The uniform grant guidance includes language in three sections (§200.210, §200.301 and §200.335) to clarify the information that must be included in a federal award announcement to hold newly awarded grantees accountable for meeting their stated performance goals in their proposals (§200.210), and to strengthen the position of federal agencies to improve program oversight and performance.
The uniform grant guidance requires that federal agencies measure the performance of recipients in a way that improves program outcomes, facilitates the dissemination and sharing of lessons learned and spreads the adoption of promising practices (§200.301).
In the uniform grant guidance, §200.210 dictates standard elements for an award announcement. Among the elements that federal agencies must include in award announcements is information about performance reporting frequency and content. The intent is to allow the federal awarding agency to better assess the nonfederal entity’s progress and to build a national body of evidence about promising practices that are proven successful.
In some instances, such as with the research community, federal performance reporting requirements may be limited to technical performance reports. Where appropriate, however, the federal award may include specific performance goals, indicators, milestones or outcomes with an expected timeline for accomplishment. Recipients of new awards under the uniform guidance, therefore, will need to perform and meet expectations, as proposed in their awarded applications.
Financial Data and Program Performance
A new condition in the uniform grant guidance (§200.301) is the requirement for applicants to explain in their proposals, and for recipients to demonstrate in reporting, how financial data relates to program performance. It appears recipients will need to break down objectives and their associated activities into “cost centers” that reflect the costs associated with the attainment of the activities and goals. In addition to presenting a yearly budget request, applicants may, therefore, be required to include sub-budgets for each performance objective. This new performance expectation will require some adjustment as applicants and recipients develop strategies and reporting styles that align program accomplishments to financial performance.
Federal agencies are responsible to clearly articulate these reporting expectations to applicants and grantees with standards or measures to meet during the execution of the federal award. Nonfederal recipients who are able to show the use of cost effective practices, especially through unit cost data, to meet performance goals will receive high grant management reviews.
Under §200.210, a federal agency may include program-specific requirements, as applicable, in an award notice. These requirements should be aligned with agency strategic goals, strategic objectives or performance goals that are relevant to the program as well as to the objectives, activities and deliverables that applicants promise in their proposals.
Federal agencies, for example, under OMB Circular A-11, must provide their goals and objectives in their yearly budget requests to Congress. The A-11 budget requests provide annual targets of agency performance goals, which they must meet and which any awarded grant programs must also reflect. The award documents, therefore, will include the types of requirements federal agencies are targeting for their own performance as well as the outcomes and timelines that awardees must deliver.
Another section (§200.335) in the guidance adds language on methods for the collection, transmission and storage of information to make clear that electronic, open, machine readable formats for report information is required. Recipient reporting on program performance must be posted on federal websites for transparency and must adhere to the data requirements stated in the uniform grant guidance for federal review and accountability. The new language is in response to the White House’s May 2013 Executive Order on Making Open and Machine Readable the New Default for Government Information and Presidential Memorandum M-13-13 Open Data Policy-Managing Information as an Asset. Under these federal directives and now the uniform grant guidance, federal agencies, applicants and grantees should, whenever practicable, collect, transmit and store federal award-related data in open and machine readable formats rather than in closed formats or on paper.
The new language stipulates that federal agencies must continue providing and accepting paper versions of federal solicitations and reporting documents if nonfederal entities do not have the capacity to submit applications or reports in open and machine readable formats; however, paper submissions can be accepted only after approving an advanced written request from the nonfederal entity. Additionally, the language clarifies storage methods for paper submissions. When original records are electronic and cannot be altered, applicants and grantees don’t need to create and retain paper copies. When original records are paper, electronic versions may be substituted through the use of duplication or other forms of electronic media, provided the documents remain readable through periodic quality control reviews and reasonable safeguards against alteration are put in place.
What to Expect
Grantees can expect greater emphasis on performance as they implement their newly funded program. The award notice will include not only their own stated goals and objectives from their proposals, but also expected timelines and deliverables.
Due to the provisions in the uniform grant guidance, federal agencies will raise the bar on program and financial performance in the award notifications. Applicants and grantees can prepare for these changes by starting or enhancing application development practices that tie the budget and program planning together and by looking for ways to ensure cost effectiveness. Having a “timeline mentality” can help prepare for the new provisions under the uniform grant guidance. In the application planning process, applicants may consider project implementation in three-, six- and nine-month increments of time, with goals and objectives set forth for each. This will help ensure they are putting forth a quality proposal, and also prepares them for a smoother transition if or when the federal agency grants them an award under the uniform grant guidance.
During a question-and-answer session at the American Institute of Certified Public Accountants’ recent Not-for-Profit Industry Conference, attendees asked questions concerning many key issues involving grants and audits, including several related to the Office of Management and Budget uniform grant guidance. Responding to the questions were Diane Edelstein, partner with Maher Duessel, and Brian Schebler, director of public sector services with McGladrey LLP. This is the first of two articles about the session, including abridged responses to questions from the audience.
Q: An auditee’s balance of loans at the beginning of the year has to be provided on the Schedule of Expenditures of Federal Awards. Are new loans obtained during the year also required to be listed on the SEFA even if they did not exist at the beginning of the year?
A: Diane Edelstein:Yes, continuing loans that have continuing requirements must be reported on your SEFA. In the new uniform guidance, OMB requires auditees to note the balances outstanding at the end of the audit period (§200.510). Loans no longer have an option to be in the footnotes. They must be up in the body. That’s one of the ways OMB has improved the new guidance by making it clear in what it is saying.
Q: Under the uniform guidance, will fixed-price contracts be reported on the SEFA?
A: Brian Schebler:It depends on the nature of the fixed-price contract and whether it is an arrangement that is really a contract or a subgrant (§200.330). The old terminology of “vendor” has been replaced with “contractor.” If it qualifies as a contract, it wouldn’t need to be included on the SEFA because that is an exchanged transaction. If it is a recipient, it would need to be reported. The responsibility for making the recipient type determination rests with the auditee. It is responsible for preparing the SEFA, so it should have already gone through the process of making that evaluation. (Editor’s note: This topic is different from the new fixed-amount award (§200.201)).
Q: Do you have to show expenditures for both cost reimbursement grants and fee for service grants on the SEFA?
A: B.S.:You have to show expenditures for federal grants and awards received on the SEFA. With respect to the cost reimbursement grant, it is an expenditure of federal awards and you do have to show those expenditures. With the fee for service, if you conclude it does meet the criteria to be considered a grant or award, it should be reported on the SEFA. The key again is that for a fee for service arrangement, you have to decide whether you are a contractor or grant recipient. If you conclude it’s a grant, it shows up on the SEFA.
Q: When can we auditors begin using the new $750,000 threshold under the uniform guidance?
A: B.S.:This becomes effective for [awards made during] fiscal years beginning on or after Dec. 26, 2014, or essentially the Dec. 26, 2015, year-end audits will be the first time auditors will use the new audit requirements. Auditees must follow the new requirements for new funding, or continuation of existing funding, on or after Dec. 26, 2014. Auditors will start doing the audits after the auditees have started implementing the new cost principle and administrative requirements under the uniform guidance (see ¶214 in the Single Audit Information Service).
Q: What should auditors and auditees do now to prepare for the new guidance?
A: B.S.:First, read the new guidance. Next, I would identify or highlight the differences from what you are used to dealing with compared to what you will deal with in the future. Gone are the old circulars that we are used to. They are being replaced with a uniform set of standards that will be applied to the administration of grants and awards. Some of those changes are going to be significant to the types of awards you are participating in, so make sure you look at ways to modify your controls appropriately to deal with them. Dec. 26 isn’t that far from now. For auditors, as you talk to auditees and wrap up your latest Circular A-133 single audits, you should start to talk to them about the changes.
Q: Will there be a requirement for us as a pass-through to change the previous pre-award assessment on a subrecipient when we get new money for a grant after Dec. 26 under the new guidance?
A: D.E.:With new money after Dec. 26, you will follow the new guidance. However, if you go out and monitor your current subrecipient on Dec. 28, for example, you will follow the old rules on an existing award.
Q: We get funds from several different federal agencies. Will the uniform guidance reduce the differences among the federal agencies? And what about the differences among pass-through entities?
A: D.E.:It should. We do know that in the real world the pass-through entity will try to add some extras on. But the idea is to have fewer differences.
Q: In the current requirements, if an auditee has a prior year significant deficiency for internal controls over financial reporting, which is not a Circular A-133 audit finding, is the auditee low risk?
A: B.S.: Yes, the auditee is low risk. But if it was a material weakness, then it would no longer be a low-risk auditee. It would be the same under the uniform grant guidance.
D.E.:However, if your financial statements as an auditee are a going concern, you can no longer be a low-risk auditee (§200.520).
Q: What are the requirements for program managers and program directors and future staff I may hire? Are there requirements internally as an auditee that I should consider when hiring individuals?
A: D.E.:As a client, you have no continuing education requirements but obviously education is for everyone. Getting them to understand the cost circulars and the administrative requirements is really important. A lot of organization have a compliance officer that reads all the grant agreements and rules. Be pro-education.
Q: What should grantees do to substantiate the payroll cost charged to program under the uniform guidance’s time and effort requirements (§200.430)?
A: B.S.:Auditors are a little concerned that people may interpret the new provision in the uniform guidance to say that grantees could put a piece of paper together at the end of the year stating that an employee worked all his time on a particular program and that paper would be sufficient evidence. The section on time and effort reporting states that there should be internal controls in place to properly account for the time and effort that will be charged to a federal program (§200.430(i)). The important thing is to have a system in place to be able to justify the charges that will be made to a federal program for salaries and wages. Gone is the requirement for timesheets that are prepared every specified time period. However, for many entities, that will likely still be the most effective and efficient way to determine this. You probably will need to look at your type of grants and awards, the types of services provided, and wages and salaries allocated and figure out what makes sense because, as an auditor, I’m going to be asking you how did you determine your controls, what are the different control elements and how are they working, and then I’ll look for evidence that substantiates those allocations.
D.E.:If timesheets are working, I wouldn’t recommend getting rid of them.
Q: For federal awards, the new uniform grant guidance says personnel costs can be distributed based on performance-oriented metrics (§200.430(f)). What are examples of such and who at the federal awarding agencies have to approve this in advance?
B.S.:I’m not aware of a specific requirement that would require that to be approved. What we would be looking for as auditors would be that this be based on the development of sound controls to properly account for the allocation of personnel costs to the various programs where individuals are providing services. For example, if you use some sort of amount, there should be backup for that. I’d look at the last couple of years to analyze how time was spent and how this year’s grant compares to prior years’ grants. However, as I would with any control, I’d like to see that there was some sort of monitoring. You should periodically test it, at least annually, to have proof that those allocations are supported by actual fact.
Proposed to amend the student assistance general provisions regulations issued under the Higher Education Act of 1965, as amended, to implement the changes made to the Clery Act by the Violence Against Women Reauthorization Act of 2013 (34 C.F.R. Part 668). 79 Fed. Reg. 35417-35460, June 20, 2014; http://www.gpo.gov/fdsys/pkg/FR-2014-06-20/pdf/2014-14384.pdf.
Proposed to amend the definition of "reservation" under the regulations governing the American Indian Vocational Rehabilitation Services program (34 C.F.R. Parts 369 and 371). 79 Fed. Reg. 35502-35507, June 23, 2014; http://www.gpo.gov/fdsys/pkg/FR-2014-06-23/pdf/2014-14387.pdf.
Conformed its Section 8 Tenant-Based Voucher and Project-Based Voucher program regulations to meet the statutory program changes made by the Housing and Economic Recovery Act of 2008 (24 C.F.R. Parts 5, 982 and 983). Effective date: July 25, 2014. 79 Fed. Reg. 36145-36170, June 25, 2014; http://www.gpo.gov/fdsys/pkg/FR-2014-06-25/pdf/2014-14632.pdf.
Established the terms and conditions by which it will implement changes to the statutory definition of a "public housing agency," the frequency of housing inspections, the statutory definition of "extremely low-income" and utility allowances for tenant-paid utilities (24 C.F.R. Parts 5, 943 and 982). Effective date: July 1, 2014. 79 Fed. Reg. 35940-35942, June 25, 2014; http://www.gpo.gov/fdsys/pkg/FR-2014-06-25/pdf/2014-14915.pdf.
Proposed, along with the Federal Transportation Administration, revisions to the regulations governing the development of metropolitan transportation plans and programs for urbanized areas, state transportation plans and programs, and the congestion management process (23 C.F.R. Part 450; 49 C.F.R. Part 613). 79 Fed. Reg. 31783-31841, June 2, 2014; http://www.gpo.gov/fdsys/pkg/FR-2014-06-02/pdf/2014-12155.pdf.
Issued joint guidance with the Federal Transit Administration to implement provisions of the Moving Ahead for Progress in the 21st Century Act (MAP-21) that require representation by providers of public transportation in each metropolitan planning organization that serves a transportation management area no later than Oct. 1 (23 C.F.R. Part 450; 49 C.F.R. Part 613). Effective date: June 2, 2014. 79 Fed. Reg. 31214-31219, June 2, 2014; http://www.gpo.gov/fdsys/pkg/FR-2014-06-02/pdf/2014-12163.pdf.
The Colorado Department of Military and Veterans Affairs plans to develop guidance this fall to clearly define what supporting documentation is required for Veterans Trust Fund grant program expenditures and what documents must be retained by award recipients for audits and reviews, in response to concerns about the program raised by the Colorado Office of State Auditor.
In 2000, the state general assembly established the Colorado Veterans Trust Fund. Administered by DMVA and the state’s Board of Veterans Affairs, the program provides funds for veterans’ nursing homes, veterans’ cemeteries and veterans’ programs offered by nonprofit veterans’ organizations through a competitive grant process. From fiscal year 2010 to FY 2014, the board awarded 205 grants totaling $4.4 million to Colorado veterans organizations.
However, during a recent audit, OSA found that the program lacked sufficient oversight due to the lack of procurement documentation guidance. For example, it found that 140 expenditures out of 900 sampled lacked a detailed and accurate description of the items or services provided, and that 748 out of 900 expenditures sampled found that documentation provided by the grantees was insufficient to allow DMVA to determine whether payments were appropriate.
“Overall, DMVA’s current contract monitoring procedures are not sufficient to ensure that the grantees’ use of grant funds are appropriate given the grants’ purpose or that all payments adhere to the requirements included in the grant contract or the DMVA’s and the board’s VTF grant policies,” OSA explained. “Because the statements of work in the grant contracts and the board’s policy statement are very vague, it is difficult to determine whether some expenditures are appropriate to accomplish the purpose of a specific grant.”
For example, four expenditures totaling more than $1,600 were to make payments for veterans to help them “avoid trouble with the law” or to prevent them from being sent to jail. In addition, nine expenditures totaling more than $1,300 were cash or checks paid directly to veterans for “emergency assistance” with no other explanation and no way to tell how the funds were actually used, OSA found.
Lack of Stated Goals
OSA also noted that DMVA did not ensure that VTF recipients clearly establish the purpose and goals of their projects when receiving funds. Specifically, it said that projects were awarded under very broad purposes such as “veterans assistance,” or “transportation,” and that no goals or specific deliverables for the projects were established.
“This stems largely from the fact that the board’s application form does not require applicants to provide a clear and complete explanation of the project,” OSA said. “Such an explanation should indicate at least what types or amounts of goods or services they plan to purchase and how many veterans they plan to serve.” Out of 10 applications OSA reviewed, nine had only a very brief project description that provided no details of how the funds would be spent.
To better monitor VTF funds, OSA recommended that DMVA:
work with the board to amend the grant application form to require applicants to provide a specific description of how grant funds will be spent, including the purpose of the project, the specific goods and services to be purchased and the number of veterans to be served.;
develop clear statements of work based on a more comprehensive program description that defines allowable uses of grant funds;
provide to grantees clear guidance about what supporting documentation they must maintain to support VTF grant expenditures, and what information they must provide in a written advance funding request;
implement a review process to ensure that grantees obtain all documentation necessary to support expenditures if grantees are not required to submit all supporting documentation to DMVA; and
withhold reimbursements when grantees do not provide a detailed description for its expenditures; and
enforce the 90-day requirement for expending advance VTF funds.
DMVA generally concurred with the recommendations, adding that by November, it will work with the board to amend the application form to require a specific description of how grant funds will be spent, including the purpose of the project, specific goods and services to be purchased and estimated number of veterans to be served.
DMVA added that it will create a procedural document to inform grantees about the requirement to document expenditures. It also will explain what supporting documents they must submit when seeking reimbursements and what items the grantee must retained for inspection. The document further will include information about advance payments.
In another finding, OSA said the Board of Veterans Affairs does not have a specific procedure as part of its grant awarding process for board members to disclose potential conflicts of interest. OSA recommended that the board establish a process prior to the grant award review to discuss potential conflicts of interest and implement ways to mitigate the potential conflicts. The board said it already has developed a conflict of interest policy and members are recusing themselves from discussions and voting on grant requests from certain prospective recipients.
A key official with the National Science Foundation noted that recipients of NSF awards generally are performing better in site visits as the agency stresses the importance of grantees having written internal policies and maintaining adequate documentation.
Speaking to attendees at a National Grants Management Association training meeting, Karen Tiplady, director of the NSF division of grants and agreements, noted that site visits of the agency’s higher-risk awards over the past few years have shown a high frequency of concerns in general program management, time and effort reporting and subaward monitoring. However, while almost 100 percent of the agency’s site visits found concerns with subaward monitoring in fiscal year 2011, that figure dropped to about 60 percent in fiscal year 2013. Likewise, time and effort concerns were found in about 85 percent of site visits in FY 2011, while similar concerns were found in only half of the site visits in FY 2013.
NSF is emphasizing to its grantees that compliance with federal grant regulations is required, Tiplady said. “It’s the price of receiving federal funds, and we must be accountable to the taxpayer,” she added.
NSF has developed a monitoring strategy that focuses its limited monitoring resources on awardees with the highest risk, Tiplady said. After conducting an annual risk assessment of all its awardees, the agency performs comprehensive monitoring activities. Later, it gathers feedback on its monitoring results to enhance its risk assessment model and monitoring procedures.
NSF’s monitoring efforts include baseline activities and advanced activities. Baseline monitoring activities include:
an automated financial report screening to identify issues that may need further scrutiny, particularly concerning cash balances, interest income, program income, grant closeout and unobligated balances;
an evaluation of the award administration, including any changes to the principal investigator, award transfers, special payments and significant budget realignments; and
transaction testing on select award expenditures to determine if they were reasonable, allocable and allowable.
NSF will conduct advanced monitoring for selected awardees that need more business assistance, Tiplady added. These monitoring activities includes desk reviews and site visits, as well as business system reviews that combine desk and onsite reviews of large facility business systems to determine wither they meet NSF’s expectations for business and administrative management.
Desk Reviews and Site Visits
Tiplady said that NSF conducts about 100 desk reviews a year and about 30 site visits a year. Desk reviews enable the agency to better understand an awardee’s grant administration practices and identify deficiencies. Agency analysts gather information from public sources, phone calls and awardee-provided documentation to assess the awardee’s capacity to manage its federal funds. For those grantees that require a site visit, reviewers assess whether the awardee’s financial management system accurately discloses the financial results and if awardee systems maintain effective control over and accountability for all funds, property and other assets.
Tiplady said that according to FY 2013 site visit and desk review results, awardees managing between $2 million and $15 million of NSF funding had the most review areas with concerns, while awardees managing more than $15 million has the least review areas with concerns. She noted that many of the concerns with the smaller awardees stemmed from a lack of written policies and procedures. “Core review areas,” such as general program management and financial and accounting systems, tended to have a higher incidence of concerns than “targeted review areas,” such as items like labor costs, time and effort or subrecipient monitoring, Tiplady said.
Tiplady advised NSF awardees to focus on the objective of their project or program; understand NSF’s requirements and expectations as stated in the award letter and terms and conditions; develop effective accounting practices that segregate costs; document policies and procedures in writing; and document approvals and conversations between the awardee and NSF.
Tiplady also discussed NSF’s merit review process that it uses when selecting awards. Focusing on a proposal’s intellectual merit and broader impacts, NSF seeks projects that have “the potential to advance, if not transform, the frontiers of knowledge,” Tiplady said. “We want them to contribute more broadly to achieving societal goals.”
NSF uses peer reviewers to evaluate proposals, basing their decisions on five review elements:
Does the project advance knowledge and understanding within its particular field and does it benefit society?
To what extend do the proposed activities explore creative, original or potentially transformative concepts?
Is the plan for carrying out the proposed activities well-reasoned, well-organized and based on sound rationale?
How qualified is the individual, team or institution to conduct the proposed activity? and
Are there adequate resources available to the principal investigator to carry out the proposed activities?
To reduce the number of ineligible participants in the Department of Agriculture’s school meal programs, the Government Accountability Office recommended that USDA launch a pilot program to determine if was feasible to use computer matching to identify households with income that exceeds program eligibility thresholds.
USDA reported that in fiscal year 2012, more than 31.5 million children participated in the National School Lunch Program and 12.9 million participated in the National School Breakfast program. However in fiscal year 2013, USDA estimated that the verification error rates for both the NSLP and NSBP were about 9 percent, costing about $2.5 million total.
The Office of Management and Budget subsequently designated NSLP as one of 13 federal “high-error” programs due to its large estimated improper payments. “OMB’s designation of the school meals program as a ‘high-error’ program with significant estimated improper payments makes it important that internal controls and oversight for the school meals programs be strengthened while simultaneously ensuring that students who qualify for benefits are not adversely affected,” GAO said.
In response to these concerns, USDA has taken steps to improve its controls to prevent ineligible individuals from participating in the program. For example, it:
worked with Congress to develop legislation to automatically enroll or “direct certify” students who receive benefits from the Supplemental Nutrition Assistance Program, which has a more-detailed certification process for school meals;
increased the frequency with which state agencies complete administrative reviews of school districts from every five years to every three years, beginning with the 2013-2014 school year, to identify if eligibility determinations were made correctly; and
issued guidance in February 2012 to clarify that school districts have the authority to verify approved applications for school-district employees applying for free- or reduced-priced meals when information indicates that the employee misrepresented his or her income.
Despite these efforts, GAO said that USDA could do more to enhance the school meal verification process, such as developing a cost-effective system to electronically verify applicant information. An electronic system could assess external income data, such as state payroll data, to determine if any participants exceed eligibility thresholds. When applying for the school meal programs, households currently self-report their income levels, and school districts are not required to take steps to verify the information on the application when determining eligibility. However, a GAO sample of school meal program applications approved at local school districts found that nine of 19 households that self-reported household income and other information should have been declared ineligible.
“While challenges may exist in verifying beneficiary income through computer matching, nine years have passed since USDA conducted a pilot to determine the feasibility of electronic verification,” GAO said. “The cost of the school meals programs, continued high improper payments and advances in technology support the need to revise the feasibility of conducting computer matching.”
If the pilot program showed promise in identifying ineligible households, GAO said, USDA should work with Congress to propose legislation to expand the statutorily-defined verification process to include electronic verification for a sampling of school meal applications.
USDA requires school districts, under the school meal program’s standard verification procedures, to verify a samples of applications considered “error-prone” to determine if they are receiving the correct level of benefits. USDA regulations also allow school districts to conduct “for-cause verifications” of questionable applications, such as when a household submits a modified application — changing the income or household members — after being initially denied for the program. GAO also said more guidance on these for-cause verifications could enhance oversight, adding that only 11 of 25 school districts it sampled said they conducted for-cause verifications. USDA officials told GAO that many school districts may be hesitant to perform for-cause verifications because of the potential work burden it may create, and that they did not want to appear to be targeting certain groups of people.
Although USDA required school districts during the 2013-2014 school year to report the total number of applications that were verified for cause, GAO said clearer guidance is needed. “Reviewing the data [reported during the 2013-2014 school year] could help USDA determine if data on the outcome of for-cause verifications should be reported separately from standard verification results,” it said. “Evaluating this data could help USDA determine whether additional guidance would be beneficial to assist school districts in identifying applicants that should be subject to for-cause verification. Such guidance could include criteria and examples of possible indicators of questionable or ineligible applications.”
GAO also recommended that USDA enable school district to verify a sample of categorically eligible applications — those directly certified into the school meal program because they receive other benefits, such as foster care — to identify ineligible households. In a review of 25 approved applications, GAO found that six households indicated categorical eligibility, yet two were ineligible to participate in the school meal program, and another may have been eligible for reduced-price meals instead of free school meals.
The following is a list of meetings and conferences that are noteworthy for subscribers. Some are directly related to single audits, while others deal with subjects of more general interest to those involved with governmental accounting, auditing or program management. To submit an entry for the calendar, please send an email to email@example.com, including the name of the conference, dates, location, sponsor and contact information.
2014 National Association of State Auditors, Comptrollers and Treasurers Annual Conference
Aug. 9-13 — Santa Fe, N.M.
Contact: Pat Hackney, National Association of State Auditors, Comptrollers and Treasurers, 859-276-1147
The uniform grant guidance includes a new section (§200.303) about internal controls that also requires nonfederal entities, both applicants and grantees, to take reasonable measures to safeguard and protect personally identifiable information as well as any information that the federal awarding agency or pass-through entity designates as sensitive.
The language previously was only included in audit provisions, but now is part of the administrative requirements of the uniform grant guidance, a significant change. The revision seeks to encourage nonfederal entities to better structure their internal controls earlier in the process, further mitigating risks of waste, fraud and abuse with federal funding, a central concern of the uniform grant guidance, with 61 references on this topic alone.
Meeting this new requirement will require creation or enhancement of internal controls to ensure proper oversight during the administration of a federal award. A system of internal control must: (1) provide reasonable assurance of compliance with federal statutes, regulations and the terms and conditions for the funding program; and (2) protect any personally identifiable information and other information deemed sensitive under federal, state and local privacy and confidentiality laws.
Applicants would clearly want to provide reasonable assurance in any proposal including examples of their internal controls to demonstrate they would be accountable once awarded. Nonfederal entities, once awarded, must include evaluation and monitoring mechanisms in their system of internal control to assure compliance, as well as processes to take prompt action when instances of noncompliance are identified.
Standards and Framework
Internal control must be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, and the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The CGUS and COSO publications define internal control as: “An integral component of an organization’s management that provides reasonable assurance that the following objectives are being achieved: effectiveness and efficiency of operations; reliability of financial reporting; and compliance with applicable laws and regulations.”
The CGUS publication sets the following five standards for internal control:
Control Environment:Management and employees should establish and maintain an environment with a supportive attitude toward internal control and conscientious management.
Risk Assessment:Internal control should provide for an assessment of the risks the agency faces from both external and internal sources.
Control Activities:Internal control activities help ensure that management’s directives are met.
Information and Communication: Information should be recorded and communicated to management and others within the entity who need it and in a form and within a time frame that enables them to carry out their internal control and other responsibilities.
Monitoring:Internal control monitoring should assess the quality of performance over time and ensure that the findings of audits and other reviews are promptly resolved.
The COSO publication, which was updated in 2013 and is consistent with the uniform grant guidance, helps nonfederal entities take these five standards and design and implement a system of internal control at their organizations. Business and operating environments have changed since the release of the original version in 1992, with the revised publication broadening the scope of internal control to address new operations and reporting objectives and clarify the requirements for determining what constitutes effective internal control.
As nonfederal entities are revising and adapting their local policies and regulations to better align with the uniform grant guidance, it would be beneficial to conduct a review of internal controls, particularly for grants administration and the term “reasonable assurance.” Often, nonfederal entities, whether grantees or applicants, will hear the term “internal control” and get bogged down trying to address all the needs or devise a comprehensive system.
The CGUS publications recommend organizations design and implement internal control based on reasonable assurance. The publication recognizes: “No matter how well designed and operated, internal control cannot provide absolute assurance that all agency objectives will be met. Factors outside the control or influence of management can affect the entity’s ability to achieve all of its goals. For example, human mistakes, judgment errors, and acts of collusion to circumvent control can affect meeting agency objectives. Therefore, once in place, internal control provides reasonable, not absolute, assurance of meeting agency objectives.”
What To Do
Federal applicants and grantees should hold brainstorming sessions to devise methods to ensure all five of the internal control standards are met from a grant administration perspective. A brainstorming session by a Head Start grantee, for instance, would likely focus on issues with protecting the personal identification for children in their care. Other programs would want to protect social security numbers of program participants or staff. This could include devising safeguards and processes to protect this information, such as limiting access to personnel or electronic records and having written guidelines in place about handling information requests from internal or external parties who may want access to the information, like a relative who isn’t authorized on file or a third-party provider. The processes would include a system to address any infractions or issues brought to light in the implementation of the grant program.
The Corporation for National and Community Service offers $11.2 million to advance and evaluate an emerging funding model that aligns payment for social services with verified social outcomes, a performance-basedstrategy central to the uniform grant guidance.
The Social Innovation Fund: Pay for Success Grants Competition will target innovative community-based solutions in low-income communities, focusing on devising methods to ensure federal funding is spent wisely. The CFDA number is 94.024.
Social Innovation Fund
SIF, a White House signature program, transforms low-income communities by uniting public and private resources to evaluate and grow innovative community-based solutions with a history of results. The programs must focus on at least one of three priority areas: (1) economic opportunity; (2) healthy futures; and (3) youth development.
SIF funding goes to identify, validate and cultivate promising approaches to address challenges facing low-income communities. SIF works with and through existing grantmaking institutions to direct resources to innovative community-based nonprofit organizations focused on the three priorities, through sub-awards. SIF’s funding model is distinguished by six key characteristics:
match dollars; and
Pay for Success
PFS financing is a mechanism to increase investments in effective social interventions by changing the way government allocates and invests its resources, with an emphasis on results and outcomes. PFS strategies are typically associated with preventive social solutions and are put in action through contracts between a government or foundation and a nonprofit social service provider.
Under PFS, grantees are only paid after they have demonstrated success, a model also described in the uniform grant guidance under fixed-amount awards (§200.201) which differs from the conventional practice of funding providers for a promise of success or a standard cost-reimbursement award simply based on expenditure of funds. Grantees agree that all or some portion of payment for services will not be paid until an agreed-upon set of outcomes or level of impact has been verified. Achievement of outcomes is typically verified by an independent evaluator agreed upon by all parties to a transaction.
CNCS provides preferences to those focusing on: (1) opportunity youth (ages 14-24) who are homeless, in foster care, or involved in the juvenile justice system; (2) traditionally underserved geographic areas and populations that include rural and economically depressed communities, tribal communities, disabled populations and veterans; and (3) government savings.
Applicants include state and local governments, as well as foundations and nonprofits. Current SIF grantees and sub-recipients are encouraged to apply under this new category of funding. Applicants also are required to demonstrate how SIF grants will supplement, and not supplant, any current PFS activities.
CNCS estimates multiple cooperative agreements will be awarded ranging from $200,000 to $1,800,000 each year over the three-year project period. Prime awardees will receive the funding and then make sub-awards to state and local governments, regional governmental partnerships and nonprofit organizations. The ultimate goal for CNCS, awardees and sub-awardees is to work together on attaining outcomes.
Prime awardees can expect substantial involvement by CNCS, especially with subrecipient selection. The assigned CNCS program officer will confer with prime awardees on a regular and frequent basis to develop and review service delivery and project status.
Every SIF grant dollar must be matched by the grantee with nonfederal dollars and services. At least 50 percent of the match must be in non-federal cash and up to 50 percent can be in-kind services. At the time of the application, applicants must demonstrate the ability to meet 10 percent of their first year match requirement in non-federal cash.
Proposals must be submitted through CNCS’ eGrants system by July 31, no later than 5 p.m. Eastern time. Applicants are strongly encouraged to send a Notice of Intent to Apply in July via e-mail to firstname.lastname@example.org. Because proposals are not submitted through Grants.gov, applicants should attend to any registration requirements for eGrants in advance of submitting an application.
CNCS may consider an application after the deadline under certain circumstances, but only if an applicant submits an e-mail to LateApplications@cns.gov within the 24 hours immediately after the deadline explaining the extenuating technical circumstance that caused the delay. If technical issues prevented the submission, applicants should include an eGrants National Service Hotline ticket number in the e-mail. A ticket number can be obtained by calling the National Service Hotline before the deadline and explaining the technical issues that prevented timely submission.
CNCS will determine the acceptance of late applications on a case-by-case basis. Advance request to submit a late application will never be considered.
Small Business Innovation Research Program (Phase I) — Deadline: October 2, 2014. Eligibility: Small businesses. Fund uses: To stimulate small business involvement in developing agricultural technologies, especially those owned by women or socially and economically disadvantaged individuals and groups. Contact: Elden Hawkes, 202-401-4002; email@example.com.More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258169.
Competitive Abstinence Education Grant Program — Deadline: August 7, 2014. Eligibility: State and local governments, institutions of higher education, public housing authorities, nonprofits and for-profits. Fund uses: To develop abstinence education programs to reduce teen pregnancies, with a focus on adolescent youth who are at greatest risk of sexually transmitted diseases and bearing children out of wedlock. Contact: Jewellynne Tinsley, 202-205-9462; Jewellyne.Tinsley@acf.hhs.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258345.
Studies Program on Ethnic Disparities in Juvenile Justice — Deadline: July 21, 2014. Eligibility: State and local governments, institutions of higher education, nonprofits and for-profits. Fund uses: To study existing data to determine the severity of ethnic disparities effecting Hispanic/Latino youth’s contact with the juvenile justice system. Contact: Justice Information Center, 877-927-5657; JIC@telesishq.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258175.
Enhancements to Juvenile Drug Courts — Deadline: July 23, 2014. Eligibility: State and local governments. Fund uses: To enhance the capacity and services provided by juvenile drug courts. Contact: Justice Information Center, 877-927-5657; JIC@telesishq.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258373.
NIJ DNA Arrestee Collection Process Implementation Grants Program —Deadline: August 7, 2014. Eligibility: State governments with designated DNA database laboratories. Fund uses: To assist with the costs associated with the implementation of DNA arrestee collection processes that improve the National DNA Index System. Contact: Charles Heurich, 202-616-9264; Charles.Heurich@usdoj.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258347.
Secretary's Proposed Supplemental Priorities and Definitions for Discretionary Grant Programs — Action: The Department of Education proposed 15 priorities and related definitions for use in discretionary grant programs. Contact: Margo Anderson, 202-205-3010. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-06-24/pdf/2014-14671.pdf.
Institutional Eligibility Under the Higher Education Act of 1965, as Amended; Delay of Implementation Date — Effective: July 1, 2015. C.F.R.: 34 C.F.R. Part 600. Action: The Department of Education delayed until July 1, 2015, the implementation date for certain state authorization regulations for institutions of postsecondary education whose state authorization does not meet the requirements of these regulations. Contact: Sophia McArdle, 202-219-7078. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-06-24/pdf/2014-14721.pdf.
Vocational Rehabilitation Services Projects for American Indians With Disabilities — C.F.R.: 34 C.F.R. Parts 369 and 371. Action: The Department of Education proposed to amend the definition of "reservation" under the regulations governing the American Indian Vocational Rehabilitation Services program. Contact: Thomas Finch; 202-245-7343. More information: http://www.gpo.gov/fdsys/pkg/FR-2014-06-23/pdf/2014-14387.pdf.
Women’s Business Center Program Initial Grant — Deadline: July 30, 2014. Eligibility: Nonprofits in Alaska, Arizona, California, Delaware, Florida, Georgia, Guam, Louisiana, New Hampshire, Tennessee, Texas and West Virginia. Fund uses: To create centers in the selected states and territory providing technical assistance to women entrepreneurs in the areas of finance, management and marketing. Contact: Office of Women’s Business Ownership, 202-205-6673. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258370.
National Priorities: Systems-Based Strategies to Improve The Nation’s Ability to Plan And Respond to Water Scarcity and Drought Due to Climate Change —Deadline: August 5, 2014.Eligibility: Nonprofits. Fund uses: To investigate how drought caused by climate change is impacting surface water and groundwater quality and availability. Contact: Angela Page, 703-347-8046; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258328.
The Housing and Economic Recovery Act of 2008 (HERA): Changes to the Section 8 Tenant-Based Voucher and Section 8 Project-Based Voucher Programs — Effective: July 25, 2014. C.F.R.:24 C.F.R. Parts 5, 982 and 983. Action: The Department of Housing and Urban Development conformed its Section 8 Tenant-Based Voucher and Project-Based Voucher program regulations to meet the statutory program changes made by the Housing and Economic Recovery Act of 2008. Contact: Michael Dennis, 202-402-3882. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-06-25/pdf/2014-14632.pdf.
HUD Implementation of Fiscal Year 2014 Appropriations Provisions on Public Housing Agency Consortia, Biennial Inspections, Extremely Low-Income Definition, and Utility Allowances — Effective: July 1, 2014. C.F.R.: 24 C.F.R. Parts 5, 943 and 982. Action: The Department of Housing and Urban Development established the terms and conditions by which it will implement changes to the statutory definition of a "public housing agency," the frequency of housing inspections, the statutory definition of "extremely low-income" and utility allowances for tenant-paid utilities. Contact: Michael Dennis, 202-402-4059. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-06-25/pdf/2014-14915.pdf.
Assistance to High Energy Cost Rural Communities — Deadline: August 1, 2014. Eligibility: State and local governments, public housing authorities, institutions of higher education, nonprofits and for-profits. Fund uses: To improve energy generation, transmission or distribution facilities serving communities where the average residential expenditure for home energy exceeds 275 percent of the national average. Contact: Kristi Kubista-Hovis, 202-720-9545; Kristi.email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258500.
The Education Department, Office of Innovation and Improvement offers $26.5 million to replicate and expand high-quality charter schools with successful performance in improving student achievement.
Applicants for the Charter Schools Program: Grants for Replication and Expansion of High Quality Charter Schools funding will propose: expanding the enrollment of one or more existing charter schools by substantially increasing the number of available seats per school; or open one or more new schools based on a charter school model showing evidence of success. The CFDA Number is 84.282M.
The Charter School Program
CSP increases national understanding of the charter school model by expanding the number of high-quality charter schools; providing financial assistance for the planning, program design and initial implementation of charter schools; and evaluating the effects of charter schools.
In addition to this program, CSP offers seven other funding programs, including the State Educational Agency Grants (CFDA Number: 84.282A) and the National Leadership Activities Grants (CFDA Number. 84.282N). Additionally, CSP funds many technical assistance providers, including the National Charter School Resource Center, a one-stop center for charter schools.
This year’s competition has a new competitive preference priority focusing on Promise Zones, which are communities partnering with the federal government to create jobs, increase economic activity, improve educational opportunities, reduce violent crime and leverage private investment. The initiative has given five communities the Promise Zone designation – San Antonio, Philadelphia, Los Angeles, Southeastern Kentucky, and the Choctaw Nation of Oklahoma – with the intent to designate 15 additional communities over the next three years.
The designation, which is active for 10 years, enables the federal government to partner with local leaders who are addressing multiple community revitalization challenges in a collaborative way and have demonstrated a commitment to results. These communities can receive up to two bonus points in the grant scoring process.
The new competitive priority joins the existing competitive priorities that benefit those focusing on: (1) low-income populations (up to 10 bonus points); (2) school improvement (up to four bonus points); (3) diversity promotion (up to five bonus points). Another competitive priority provides up to three bonus points for novice applicants.
ED offers a helpful list of definitions, which can aid in the development of quality applications. For instance, the agency has revised the project design criteria to ensure it is supported by evidence of promise. The definition for evidence of promise offers details on what constitutes legitimate supporting evidence and where this information should be included.
In this case, the evidence should support at least one critical component of the program and one significant outcome. This information will be included in the logic model required by all applicants. The definition for logic model isn’t universal, so information on this method to devise a program’s framework also is defined in detail.
In January, ED updated Section E of the CSP Nonregulatory Guidance to clarify circumstances where charter schools receiving CSP funding can use weighted lotteries. Applicants may propose using these types of lotteries to give educationally disadvantaged students slightly better chances for admission, and to help those seeking to switch schools under the school choice provisions of the Elementary and Secondary Education Act.
Weighted lotteries may not be used to create schools exclusively to serve a particular subset of students. Additionally, ED strongly encourages charter schools to use weighted lotteries as part of a broader strategy to fulfill their existing responsibilities related to outreach, recruitment and retention for all students.
The fiscal year 2014 appropriations law (Pub. L. 113-76) includes language allowing CSP funding to support preschool education in charter schools. The solicitation clarifies CSP funds may be used for these purposes as long as the preschool program is offered by a school that meets ED’s charter school definition. Under the definition, charter schools must provide elementary or secondary education, or both. This means applicants wanting to provide just preschool are ineligible.
CSP applicants will receive more direction on this situation later this summer when ED releases nonregulatory guidance with additional information about how CSP funds may be used to support preschool education in charter schools. The new guidance will be posted on the main CSP website.
Eligibility and Funding
Each state will receive a portion of $26.5 million in funding, with 14-19 awards expected ranging from $500,000 to $3 million each. The average award is expected to be $1.6 million. The maximum limit per new school created is $800,000, with up to $3,000 allowed per student. The maximum limit for an existing charter school that is substantially expanding is also $800,000, with up to $1,500 allowed per student. A grantee may use up to 20 percent of an award for initial operational costs associated with the expansion or improvement of the charter schools.
Nonprofit charter management organizations may apply for the funding. NCMOs are nonprofits operating multiple charter schools and launching new ones
Proposals must be submitted through Grants.gov by July 21, no later than 4:30 p.m. Eastern time. Those experiencing problems submitting applications through the system should immediately contact the Grants.gov Support Desk at 800-518-4726. Applicants must obtain a Grants.gov Support Desk Case Number to obtain an extension until the following business day at 4:30 p.m. Eastern Time.
Museums, Libraries and Cultural Centers: Planning and Implementation Grants —Deadline: August 13, 2014. Eligibility: State and local governments, nonprofits and institutions of higher education. Fund uses: To produce public humanities programs at museums, libraries and cultural organizations. Contact: NEH Division of Public Programs, 202-606-8269; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257630.
Second Chance Act Strengthening Relationships between Young Fathers and Their Children: A Reentry Mentoring Project — Deadline: July 17, 2014. Eligibility: Tribal governments and nonprofits in collaboration with justice or correctional agencies. Fund uses: To help young fathers make a successful transition from secure confinement facilities back to their families, while also promoting public safety. Contact: Justice Information Center, 877-927-5657; e-mail, JIC@telesishq.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257929.
Advanced Technological Education — Deadline: October 9, 2014. Eligibility: Unrestricted. Fund uses: To support partnerships between academic institutions and employers focused science, technology, engineering and mathematics education at the undergraduate and secondary school levels to increase employment in high-technology fields. Contact: V. Celeste Carter, 703-292-4651; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257950.
Health Careers Opportunity Program: Skills Training and Health Workforce Development of Paraprofessionals — Deadline: July 16, 2014. Eligibility: Institutions of higher education, including community colleges, technical schools and tribal colleges. Fund uses: To expand the health paraprofessional workforce to meet the employment needs of the community with a particular focus on team-based care. Contact: HRSA Call Center, 877-464-4772; CallCenter@HRSA.GOV. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257734.
Prevention and Public Health Funds: Immunization -- Enhance an Immunization Information System to Interface with CDC’s Vaccine Tracking System or VTrckS Vaccine Ordering and Management System — Deadline: July 31, 2014.Eligibility: State and local governments. Fund uses: To improve the quality of immunization practices by expanding delivery partnerships and improving tracking systems. Contact: Ulrica Andujar, 404-639-6246; UAndujar@cdc.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257947.
Homeland Security National Training Program: Continuing Training Grants — Deadline: July 16, 2014. Eligibility: State and local governments, nonprofits and institutions of higher education. Fund uses: To develop and deliver innovative homeland security and disaster preparedness training programs that are national in scope and meet emerging needs. Contact: 800-368-649; e-mail, firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257828.
Resident Opportunity and Self-Sufficiency Service Coordinators Program —Deadline: August 18, 2014. Eligibility: Public housing authorities, nonprofits and resident associations and organizations. Fund uses: To coordinate supportive services and other activities designed to help public and Indian housing residents attain economic and housing self-sufficiency. Contact: Dina Lehmann-Kim, 202-402-2430; Dina.Lehmann-Kim@hud.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257998.
Amendments To Reflect Change of Office Name From Office of Healthy Homes and Lead Hazard Control to Office of Lead Hazard Control and Healthy Homes —Effective: July 21, 2014. C.F.R.:24 C.F.R. Parts 30 and 35. Action: The Department of Housing and Urban Development changed the name of the Office of Healthy Homes and Lead Hazard Control to the Office of Lead Hazard Control and Healthy Homes. Contact: John B. Shumway, 202-402-5190. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-06-19/pdf/2014-14368.pdf.
Innovative Approaches to Literacy Program — Deadline: July 17, 2014. Eligibility: Local educational agencies and national nonprofits. Fund uses: To support high-quality efforts designed to develop and improve literacy skills for children and students from birth through 12th grade. Contact: Melvin Graham, 202-260-8268; e-mail, Melvin.Graham@ed.gov. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=257930.
American Indians into Psychology — Deadline: June 18, 2014. Eligibility: Institutions of higher education offering a Ph.D. program in clinical programs accredited by the American Psychological Association. Fund uses: To increase the number of clinical psychologists delivering health care services to AI/Alaskan Native communities. Contact: Michael Berryhill, 301-443-2443; Michael.Berryhill@ihs.gov.More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257936.
Interventions for Health Promotion and Disease Prevention in Native American Populations — Deadline: May 12, 2015. Eligibility: State and local governments, public housing authorities, nonprofits, institutions of higher education and for-profits. Fund uses: To develop health promotion and disease prevention interventions for Native American populations. Contact: 866-504-9552; e-mail, email@example.com.More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257851.
Tribal Healing to Wellness Court Responses to Underage Drinking Initiative —Deadline: August 1, 2014. Eligibility: Tribal governments currently operating juvenile, juvenile and family or family Healing to Wellness Courts (Nonprofits, institutions of higher education, public housing authorities and for-profits are eligible for a technical assistance award). Fund uses: To address issues related to tribal youth up to 21 years old who possess and consume alcohol. Contact: Justice Information Center, 877-927-5657; JIC@telesishq.com. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=257952.
Hearing and Re-Petition Authorization Processes Concerning Acknowledgment of American Indian Tribes — C.F.R.: 43 C.F.R. Part 4. Action: The Department of the Interior proposed to revise the process and criteria for federal acknowledgment of Indian tribes. Contact: Karl Johnson, 801-524-5344. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-06-19/pdf/2014-13817.pdf.
Rights-of-Way on Indian Land — C.F.R.: 25 C.F.R. Part 169. Action: The Bureau of Indian Affairs proposed to comprehensively update and streamline the process for obtaining BIA grants of rights-of-way on Indian land, while supporting tribal self-determination and self-governance. Contact: Elizabeth Appel, 202-273-4680. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-06-17/pdf/2014-13964.pdf.
State Health Insurance Assistance Program: Performance Improvement and Innovation Grant — Deadline: July 24, 2014. Eligibility: State governments with a current SHIP grant. Fund uses: To improve counseling and assistance programs helping seniors and disabled Medicare and Medicaid beneficiaries navigate the complexities of the health and long-term care systems. Contact: Rebecca Kinney, Rebecca.Kinney@acl.hhs.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257812.
During its spring forum in Washington, D.C. last month, the law firm of Brustein and Manasevit, PLLC provided insights about preparing for a federal audit or monitoring visit, including an audit resolution defense strategy called “no harm to the federal interest.”
The strategy is based upon performance, a focus of the uniform grant guidance, also referred to as the super-circular or omni-circular. Grant writers, therefore, when developing proposals should be increasingly mindful of proposed objectives and promised deliverables that would impact performance. After award, those who use the “no harm” defense during audit resolution would acknowledge an audit violation, but would pursue a resolution that does not involve repayment of funds. Auditees who have grant programs with successful performance despite the audit finding may be in a position to use the “no harm” defense. There may be other considerations, as well.
Common Audit Violations
During their presentation, attorneys Brette Kaplan and Steven Spillan discussed an Education Department, Office of Inspector General report examining noncompliance findings from 27 ED OIG final audit reports that included what the OIG termed “pervasive noncompliance issues” such as inadequate policies and procedures (34 times), no policies and procedures (15 times), not understanding the regulations and guidance (10 times) and policies in place but not followed (5 times). “You can get ED OIG reports online,” said Kaplan, “and you can see other trouble spots.”
“Before an auditing or monitoring visit, make sure you resolve any prior areas of noncompliance,” advocated Kaplan. “If you are not able to bring an unresolved finding into compliance before the visit, develop a corrective action plan to ensure compliance in a timely manner,” she continued.
Audit violations that are deemed significant by ED and other federal agencies include issues with time and effort, unallowable expenses, maintenance of effort, procurement irregularity, lack of appropriate record keeping, record retention problems, late or missing reports, inaccuracies or inconsistencies in reports, unresolved audits of subrecipients, lack of reliable performance data, and others.
Audit Defense and Resolution
“What happens if you find a problem before the federal auditors arrive?” asked Kaplan. Ideally, nonfederal entities would address the issue by correcting it. If the issue cannot be resolved before the visit, at minimum, Spillan suggested, “Make corrective action plans to start resolving the problem, if possible.” Spillan further explained, “It will show your internal controls are working.”
Other advice included scheduling action meetings, creating a timeline for correction, noting who will be responsible, and informing agency leadership – all steps to resolve the violation by correcting it.
Harm and No Harm
In some circumstances, however, it is possible to defend an audit violation without repayment of funds. It becomes an issue of harm or no harm to the federal interest. According to Kaplan and Spillan, harm is defined in 34 C.F.R. 81.32, “A recipient that made an unallowable expenditure or otherwise failed to account properly for funds shall return an amount that is proportional to the extent of harm its violation caused to an identifiable federal interest associated with the program…”
There are some violations, warned Spillan that are considered to cause harm always, and would not qualify for a no harm defense. Examples of harm include ineligible beneficiaries or participants, unauthorized activities and violations relating to financial issues such as maintenance of effort, supplanting, matching or excess cost.
On the other hand, Spillan offered, “There is an interesting argument for a defense of no harm.” It is possible to argue no harm for some procedural violations. The grant program also must reflect successful program performance.
Procedure and Performance
Procedural violations could involve a recipient, for example, who may not have obtained prior approval. There may be missing required time and effort documentation or missing evidence of procurement. While these procedural issues must be addressed and corrected, it is possible to resolve these findings without repayment of funds.
If a nonfederal entity is excused from costly financial repayment for these types of audit findings, it could significantly reduce burden. “The defense focuses on outcomes, not procedures, to get there,” said Spillan. If the program performed well and outcomes were met despite the procedural findings, the financial consequences associated with the violation could be forgiven once the procedural issues are resolved.
“The no harm defense may or may not be accepted on a case-by-case basis,” said Spillan, “and it may likely require an appeal, but it is often an accepted argument.”
Brustein and Manasevit
Brustein and Manasevit, PLLC provides legal advice on programmatic and fiscal requirements in federal education and other grant programs. Services include mock monitoring visits, audit resolution and defense, legislative services and training programs.
After receiving feedback from applicants and agencies, Grants.gov will deploy a revised and improved application package containing updated standard federal forms for SF-424 R&R (Research and Related) submissions effective July 10. A test package is posted on the Grants.gov site now. Users and applicants should make sure they have the right version of Adobe Acrobat Viewer for grants.gov.
The SF-424 R&R package is used for all research and related grantmaking, which generally includes career development and training programs. Grants.gov originally created the package to provide common application requirements for all of types of programs, replacing numerous agency forms previously used for applications.
A test of the revised application package has been posted as a “funding opportunity” to the training environment on Grants.gov. The Funding Opportunity Number is CAL-RR-MODS. Grants.gov users and applicants can test the revised package and provide comments through June 27.
The enhancements have been made to several of the R&R Budget and Senior Key Person forms. These enhancements are made only to the PDF forms, and no schema or framework changes have been made.
While SF-424 is used by many Grants.gov programs, the SF-424 R&R contains some differences from the SF-424, and federal agencies sometimes include additional agency-specific requirements. For instance, the National Institutes of Health under the Health and Human Services Department and the National Institute of Food and Agriculture at the Agriculture Department each include details in the SF-424 R&R package for their own programs. Agency websites can also provide more supplemental details to information posted on Grants.gov.
NIH, for instance, through its website informs applicants that the SF-424 R&R package is used for all competing applications for research, career development, institutional training awards and Small Business Innovation Research/Small Business Technology Transfer awards. Another form (PHS 398, Rev. 08/12), however, is used for some opportunities when cooperative agreements, not grants, are awarded.
The following forms were modified for improved usability in application packages:
R&R Multi-Project 10 year Budget;
R&R Multi-Project Subaward Budget;
R&R Budget - 10 year;
R&R Subaward Budget Attachments Form;
R&R Subaward Budget Attachments Form - 5 year (30 attachments);
R&R Subaward Budget Attachments Form - 10 year (10 attachments);
R&R Subaward Budget Attachments Form - 10 year (30 attachments);
R&R Senior/Key Person Profile Form; and
R&R Senior/Key Person Profile Expanded Form.
Grants.gov has made nine modifications to the documents, including:
A new budget period being populated with the data from the first budget period; and
Navigation improvements between budget periods, which include the ability to navigate between previous and following years when the form is partly completed.
Additionally, the modifications make it easier to add key personnel, other personnel, equipment and indirect costs. These fields will allow for the creation of new rows, with the button disabled once all the allowable rows have been added.
Applicants are encouraged to click “Check package for errors” prior to submission. Also, Grants.gov also reminds users the data is forward populated from budget Year 1, thus applicants should make sure to update the data in subsequent budget years as needed.
As applicants are testing the new package, taking notes can help in planning upcoming submissions. Knowing how many lines are available, for example, to enter key personnel and equipment can help inputting and prioritizing data in these areas.
Testing the revised budget system also can help with devising workable multi-year budgets and schedules for the proposed project. Being able to practice using the new package and forms can save time and ensure quality submissions when it goes live on Grants.gov in July.
The new uniform grant guidance includes a section (§200.203) and Appendix I to Part 200 (Full Text of Notice of Funding Opportunity) that stipulates where federal agencies should include information on handling situations when applicants experience technical difficulties or systems problems when submitting applications.
§200.203 provides a standard set of categories that should be included in all federal notices, while Appendix I offers additional details for each of these categories. According to the section and appendix, the Application and Submission Information category is where to find details on handling submission problems.
Process for Handling Submission Issues
The Application and Submission Information category is where full details on the electronic submission process for a particular program are offered, including a URL where the applications will be submitted or an e-mail address to send submissions.
Along with this information, federal agencies must offer details on what to do in the event of system problems, mainly with Grants.gov, including a point of contact who will be available in the event the applicant experiences technical difficulties.
Applicants must keep in mind that any extension of a deadline date must be approved by the granting agency offering the grant in advance of the due date and time. In most cases, the Grants.gov contact and the federal agency contact will both be engaged in the process.
Prompted by the provisions in the uniform guidance, federal agencies are starting to provide more detailed information on how to handle problems with online submission systems and the process to secure a deadline extension.
A recent example is the solicitation for the Education Department’s Innovative Approaches to Literacy Program solicitation, which has an entire section focusing not only on submission issues, but also obtaining a deadline extension in case of technical issues with the Grants.gov system.
Those experiencing submission problems are directed to the Grants.gov Support Desk, where they should obtain and store a Grants.gov Support Desk Case Number to ensure they have proof of the problem. An applicant prevented from electronically submitting an application on the deadline date because of Grants.gov technical problems can be granted an extension until 4:30 p.m., EST, the following business day to enable successful electronic submission or for hand delivery.
In this situation, the applicant should immediately call the support desk and obtain a case number and then contact the program official listed in the solicitation, in this case Melvin Graham. The applicant should provide the program contact with an explanation of the technical problem, along with the case number. The deadline extension will be granted once the program official confirms that a technical problem occurred and that the problem affected the submission of a timely application.
The Investing in Innovative Literacy solicitation makes clear the extension is only available for Grants.gov technical problems. Those who failed to fully register to submit their application to Grants.gov or experienced technical issues unrelated to the Grants.gov system aren’t eligible for the extension.
A virus issue on June 13 with Grants.gov illustrates the importance of understanding the process for handling technical issues with Grants.gov. The system experienced problems with its virus checker on that day, which resulted in rejected applications.
The problem was quickly discovered and reported to Grants.gov by savvy applicants using the system. This included Evelyn Ford at the University of Pennsylvania, who was submitting several applications.
She not only contacted Grants.gov about the problem, but posted the following on its listserv to help others:
“About 45 minute ago, we received a Grants.gov rejection notice – VIRUSDETECT – which I believe is the first time we’ve received that message. We now have three proposals hanging out there in the processing stage for about a half-hour or more, which is very unusual. We usually receive the Validation Receipt within a minute or two of the Submission Receipt. We’ve had several successful submissions already this morning.”
The Department of Health and Human Services is the responsible federal agency for the operation of Grants.gov. HHS’ Kevin Harp, who helps oversee Grants.gov, quickly responded to Ford, saying there had been a problem with the virus checking server. He further offered the server had been restarted and the rejected applications were being reprocessed.
The case also highlights the importance of watching for submission receipts and tracking numbers once that submit button is pressed.
Listserv and User Support
Grants.gov users can join System-to-System listservs to ensure they receive crucial details – in real time -- like the one from the University of Pennsylvania.
The listservs, hosted by the National Institutes of Health at the Department of Health and Human Services that is the federal agency responsible for the management of Grants.gov, promote interactions between federal agencies and applicants. The listservs allow members to post and receive messages from other members.
In addition to these listservs. Grants.gov offers a wealth of online user supports, including general and technical help. General supports include a helpful FAQ section, while the technical information includes insights on the recommended software to successfully navigate Grants.gov.
Grant managers can ease their online submission burden in many ways. The best advice is to submit applications ahead of time. Submitting on the deadline day should only be a last resort. A helpful practice is to target online submission at least a day ahead of the deadline, which allows time for mishaps like the recent Grants.gov virus issue. Another tip is to note and retain the information for handling system issues, making it easily accessible. Most solicitations are starting to include sections like the one in the literacy solicitation. Keeping this information handy is helpful especially during the period when the online submission is being readied.
A final strategy is to make sure all the verification receipts have been received from Grants.gov and to keep them on file just in case an issue arises. Ford obviously adheres to this practice, immediately recognizing an issue when she didn’t receive the various receipts and tracking numbers from Grants.gov.
Media Projects: Production & Development Grants — Deadline: August 13, 2014. Eligibility: State and local governments, nonprofits and institutions of higher education. Fund uses: To support multimedia humanities projects in the following formats: interactive digital media; film and television projects; and radio projects. Contact: NEH Division of Public Programs, 202-606-8269; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257433.
Undergraduate International Studies and Foreign Language Program —Deadline: July 28, 2014. Eligibility: Nonprofits and institutions of higher education. Fund uses: To strengthen undergraduate instruction in international studies and foreign languages, with minority-serving institutions and partnerships between colleges/universities and nonprofits receiving preference. Contact: Tanyelle Richardson, 202-502-7625; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257408.
Bridging Cultures at Community Colleges — Deadline: August 21, 2014. Eligibility: State and local governments, institutions of higher education and nonprofits. Fund uses: To strengthen humanities programs at community colleges exploring the ways other cultures influence American society. Contact: NEH Division of Education Programs, 202-606-8380; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257429.
Fellowship Programs at Independent Research Institutions — Deadline: August 13, 2014. Eligibility: State and local governments and nonprofits. Fund uses: To support fellowships at research institutions devoted to advanced study of the humanities. Contact: NEH Division of Research Programs, 202-606-8200; email@example.com. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=257436.
Behavioral Interventions for Child Support Services — Deadline: August 5, 2014. Eligibility: States and territories, including the District of Columbia. Fund uses: To explore the potential relevance and test behaviorally-informed interventions to improve child support services with attention to economics principles such as early engagement, right-sizing orders, reliable payment, family-centered services, and other process improvements. Contact: Jessica Lohmann, 202-205-4854; Jessica.Lohmann@acf.hhs.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=256929.
Victims of Crime Act Victim Compensation Formula Grants — Deadline: July 23, 2014. Eligibility: State victim assistance offices. Fund uses: To support programs compensating crime victims, with up to five percent of each state award available for administrative and training purposes. Contact: 202-307-5983. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257013.
Early Head Start Expansion and EHS-Child Care Partnership Grants —Deadline: August 20, 2014. Eligibility: State and local governments, institutions of higher education, nonprofits, public housing authorities and for-profits. Fund uses: To expand high-quality, comprehensive services for low-income infants and toddlers and their families through EHS-CC Partnerships, or through the expansion of Early Head Start services. Contact: Shawna Pinckney, 866-796-1591; OHS@headstartgrants.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=256890.
Air Pollution Monitoring for Communities — Deadline: October 7, 2014. Eligibility: State and local governments, nonprofits, institutions of higher education and for-profits. Fund uses: To conduct research on empowering communities and individuals to avoid air pollution exposure by using low-cost portable air pollution sensors. Contact: Sheri Hunt, 703-347-8042; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257069.
Prevention and Public Health Fund: Cooperative Agreements to Implement the National Strategy for Suicide Prevention — Deadline: July 16, 2014. Eligibility: State mental health offices. Fund uses: To implement the 2012 National Strategy for Suicide Prevention goals and objectives focused on preventing suicide among working-age adults 25-64 years old. Contact: Richard McKeon, 240-276-1873; Richard.McKeon@samhsa.hhs.gov.More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=256932.
Native Americans/Alaska Natives
Community Development Block Grant for Indian Tribes and Alaska Native Villages — Deadline: July 29, 2014. Eligibility: Tribal governments and organizations. Fund uses: To develop viable Indian and Alaska Native communities through the creation of decent housing, suitable living environments and economic opportunities primarily for persons with low- and moderate-incomes. Contact: Roberta Youmans, Roberta.Youmans@hud.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257613.
Residential Services for Unaccompanied Alien Children — Deadline: August 5, 2014. Eligibility: State and local governments, institutions of higher education, nonprofits, public housing authorities and for-profits. Fund uses: To provide shelter and social services for unaccompanied alien children and youth up to age 18, including health care, mental health, nutrition assistance and counseling services. Contact: Hilda Crespo, 202-205-8395; DCS_ProjectOfficers@acf.hhs.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=256948.
Section 533: Housing Preservation Grant Program — Deadline: July 28, 2014. Eligibility: State and local governments, public housing authorities and nonprofits. Fund uses: To assist programs helping low- and very low-income homeowners in repairing and rehabilitating their homes in rural areas; and assisting rental property owners and cooperative housing complexes in rural areas in repairing and rehabilitating their units. Contact: Bonnie Edwards-Jackson, 202-690-0759; Bonnie.Edwards@wdc.usda.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=257434.
A new bipartisan piece of legislation, The Workforce Innovation and Opportunity Act, is expected to pass Congress soon, reauthorizing the prior Workforce Investment Act for the first time in more than a decade.
The prior WIA (Pub. L. 105-220), enacted in 1998, revolutionized the nation’s workforce system by getting business leaders involved in the local delivery of job training services through involvement on Workforce Investment Boards. It created federal, state and local boards to direct funding for workforce development services. The WIOA reauthorization measure is a compromise between the House-passed SKILLS Act (H.R. 803) and the Senate’s Workforce Investment Act of 2013 (S. 1356).
A bipartisan group of seven House and Senate members worked over several months to devise the deal. Negotiators included Rep. John Kline (R-Minn.) and Sen. Tom Harkin (D-Iowa), the chairmen of the House and Senate committees overseeing workforce issues.
The negotiators agreed the prior WIA legislation needed updating for more than a decade. The new agreement would reauthorize the measure for six years, with the Senate expected to consider the measure first. The goal is to have the new WIOA signed into law by the August congressional recess.
Legislators say WIOA will achieve two goals: (1) streamline the workforce system to prepare workers for the 21st century workforce; and (2) help businesses find the skilled employees they need to compete and create jobs in America.
To achieve these two goals, WIOA would: eliminate programs; apply a single set of outcome metrics for all federal funding programs; streamline workforce boards and regional collaboration; improve state workforce planning; and target youth services funding to the most needy.
The measure would eliminate the following 15 programs:
Youth Opportunity Grants;
21st Century Workforce Commission;
National Institute of Literacy under Adult Education;
Health Care Gap Insurance for Trade Adjustment Assistance participants;
WIA Incentive Grants;
WIA Pilots and Demonstration Grants;
Community-Based Job Training Grants;
Green Jobs Act;
Projects with Industry under the Rehabilitation Act amendments;
Recreation Programs under the Rehabilitation Act amendments;
In-service Training under the Rehabilitation Act amendments;
Migrant and Seasonal Farmworker Program under the Rehabilitation Act amendments;
WIA Veterans Workforce Investment Program;
WIA Workforce Innovation Fund; and
Grants to States for Workplace and Community Transition Training for Incarcerated Individuals under the 1998 Amendments to the Higher Education Act.
Some of these eliminations cause less of an impact than others. On one hand, solicitations for funding under the Green Jobs Act haven’t been offered since FY 2009. The Workforce Innovation Fund and Incentive Grants eliminations, however, have active awards. The Labor Department’s Employment and Training Administration is in the midst of its FY 2014 Workforce Innovation Fund grantmaking. The program funds innovative employment and training programs generating long-term results for job seekers and employers. Additionally, ETA is in the process of providing Incentive Grants to eight states, who exceeded performance levels.
WIOA would improve transparency by requiring that six primary indicators for performance be used for adults receiving workforce services and six for youths participating in the programs.
This isn’t the only reference to outcome metrics, which include reporting and evaluation. In analyzing the legislation, reporting and evaluation are increasingly important. The terms “performance accountability,” “reporting” and “data” have become a focus of the legislation, consistent with the uniform grant guidance and its focus from compliance to performance.
Under the one-stop program section, the measure would require the development of strategies for aligning technology and data systems across providers to enhance service delivery and improve efficiencies in reporting on performance accountability measures. This would include the design and implementation of common intake, data collection, case management information, and performance accountability measurement and reporting processes.
Board, Regional Streamlining
The proposed legislation would also rework the Workforce Investment Boards by reducing the number of required board members at both the state and local levels. The boards would remain a business majority with a business chairman, while the representation for the workforce would be increased to at least 20 percent. At the local level, one-stop members would no longer be required members.
WIOA also proposes to improve regional coordination among workforce boards, with a goal being to develop and implement regionalinitiatives focusing on in-demand industry occupations and sectors.
State Workforce Planning
Provisions focusing on states include restoring the 15 percent set-aside of allocated WIOA funding for governors to use at their discretion for workforce development activities.
States also would be required to devise four-year workforce plans for each of WIOA’s four core areas: (1) employment and training services; (2) adult education and literacy services; (3) employment service; and (4) vocational rehabilitation services for individuals with disabilities. The plan would be based on strategic research, including analysis of state economic conditions, current workforce and workforce development programs.
Of the formula funding for youth services, 75 percent would be targeted to out-of-school youth and would focus on career-pathways, drop out recovery efforts and education and training leading to a high school diploma and a recognized postsecondary credential.
States would be able to decrease the amount to 50 percent if their analysis of the in-school youth and out-of-school youth populations in their state is not sufficient enough to expend 75percent of their funding.