purchase Cost or price analysis is not required 22 11
When is it effective? COFAR FAQ: (11/26/14) Procurement (200.320) FAQ.320-1 If org has a policy that provides strategic sourcing or bulk purchase arrangements The NFE must consider procuring from 1 of a number of computer / office supply stores Such policies should dictate the purchase of a laptop to be rotated among qualified supplies if they offer a similar price based on prescribed laptop features 23 When is it effective? COFAR FAQ: (11/26/14) Procurement (200.320) FAQ.320-1 [2] Purchases under the Simplified Acquisition Threshold currently set at $150,000 All purchases between $3,000 and $150,000 Small purchase procedures are relatively simple and informal Price or rate quotations must be obtained from an adequate number of qualified sources (number of sources > 1, whereas 1 = sole source) The NFE has discretion as to the amount of qualified sources and the method(s) of obtaining price quotations 24 12
When is it effective? COFAR FAQ: (11/26/14) Procurement (200.320) FAQ.320-1 [2] Purchases under the Simplified Acquisition Threshold currently set at $150,000 Price or rate quotations can be: Written or verbal Vendor price list on website Generated via online search engine Small purchases do not require cost or price analysis 25 General Provisions Subpart B 13
Subpart B 2 CFR 200.100 General Provisions Applicability of Subparts A to F to certain awards and contracts (next slide for table) 200.101(c): Federal Agencies may apply Subparts A to E to for-profit, foreign public entities and foreign organizations Subpart F (Single Audit) does not apply to foreign entities Subpart F not mentioned regarding for-profits, though NIH had that requirement in the past 200.101(d): Subparts C through E does not apply to various statutory programs (e.g. block grant awards) Several programs are listed on 2 pages (Medicaid, TANF) 27 28 14
Subpart B 2 CFR 200.100 General Provisions 200.109: next review date is 12/26/2018 200.110: Effective / Applicability Date Except for procurement 1 more fiscal year Misleading, if FY begins on 7/1/15, then FYE 6/30/16 must be under new standards, however, if retain old standard until 6/30/15, must document using old standards Except for audit, first full FY beginning after 12/26/14 200.111 Mandatory use of English language 200.112 Conflict-of-interest policies for awards 200.113 Mandatory disclosures by NFE 29 Technical Fixes 15
Technical Fixes: Application & Should to Must 200.203(c)5 added requirement that includes merit reviews on par with risk reviews Federal Awarding Agency (FAA) review of merit proposals (200.204) and FAA review of risk posed by applicants (200.205). 200.42 from should to must When there is no CFDA # assigned, if the FAA issues same programs for same purpose, the FAA must (not should) combine and consider as one program 200.56 from should to must Indirect cost pools must (not should) be distributed on beneficial cost objectives on bases that will produce an equitable result in consideration of relative benefits derived 31 Technical Fixes A Move Away from Using DUNS 200.32 Data Universal Numbering System has been replaced with reserved Appendix 1 (Section D.3) changes from DUNS to Unique Entity Identifier (UEI) The requirements for the UEI will be in SAM Previously the DUNS number was the primary identifier for NFE s in SAM and for applications For new applications, all NFE s must go to SAM for instructions to obtain a UEI for acceptability in applying via Grants.gov 32 16
Technical Fixes Fixed Award / Sub-Awards 200.201(b)(1) new verbiage: The FAA or passthrough entity may use fixed amount awards if the project scope is specific and if adequate cost, historical, or unit pricing data is available to establish a fixed amount award based on reasonable estimate of actual cost. Old language was with assurance that the NFE will realize no increment above actual cost. Agencies still have to provide more specific guidance as to the form and details of fixed awards / subawards 33 Technical Fixes 4 year Extended NICRA 200.414g revised language: Any non-federal entity that has a current federally negotiated indirect cost rate may apply for a one-time extension of the rates in that agreement for a period of up to four years. This extension will be subject to the review and approval of the cognizant agency for indirect costs. If an extension is granted the non-federal entity may not request a rate review until the extension period ends. At the end of the 4-year extension, the non-federal entity must re-apply to negotiate a rate. Subsequent one-time extensions (up to four years) are permitted if a renegotiation is completed between each extension request. 34 17
Technical Fixes Other Items Appendix IX is created as the rules for Hospitals Cost Principles 200.407(e) Prior Written Approval. Three items were added to the list: 200.311 Real Property 200.313 Equipment 200.470 Taxes (including Value-Added Tax) 200.439(b)(7) added equipment and other capital expenditures are unallowable as indirect costs, either direct with approval via budget; or purchased fixed assets that are depreciated as an indirect cost. 35 Technical Fixes Exchange Rates 200.440(a) Exchange Rates, changed wording of first two sentences: Cost increases for fluctuations in exchange rates are allowable costs subject to the availability of funding. Prior approval of exchange rate fluctuations is required only when the change results in the need for additional Federal funding, or the increased costs result in the need to significantly reduce the scope of the project. 36 18
Technical Fixes Should to Must Allowable costs ( 200.405(d)): If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must (not should ) be allocated to the projects based on the proportional benefit. Applicable credits ( 200.406(b)): In some instances, the amounts received from the federal government to finance activities or service operations of the nonfederal entity must (not should ) be treated as applicable credits. Compensation personal services ( 200.430(g)): For compensation to members of nonprofit organizations, trustees, directors, associates, officers or the immediate families thereof, determination must (not should ) be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in 37 excess of costs. Technical Fixes Should to Must Intellectual property ( 200.448(b)(3)): In any case involving a patent or copyright formerly owned by the nonfederal entity, the amount of royalty allowed must (not should ) not exceed the cost which would have been allowed had the nonfederal entity retained title thereto. Materials and supplies costs, including costs for computing equipment ( 200.453(b)): Withdrawals from general stores or stockrooms must (not should ) be charged at their actual net cost under any recognized method of pricing inventory withdrawals, consistently applied. 38 19
Federal Agencies Exceptions https://cfo.gov/wp-content/uploads/2014/12/agency-exceptions.pdf 40 20
Changes to CNCS 45 CFR 2205.332 Fixed award / sub-awards may be awarded under national service laws without respect to the simplified acquisition threshold 45 CFR 2521.95 for programs funded under subtitles B & C are limited to a 5% admin cap 41 Changes to Dept. of Education ED will use risk review requirements of 200.205 and special conditions of 200.207 However ED will continue to use the existing regulatory requirements to deal with high risk applicants per 34 CFR 74.14 and 80.12. ED does not distinguish between cooperative agreements and grants and thus, developed conforming language that grants and agreements are the same as cooperative agreements and grants 42 21
Changes to Dept. of Health & Human Services Largest amount of additions / exceptions, i.e. 37 Adopts super circular under 45 CFR 75 Adds (13) new definitions (i) Awardee. (ii) Commercial organization. (iii) Departmental Appeals Board. (iv) Excess property. (v) Expenditure report. (vi) Grantee. (vii) HHS awarding agency. 43 Changes to Dept. of Health & Human Services Adds (13) new definitions (viii) Principal Investigator/Program Director/ (PI/PD).. (ix) Prior approval. (x) Project period. (xi) Surplus property. (xii) Suspension of award activities. (xiii) Total Costs. Add to the Cost Sharing & Match Definition: This may include the value of allowable third party in-kind contributions, as well as expenditures by the recipient. 44 22
Changes to Dept. of Health & Human Services Adds to the property definition Includes copyrights, patents and securities 45 CFR 75.104 supersession of old 45 CFR 74/92 45 CFR 75.308 (c) prior approvals for budget revisions, added the following: Research patient costs Fixed sub-awards up to $150,000 Dispose, replace, encumber title to property/equip. Need arises for additional funds to complete the project. 45 Changes to Dept. of Health & Human Services 45 CFR 75.309 Adds to Period of Performance and Availability of Funds (a).funds available to pay allowable costs during the period of performance include both Federal funds awarded and carryover balances. (b) A non-federal entity must liquidate all obligations incurred under the award not later than 90 days after the end of the funding period (or as specified in a program regulation) to coincide with the submission of the final Federal Financial Report (FFR). This deadline may be extended with prior written approval from the HHS awarding agency. 46 23
Changes to Dept. of Health & Human Services 45 CFR 75.374 Appeals a) Upon taking any remedy for non-compliance, the HHS awarding agency must provide the non-federal entity an opportunity to object and provide information and documentation challenging the suspension or termination action, in accordance with written processes and procedures published by the HHS awarding agency. The HHS awarding agency or pass-through entity must comply with any requirements for hearings, appeals or other administrative proceedings to which the non-federal entity is entitled under any statute or regulation applicable to the action involved. 47 Changes to National Science Foundation (NSF) NSF obtained permission to incorporate the uniform guidance into the Proposal and Award Policies and Procedures Guide (PAPPG) includes: Grant Proposal Guide (GPG) Award & Administration Guide (AAG) Risk Management Framework incorporates Risk Posed by Applicants 200.205 GPG, III.F.1 plus: Conduct pre-award financial & admin reviews for proposers not received NSF funds in past 5 years and over $200,000 Conduct pre-award financial & admin reviews under SBIR and SBTTR 48 24
Changes to National Science Foundation (NSF) Risk Management Framework incorporates Risk Posed by Applicants 200.205 GPG, III.F.1 plus: Consider proposer s record of how it managed past and current Federal awards and leveraging NSF systems to identify any ongoing issues before proceeding with future awards Consider the status of any corrective actions and how they addressed findings from audits, desk reviews, site visits from past or current Federal awards Ensuring that no awards are made to proposers that might be on the suspended and debarred list 49 Changes to National Science Foundation (NSF) Merit Reviews 200.204 GPG, III.A.2 plus: Merit review principles and criteria is critical b/c NSF is the primary Federal agency charged with nurturing and supporting excellence in basic research and education based on (2) criteria: Intellectual Merit encompasses the potential to advance knowledge Broader Impacts encompasses the potential to benefit society and contribute to the achievement of specific, desired societal outcomes There are (5) elements that should be considered in the aforementioned criteria 50 25
Changes to National Science Foundation (NSF) Conflicts-of-Interest 200.112/113 plus: Grantee notifications of conflict of interest that cannot be managed, reduced, or eliminated and awardee notifications of situations where research will proceed without the imposition of conditions or restrictions when a conflict of interest exists, must be submitted electronically via use of NSF s electronic systems. 51 Changes to National Science Foundation (NSF) Conflicts-of-Interest 200.112/113 Examples of conditions or restrictions that might be imposed to manage, reduce or eliminate conflicts of interest include, but are not limited to: a. public disclosure of significant financial interests; b. monitoring of research by independent reviewers; c. modification of the research plan; d. disqualification from participation in the portion of the NSF-funded research that would be affected by significant financial interests; e. divestiture of significant financial interests; or f. severance of relationships that create conflicts. 52 26
Changes to National Science Foundation (NSF) Before uniform guidance and updated policy on cost sharing, research projects did not have it Cost Sharing in Applications should be mentioned in the eligibility section as to whether cost sharing or match is required or not PAPPG Part 1, page 3 Sub-awards: The criteria of the proposing organization as to whether the role of a sub-award functions as a subrecipient or contractor will be determined on a caseby-case basis 53 Changes to NSF PAPPG, Part 1, page 3 Travel, has been revised to state that all travel (both domestic and foreign) must now be justified. Additionally, temporary dependent care costs above and beyond regular dependent care that directly result from travel to conferences are allowable costs provided that the conditions established in 2 CFR 200.474 are met. Finally, the definition of what constitutes domestic travel has been revised: US Territories and 54 Possessions 27
Changes to NSF PAPPG, Part 1, page 3 Participant Support, has been clarified to reflect that any additional categories of participant support costs other than those described in 2 CFR 200.75 (such as incentives, gifts, souvenirs, t-shirts and memorabilia), must be justified in the budget justification, and such costs will be closely scrutinized by NSF. Funds provided for participant support may not be used for other categories of expense (in your budget) without specific prior NSF written approval. Such requests must be submitted electronically via use of NSF s electronic systems. 55 The Path Forward What s Next? How to We Start the Implementation Process? 28
57 Any Questions 58 29
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