While the uniform grant guidance will produce changes in grants administration for all nonfederal entities when it becomes effective Dec. 26, tribal governments must also strike a balance between a need for compliance and their autonomy as sovereign nations, because of their unique relationship to the federal government.
Emerging issues include applicant eligibility, remedies and fines, procurement, audit reporting, indirect costs and other costs. Additionally, as with all nonfederal entities, the uniform guidance is designed to reduce fraud, waste and abuse, including improper payments.
More than $600 billion in federal funds are awarded annually to nonfederal entities for grants and cooperative agreements. Of this amount, more than $100 billion annually are improperly paid. These improper payments could result from errors, lack of knowledge, missing documentation or fraud, waste and abuse. The unacceptable level of misspent federal funds, under any circumstance, has pressed Congress to direct the Office of Management and Budget to recover $50 billion of improperly paid funds annually. It was also among the motivating factors for OMB to create the uniform grant guidance with the goals to reduce administrative burden and the amount of fraud, waste and abuse.
Nationhood Status and Federal Mandates
The United States has a unique legal and political relationship with tribal governments and organizations. U.S. relations were first defined through the treaty-making process. These “contracts among nations” recognized and established unique sets of rights, benefits and conditions. The first treaty was made with the Delawares in 1778. The Bureau of Indian Affairs was created in 1824. The U.S. Supreme Court ruled in the 1830s that tribes possess a nationhood status and retain inherent powers of self-government. The ruling included a legal obligation called the federal Indian trust responsibility, under which the U.S. “charged itself with moral obligations of the highest responsibility and trust” toward Indian tribes.
Congress ended treaty-making with Indian tribes in 1871. Since then, relations with Indian groups have been formalized and/or codified by congressional acts, executive orders, and executive agreements. Article 1, Section 8 of the U.S. Constitution vests Congress with the authority to engage in relations with the tribes.
Concurrently, under the federal Indian trust responsibility, the federal government has a legal obligation to protect tribal treaty rights, lands, assets and resources, as well as a duty to carry out the mandates of federal law. Over the years, the juxtaposition between nationhood status and the need to carry out federal mandates has been at the center of numerous Supreme Court cases, making it one of the most important principles in federal Indian law, according to BIA.
A federally recognized tribe has a government-to-government relationship with the U.S., and is eligible for federal funding and services from BIA, the Department of Health and Human Services that includes the Indian Health Service, the Environmental Protection Agency and other federal agencies and programs. At present, there are 566 federally recognized tribes.
Within the government-to-government relationship, BIA and other federal agencies provide services directly or through contracts, grants or compacts. Federally recognized tribes maintain their inherent rights of self-government (i.e., tribal sovereignty), yet need to be mindful of the federal mandates associated with the federal funding they receive.
Uniform Grant Guidance
The uniform grant guidance combines eight previously separate grant circulars into one combined set of guidance for all federal and nonfederal entities. Its formal name, the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, became effective for federal agencies on Dec. 26, 2013, and will become effective for nonfederal entities this year, no later than Dec. 26.
Tribal governments can best prepare for the effective date by reviewing the uniform guidance, noting differences between the prior circulars and the new guidance and making any revisions to local policies to better align with the new requirements, as appropriate and in relation to tribal sovereignty. Some highlights that may have special significance for tribal governments include applicant eligibility, remedies and fines, procurement, audit reporting, indirect costs and more.
During the pre-award process, federal agencies are required to create funding opportunity announcements that must clearly identify the types of entities that are eligible to apply (§200.203 and Appendix I), including “any factors or priorities that affect an applicant’s or its application’s eligibility for selection.” The guidance further instructs, “It is important to be clear about the specific types of entities that are eligible.”
Even with a notation that nonprofits are eligible to apply, however, there can still be uncertainties about tribal organizations that may be nonprofits. “Similarly, it is better to state explicitly that Native American tribal organizations are eligible than to assume that they can unambiguously infer from a statement that nonprofit organizations may apply.” Grant announcements, therefore, should clearly state when tribal governments and organizations are eligible. When not expressly stated, tribal governments and organizations should clarify with federal agencies if they are eligible to apply. Tribal governments and organizations should also be prepared to submit documentation of eligibility (e.g., proof of 501(c)(3) status as determined by the Internal Revenue Service or an authorizing tribal resolution).
Also under Appendix I, federal agencies are required to include the criteria that will be used to evaluate applications. “This includes the merit and other review criteria that evaluators will use to judge applications, including any statutory, regulatory or other preferences (e.g., minority status or Native American tribal preferences) that will be applied in the review process.” Tribal governments or organizations should be mindful to look for preferences noted in application guidelines, and to specifically state in their narratives that they are eligible to receive all possible preference scoring, as appropriate.
Procurement, Competition and Other Transactions
The procurement sections (§§200.317-200.326) should be reviewed carefully. Some of the procurement methods are new and some are revised from the prior grant circulars. All nonfederal entities, including tribal governments and organizations, may need to review and revise local procurement policies. Additionally, under competition (§200.319), the guidance warns, “Where there is a conflict between state or tribal law and this guidance as implemented in regulation with respect to the administration of a federal award, this federal guidance prevails.” Tribal governments should seek the counsel of their advisors if there are any questions about autonomy and the uniform grant guidance.
In a related matter for rental costs of real property and equipment (§200.465), the uniform guidance places some constraints on “less-than-arm’s-length” leases and transactions. Tribal governments and organizations had previously contacted the Council for Financial Assistance Reform and OMB during the comment period of the draft uniform guidance regarding the matter of tribal autonomy and what they believed was a better way to support tribal enterprises. COFAR reviewed those concerns, but kept the language as stated, despite the government-to-government relationship.
Fines, Penalties and Other Settlements
Reimbursement of costs for fines and other penalties resulting from nonfederal entity violations, alleged violations, or failure to comply with federal law are unallowable. Under §200.441, tribal governments and organizations will need to comply along with state, local and foreign governments, “except when incurred as a result of compliance with specific provisions of the federal award, or with prior written approval of the federal awarding agency.”
General Cost of Government
Salaries and associated fringe benefits for tribal council members and other leaders are unallowable (§200.444) except as defined for travel costs (§200.474). This also includes, “Salaries and expenses of the Office of the Governor of a state or the chief executive of a local government or the chief executive of an Indian tribe.”
Indirect Costs and Cost Allocation Plans
In Appendix VII, tribal governments and organizations wishing to seek indirect cost rate reimbursements must submit indirect cost rate proposals to their cognizant federal agency, the Department of the Interior.
Appendix V, which relates to central service cost allocation plans, mentions a resource brochure published by the Department of Health and Human Services, A Guide for State, Local and Indian Tribal Governments: Cost Principles and Procedures for Developing Cost Allocation Plans and Indirect Cost Rates for Agreements with the Federal Government.
Nonfederal entities that receive federal awards must submit audit reports to the Federal Audit Clearinghouse. The FAC serves as the repository of record for audits and is authorized to make reporting packages available on a website for public disclosure. Tribal governments and organizations expressed concerns about posting reports online for public viewing. The uniform guidance addressed this concern (§200.512(b)(2)) with an exception, “An auditee that is an Indian tribe may opt not to authorize the FAC to make the reporting package publicly available.” Tribal auditees are still required to submit audit reports to the FAC and provide a copy to any pass-through entities, as appropriate. Unless restricted by federal statute or regulation, if a tribe opts out of online posting, it must make copies available for public inspection.
Under supersession (§200.104) and applicability (§200.110), the uniform guidance supersedes prior OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments.
Bureau of Indian Affairs
BIA, the oldest bureau within DOI, provides services directly or through contracts, grants, or compacts to approximately 1.9 million American Indians and Alaska Natives. There are 566 federally recognized American Indian tribes and Alaska Natives in the United States. BIA is responsible for the administration and management of 55 million surface acres and 57 million acres of subsurface minerals estates held in trust by the U.S. for tribal governments and organizations.
Programs administered through BIA include social services, natural resources management, economic development programs, law enforcement and detention services, administration of tribal courts, implementation of land and water claim settlements, housing improvement, disaster relief, replacement and repair of schools, repair and maintenance of roads and bridges, and the repair of structural deficiencies on high hazard dams.
The Bureau of Indian Education provides educational services that include an education system consisting of 183 schools and dormitories educating approximately 42,000 elementary and secondary students and 28 tribal colleges, universities and post-secondary schools.
During a question-and-answer session at the American Institute of Certified Public Accountants’ recent Not-for-Profit Industry Conference, attendees asked questions on many key issues involving federal grants and audits, including questions related to the new uniform grant guidance. Session panelists were Diane Edelstein, partner with Maher Duessel and Brian Schebler, director of public sector services with McGladrey LLP. This is the second of two articles about the session, including abridged responses to questions from the audience.
Q: If you are assuming responsibility for other auditors when conducting a single audit, and not making reference in your opinion to them, are you still supposed to disclose that on the Data Collection Form?
A:Brian Schebler: No. If you take full responsibility of the engagement, you do not have to refer to the other auditors in the Data Collection form.
Q: We sometimes have difficulty determining the federal portion of a state grant. If the client or pass-through entity knows how much is federal, how do I report this?
A:Diane Edelstein: If you go to the uniform guidance on completing your SEFA (§200.510), if you don’t know what portion is federal and what portion is state, you should report it all as federal on the SEFA. I would recommend including a footnote with that saying the portion for this section is indeterminable between federal and state, but basically if you don’t know it, it all goes as federal on the SEFA.
Q: We will receive federal grants for the first time this year. Any advice?
A:D.E.: The first thing I would recommend is to talk to your auditor and if [he or she] is not qualified to do single audits, shop for another auditor right away if you need advice. As a client, the auditor generally is not going to come in and go deep diving until you reach the single audit threshold. However, the pass-through entity can come in [for monitoring activities] or the inspector general from the federal awarding agency can come in and conduct an audit. As soon as you start spending federal dollars, you have to follow the cost principles so be aware of the post-award administration and cost principle requirements.
Q: As a subrecipient, what would be the best practice for us to take to require our pass-through entity to realize the funds are federal funds and to provide us with a Catalog of Federal Domestic Assistance number for the award?
A: D.E.:If a subrecipient doesn’t know whether the funds are federal funds or whether they are attached to a CFDA number, the pass-through entity is not doing proper subrecipient monitoring. This is spelled out in uniform guidance that the pass-through entity has to tell you the CFDA number up front (§200.331(a)). If the pass-through entity doesn’t know how much is federal and how much is state and is not sure of the ratio, the guidance says the pass-through entity must provide the best information available to describe the federal award and subaward.
Q: We’ve had some confusion concerning our responsibility to check whether a contractor has been debarred. What are our obligations?
A: B.S.:Your obligation is to actually verify whether the contractor has been debarred. You have to have a certification process to verify that the contractors are not debarred or suspended from participation.
D.E.:If you have the contractor certify and sign off that they were not suspended or debarred, that should meet the essence of the rules. However, the compliance supplement made it so that we expect you to go to SAM.gov to check there (see ¶360).
Q: Regarding the Government Auditing Standards’ 80-hour continuing professional education requirement, what do you count towards this requirement under types of CPE?
A: D.E.:Under the 80-hour portion, anything that helps you to be a better auditor counts in that part.
B.S.:What does count under that requirement is a really long list. What doesn’t count would be something like a course that teaches you how to prepare tax returns. However, a course that teaches you what the tax implications are on nonprofit organizations would count. Teaching marketing skills wouldn’t count towards that portion either, but courses on managing individuals can because it teaches how to treat people and manage your business.
Q: Where do I include new loan expenditures and preexisting balance information in the Schedule of Expenditure of Federal Awards under the uniform guidance?
A: D.E.:It used to be that you could put loan balances in the footnotes of the SEFA, but under the uniform guidance, everything goes up in the face of the SEFA (§200.510(b)(5)), and that way the grand total will tied to grant total on the Data Collection Form.
Q: Are auditors required to test internal controls over an entity’s financial statements or are they just required to test internal controls over Type A programs?
A: D.E.:Financial statement audit requirements are covered under the Government Auditing Standards. GAGAS doesn’t say I have to test internal controls over financial statements, but many times, I need to test internal controls to give a financial statement opinion. If I’m auditing a very small entity, under GAGAS, I don’t have to test internal controls, but I do have to gain an understanding of the internal controls.
The Centers for Medicare and Medicaid Services plans to issue guidance to states explaining their responsibilities for participating in the Medicaid Interstate Match in response to a recent recommendation by the Department of Health and Human Services Office of Inspector General.
CMS estimated that about 5.8 percent, or $14.4 billion, of Medicaid payments made in fiscal year 2013 were improper, more than half of which were due to eligibility errors. One type of eligibility error occurs when beneficiaries remain enrolled in a state’s Medicaid program after they have become ineligible because they are no longer residents of the state or have failed to report a change of address.
CMS created the Public Assistance Reporting Information System (PARIS) Medicaid Interstate Match as a key tool to help reduce improper payments by identifying beneficiaries who are enrolled in multiple state Medicaid programs. States submit Medicaid enrollment data to the Defense Manpower Data Center, which compares Social Security Numbers of enrolled beneficiaries from one state another to develop its quarterly matching report.
After state Medicaid agencies receive their match information from DMDC, states must verify the matches to determine whether beneficiaries are still eligible to receive benefits in their state. If a state verifies a match and determines that a beneficiary is ineligible to receive Medicaid, it may act to discontinue benefits.
Even though CMS requires state participation in the Medicaid Interstate Match as a condition of receiving Medicaid funding, OIG found that state participation was limited. While all states in August 2011 submitted enrollment data, OIG found that 14 states did not submit enrollment data for all of their beneficiaries. For example, one state did not submit enrollment data for 79 percent of its Medicaid beneficiaries. “To maximize the potential for the Medicaid Interstate Match to identify beneficiaries who may be enrolled in multiple state Medicaid programs, each state needs to submit complete enrollment data for all of its beneficiaries,” OIG added. State officials explained that they did not submit complete enrollment data because they lacked staff to prepare the submission or because their state systems were not compatible with the DMDC system.
OIG also found that states did not verify about 68 percent of the matches found by the Medicaid Interstate Match system because of issues with enrollment data, OIG said. State officials told OIG that they did not verify the matches because other states submitted enrollment data for beneficiaries who were no longer enrolled in their Medicaid programs, or because they submitted incomplete or inaccurate enrollment data.
“When a state submits Medicaid eligibility data that indicates the beneficiary is no longer enrolled in its Medicaid program, it can create a ‘false positive’ match,” OIG said. When such inaccurate information is included in the match file, OIG added, it is difficult for other states to determine whether such beneficiaries have an overlapping Medicaid coverage period, thus requiring states to conduct resource-intense follow-up activities. “Given their limited information and resources, states may conclude that the match does not merit verification,” OIG explained.
States reduce improper payments in the program when one or more states discontinue Medicaid benefits to beneficiaries found to be enrolled in multiple state Medicaid programs. Still, while states verified 32 percent of the matches from the August 2011 match, only 41 percent of those matches resulted in a discontinuation of benefits. Moreover, OIG found that even for those instances where benefits were discontinued, none of the states recovered any improper payments from the managed care organizations because they lacked the time and resources needed to recover the payments.
OIG said that although CMS issued guidance in 2010 on state requirements to participate in PARIS, it does not address the submission of Medicaid enrollment data, verification of matches and the discontinuation of benefits. “Guidance for CMS could assist states in complying with the requirement for participating in the Medicaid Interstate Match [and] could help states receive the full benefit of their participation,” OIG said. “CMS should define the meaning of ‘participation’ in the match by establishing clear expectations for the actions that states should take to comply with the requirement.”
CMS officials concurred with an OIG recommendation to issue further guidance to states to clarify the requirement for participating in the Medicaid Interstate Match.
Officials with the Wisconsin Department of Administration planned to determine if a separate annual audit of the state’s Home Energy Assistance and Weatherization Assistance programs was warranted in response to a recent Wisconsin Legislative Audit Bureau audit recommendation.
The Wisconsin Home Energy Assistance Program provides financial assistance to low-income individuals and families to offset energy costs, and the Wisconsin Weatherization Program provides services for low-income individuals and families to reduce energy consumption. In fiscal year 2012-2013, expenditures in the two programs totaled about $217.1 million and aided more than 220,000 households. Local energy assistance and local weatherization agencies are required to review documentation to determine eligible participants.
The Wisconsin Department of Administration oversees the programs using desktop and administrative reviews of local energy assistance agencies. It also conducts annual administrative reviews and dwelling unit inspections of each local weatherization assistance agency.
Although state law requires WDOA to provide for an annual independent audit of the programs, the audit bureau found that it had not done so. “Annually auditing these programs could facilitate more effective program oversight,” WLAB said. It recommended that WDOA comply with state law and provide for the audit or, if it determines that the potential benefits of complying with this requirement do not justify the added costs, request that that the state legislature eliminate the statutory requirement for the audit.
WDOA staff said they would assess whether there are any “gaps” in the current audit efforts that would be addressed by a separate annual audit and would determine the cost of such an audit. “The energy assistance and weatherization programs are subject to several existing audit requirements,” WDOA said. “In most years, they are audited on an annual basis as required by federal funding agencies. DOA will review the federal audit requirements … to determine if there are efficiencies that may be gained by combining the audit efforts.”
As part of 78 desktop reviews conducted from FY 2008 to FY 2011, WDOA official told WLAB that it investigated 50 cases of participants using fictitious Social Security numbers. While WDOA contacts these agencies to address areas of noncompliance related to participant eligibility, WLAB found that WDOA does not require those agencies to retain original source documentation. WLAB noted that the U.S. Department of Health and Human Services in 2010 issued guidance for the energy assistance program emphasizing the important of implementing strategies to monitor and detect fraud, waste and abuse by applicants, contractors and administering agencies.
Without such documentation, “there is no mechanism in place for WDOA staff or outside parties to independently verify the accuracy of this information,” WLAB said. “Without original documentation, it is difficult to determine whether the information was recorded correctly or whether the information provided by applicants was inaccurate. In addition, obtaining access to additional sources of data on applicant income could further facilitate independent verification of eligibility.”
Therefore, WLAB recommended that WDOA:
ensure that applicant reported incomes are verified using additional sources of data;
implement policies that require retention of original source documentation that support applicant eligibility for at least three years from the date of application; and
report the status of its efforts by Nov. 14.
WDOA officials said they would consider alternatives that would provide assurance of program eligibility, do not increase administrative costs and burden for local delivery agencies, and do not present a risk to the security of confidential information. It also agreed to report on its efforts by the recommended date.
The Council on Governmental Relations, which represents numerous universities and research institutions, is urging the National Science Foundation to request a deviation from the Office of Management and Budget’s uniform grant guidance to extend the grant closeout reporting date to 120 days after the end date of the period of performance.
The recommendation came in comments submitted to NSF’s draft revision to its Proposal and Award Policies and Procedures Guide, which when finalized on Dec. 26, would implement the uniform guidance. The draft included only two deviations from requirements in the uniform guidance (see “NSF Seeks Comments on Draft Policy Guide,” July 2014). One deviation would limit to two months’ salary compensation for senior personnel/faculty. NSF regards time spent on research to be included within a faculty member’s regular organizational salary, and has maintained the two-month grant compensation limitation for more than 40 years. The other would allow for an alternative to the Federal Financial Report.
NSF concurred with all other requirements in the uniform grant guidance and submitted its draft revision to OMB, as all federal agencies were required to do so by June 26. After OMB’s review and approval, all agency revised regulations and the uniform grant guidance become effective as of Dec. 26 for all federal funding awarded after that date.
The PAPPG, which combines NSF’s Grant Proposal Guide and its Award and Administration Guide, states that NSF grantees also must liquidate all obligations incurred under their awards no later than 90 calendar days after the award end date, matching the requirement in the uniform guidance (§200.343). This timeframe is consistent with current practice, as defined under both OMB Circulars A-102 and A-110.
COGR, in its comments on the draft PAPPG, said it supports timely closeouts, but stressed that the 90-day standard is an “obstacle to effective award management.” Instead, COGR countered, “A new 120-day standard would ensure that research performance is not adversely impacted by an artificially short period for closeout.” The council continued, “Further, it would enable submission of accurate and compliant reports [that] do not require revisions and do not jeopardize institutional funds due to hurried reporting.”
COGR noted that §200.343(g) states, “federal awarding agencies should complete all closeout activities no later than one year after the acceptance of all required final reports.” The organization said this effectively provides a 15-month (i.e., one year plus 90 days) period for closeout activities after the end of the award for federal and nonfederal combined activities. The council argued that a 120-day reporting standard for nonfederal entities could be integrated within those 15 combined months to allow for timely and accurate closeouts.
COGR further asked NSF to request a deviation from OMB that would exempt institutions of higher education, nonprofit research organizations and other researcher from the procurement sections (§§200.317-200.326) in the uniform guidance, adding that the procurement standards in Circular A-110 be instated for these research institutions. COGR said the procurement provisions in the uniform guidance would: create increased cost and administrative burden via expensive processing and IT system changes; require a long lead time to implement that cannot effectively be accomplished by Dec. 26; and increase the risk to program performance.
The organization also discussed provisions related to indirect cost recovery in Chapter II.C.2.g(viii) in the Grants Policy Guide and Chapter V.D.1(i) in the Award and Administration Guide. These sections state, “foreign grantees that have never had a negotiated indirect cost rate are limited to an indirect cost rate recovery of 10 percent of modified total direct costs. Foreign grantees that have a negotiated rate agreement with a U.S. federal agency may recover indirect costs at the current negotiated rate.” COGR said this provision suggests that this rule would not be applicable to domestic grantees, so it sought clarification to state that these rules apply to all grantees. The uniform grant guidance explains the de minimis rate in §200.414 and in §200.331 for pass-through entities.
Another provision in the Grant Proposal Guide states that foreign subrecipients are not eligible for indirect cost recovery unless the subrecipient has a previously negotiated rate agreement with a U.S. federal agency that has a practice of negotiating rates with foreign entities. COGR contended that this provision was inconsistent with the previously mentioned related sections and the uniform guidance and requested that NSF update it accordingly.
The Department of Health and Human Services Departmental Appeals Board recently upheld an Administration for Children and Families disallowance of almost $1.4 million in federal Head Start and Early Head Start funding from fiscal year 2010 to FY 2012 sought by Texas Neighborhood Services, Inc. The disallowance primarily stemmed from TNS’ failure to show that it reasonably made incentive compensation payments under an established policy.
According to the Office of Management and Budget uniform grant guidance (§200.430(f)), “incentive compensation to employees based on cost reduction, or efficient performance, suggestion awards, safety awards, etc., is allowable to the extent that the overall compensation is determined to be reasonable and such costs are paid or accrued pursuant to an agreement entered into in good faith between the nonfederal entity and the employees before the services were rendered, or pursuant to an established plan followed by the nonfederal entity so consistently as to imply, in effect, an agreement to make such payment.” Head Start regulations require that Head Start grantees implement written personnel policies for staff, including the procedures for conducting staff performance appraisals.
TNS is a nonprofit organization that provides Head Start and Early Head Start services to several counties in Texas. In a February 2013 monitoring review, ACF found that TNS failed to ensure that its incentive compensation payments to employees for FY 2010-2012, totaling about $1.369 million, were reasonable, and that it did not document the basis for the amounts awarded. In September 2013, ACF disallowed these funds, and TNS subsequently appealed the determination.
Appeals Board Ruling In its ruling, the appeals board found the ACF properly disallowed the incentive compensation payments because TNS had not shown that the payments were reasonable, did not support them with adequate documentation and did not make them under its established plan. TNS has had a formal incentive compensation policy since August 2007, which allows TNS personnel to receive increases in salary (i.e., incentive awards) for consistent or exemplary job performance, based on a series of specific guidelines. It also had a compensation plan for determining salaries since 2009. TNS argued that its incentive compensation awards should be allowable because it made them pursuant to these policies.
The TNS compensation plan contains an appendix with a matrix for “determining employee worth to the organization that TNS will follow” in determining incentive compensation awards. Based on this matrix, TNS assigns letter grades based on certain criteria. However, the appeals board determined that some employees received less generous incentive compensation awards than did employees with equivalent or lower grades. Because the company did not provide any employee-specific documentation substantiating the reason for the differing awards, the board agreed with ACF’s ruling that TNS failed to follow its compensation policies.
The appeals board also determined that the incentive compensation awards were not reasonable. For example, in FY 2011, 10 out of 12 management employees received incentive payments in excess of 10 percent of their salaries, and TNS’ executive director received awards up to about 30 percent of his salary. The board said that TNS consistently gave differing incentive compensation awards, both in terms of actual money awarded and in terms of the award as a percentage of an employee’s annual salary, to employees who in the same letter grade, and at times gave more generous awards to employee with lower grade. It also gave larger incentive compensation awards to managers.
“The questions these differences raise about the reasonableness and necessity of the payments amount to more than a ‘subjective’ finding of unreasonableness,” the board said. “A prudent person would not determine incentive awards in what appears to be an arbitrary manner. Without further explanation or evidence supporting such differential treatment, these differences cannot be viewed as consistent with TNS’ own compensation plan.”
The appeals board also raised another issue. “If employees believe that awards are based on factors such as favoritism, rather than performance, the awards may act as a disincentive rather than an incentive to achieve superior performance,” it said. Therefore, the board upheld the ACF disallowance of the incentive compensation funds, along with erroneous charges for repair costs charged to a Head Start/Early Head Start award, which in all totaled $1.392 million.
Audit organizations should be aware that the quality of their single audits will be under federal scrutiny in four years under a provision in the Office of Management and Budget’s uniform grant guidance calling for a governmentwide audit quality review every six years. This is the first time the federal government has established a set schedule for reviewing single audit quality.
In §200.513, the guidance states that a federal agency designated by OMB will lead a governmentwide project to determine the quality of single audits by providing a “statistically reliable estimate of the extent that single audits conform to applicable requirements, standards, and procedures.” The agency will make recommendations to address any audit quality issues, which could include changes to applicable audit requirements, standards and procedures. This governmentwide audit quality project will be conducted every six years beginning in 2018, and the results must be public.
The governmentwide study will evaluate whether auditors are addressing single audit deficiencies identified most recently in an audit sampling project released in 2007 by the President’s Council on Integrity and Efficiency and the Executive Council on Integrity and Efficiency (now known as the Council of the Inspectors General on Integrity and Efficiency). The 2007 study found that more than a third of the 208 audits reviewed were unacceptable. The councils determined that 115, or 48.6 percent, of the single audits reviewed were acceptable and could be relied upon; 30 audits, or 16 percent, were of limited reliability; and 63 audits, or 35.5 percent, were unacceptable and could not be relied upon.
Some of the most prevalent deficiencies found in the 2007 study were the failure to audit a program as a major program, errors in the Schedule of Finding and Questions Cost, and missing documentation related to a finding. A recommendation in that study to revise and improve single audit standards, criteria and guidance helped spur the changes to the audit process now contained in the uniform guidance.
Other Audit Quality Deficiencies
During a session on audit quality at the American Institute of Certified Public Accountant’s recent Not-for-Profit Industry Conference, Nancy Miller, executive director with KPMG US, and AICPA Technical Manager Teresa Bordeaux discussed other leading audit deficiencies. When auditing major programs, auditors have failed to audit programs contained in a cluster, failed to meet audit percentage of coverage requirements and have applied an incorrect threshold for Type A and Type B programs (see ¶331 in the Single Audit Information Service). Another deficiency is the failure to document the testing of controls and compliance for the relevant assertions related to each compliance requirement with a direct and material effect for the major program (see ¶537 in theService).
document the evaluation of management’s skills, knowledge and experience to effectively oversee nonaudit services performed by the auditor;
document threats to independence that require the application of safeguards in accordance with the conceptual framework for independence; and
meet GAGAS continuing professional education (CPE) requirements.
Miller noted that the 2007 study specifically compared large and small audit firms. She anticipated that the 2018 study would be more detailed. “I think you will see a much broader statistical breakdown to try to get more root cause evidence on the deficiencies,” she said.
Advice to Auditors
Bordeaux advised audit firms to document policies and procedures for planning and performing audit engagements. This process includes ensuring that only qualified staff with appropriate GAGAS CPE credits are assigned to the engagements to enable the firm to demonstrate audit competency. “The important question is, ‘Do you have the competency to do the audit?’” she said. “It’s not just do you have the [CPE] hours.”
Miller stressed that the GAGAS peer reviews can help auditors address deficiencies and meet professional standards (see ¶733 in the Service). “The peer review program is intended to be remedial in nature, but we have to police ourselves,” she said. “If there are firms that have peer review deficiencies, the [deficiencies] need to be addressed in an appropriate fashion and resolved. If you can address them internally and develop promising practices, that’s a win for everybody.” An audit firm also should select a peer reviewer that has adequate experience and knowledge in the type of engagements conducted by the audit firm, Miller added.
The Department of Housing and Urban Development, Office of Community Planning and Development plans to award $1.79 billion in funding for its Continuum of Care program (CFDA No. 14.267) — the leading source of federal funding for homeless programs.
CoC funding, which is currently being guided by an interim rule, supports communitywide efforts to end homelessness by quickly rehousing homeless individuals and families and providing crucial supportive services.
HUD sets an Aug. 6 deadline for collaborative applicants to register for the upcoming funding competition. The mandatory registration must be received before 8 p.m. on the deadline day.
CoC planning boards are responsible for establishing and operating homelessness systems for specific geographic areas. Under the interim rule, these planning bodies designate collaborative applicants or lead agencies to submit a CoC funding application to HUD. State and local governments, public housing agencies and nonprofits are eligible for the designation.
The designation must state whether the planning body is assigning more than one applicant to apply for funds. Those listing multiple applicants, must designate a lead agency or collaborative applicant. Those with only one designee automatically designate that applicant as the collaborative applicant.
This is important because collaborative applicants lead the funding process, ranking new and existing projects in their geographic region for funding through the CoC’s priority listing in the application. For-profits are ineligible to apply or to receive project funding via subawards.
HUD does not use Grants.gov for its CoC grants, instead using an in-house portal called e-snaps. Collaborative applicants must complete the registration using this portal, located at www.hud.gov/esnaps. Those failing to register will not be able to access the FY 2014 CoC Priority Listing, meaning they lose the ability to rank projects for funding.
Interim Rule and Competition
As applicants prepare for the upcoming FY 2014 solicitation, HUD strongly recommends referring to the registration document, interim rule and the FY 2013-FY 2014 CoC program competition NOFA. The latter offers many funding details on the upcoming competition, with an FY 2014 addendum expected by fall to make any final changes to the process and set deadlines, including those for applications and application review.
The registration notice has already started offering insights on FY 2014 grantmaking. For example, the FY 2014 funding law (Pub. L. 113-76) and interim rule authorize increases in project administrative costs, leasing, rental assistance and operating funds for renewal projects. The notice, however, says HUD will not fund all of these increases at the maximum authorized levels due to insufficient funds. HUD, likewise, has capped CoC planning grants at $250,000 each.
Funding Priorities Update
The funding priorities outlined in the interim rule are expected to stay, but the notice does provide an update on the controversial high-performing communities (HPC) designation. The notice confirms funds will still be available for five categories: (1) permanent housing; (2) transitional housing; (3) supportive services only; (4) Homeless Management Information System (HMIS); and (5) homelessness prevention.
It goes on, however, to provide an update on the final category. The notice points out no CoC can currently use funding for homeless prevention, because none have received the HPC designation. Under the interim rule, HUD can select up to 10 CoCs as HPCs each year, but thus far hasn’t bestowed the designation.
Collaborative applicants can apply for the designation by demonstrating they meet four HPC standards, one of which requires that less than 5 percent of those leaving homelessness became homeless again within two years in a CoC’s geographic area.
CoCs looking to achieve the designation should evaluate their HMIS, because another HPC standard focuses on this system. An HMIS helps localities collect data on the local homeless population and services provided to them. The HPC designation is contingent on a CoC’s HMIS finding bed coverage and service coverage rates of at least 80 percent.
In general, applicants should not ignore the HMIS funding, especially in today’s climate where funding requests must be backed by quality data. A high-performing HMIS can help obtain an accurate picture of the homeless situation and pinpoint potential best practices. This type of information is very valuable in securing not only CoC funding, but also funding available from other private and federal funding opportunities.
HUD encourages CoCs to use the many methods available to keep them updated on the FY 2014 grantmaking. The agency will notify and remind collaborative applicants of the registration and application deadlines through its websites located at www.hud.gov and www.onecpd.info and via the CoC email-based listserv. CoCs can join the listserv by visiting https://onecpd.info/mailinglist/.
A provision in the Office of Management and Budget’s uniform grant guidance (§200.301) requires grant recipients to offer convincing performance reports that identify promising practices and make the case for future funding awards by showing evidence of program success.
The overall goals of the section, which focuses on measuring performance, are for federal agencies to rework performance reporting to: (1) improve program outcomes; (2) share lessons learned; and (3) spread the adoption of promising practices. In addition to focusing on progress with current funding, applicants and recipients should keep these three goals in mind as they are preparing future applications and reports.
Frequency and Content
The actual language in §200.301 states: “Performance reporting frequency and content should be established to not only allow the federal awarding agency to understand the recipient progress but also to facilitate identification of promising practices among recipients and build the evidence upon which the federal awarding agency's program and performance decisions are made.”
Federal agencies must provide applicants and grantees guidance on the frequency and content of performance reporting in their award announcement (§200.210). Additionally, where appropriate, the federal award may include specific performance goals, indicators, milestones or outcomes with an expected timeline for accomplishment.
Applications and Announcements
Federal agencies articulate reporting expectations to applicants and grantees in applications, as well as award announcements. Currently, federal agencies are reworking reporting processes to meet the edicts of the uniform grant guidance by the Dec. 26 implementation deadline. Applicants and grantees should be making preparations as well.
Applicants can start by ensuring their narrative section clearly outlines goals and objectives, which helps awarding agencies identify promising practices and can improve outcomes. For example, a solicitation may state performance reports are due every six months, therefore, applicants can arrange the grant narrative, especially the goals and objective section, with this in mind.
Throughout the narrative, applicants can show comprehension of the reporting process by making references to the reporting timeframes, in this case six months. They can do so by making statements such as “in the first six months” and “the final six months” when referencing goals and objectives in the narrative. Additionally, under §200.301, making reference to any potential promising practices in the narrative is recommended. Keep in mind mentioning a potential promising practice also requires referencing data indicating its worth. For instance, a child care applicant or grantee may have data showing participating children are healthier and more prepared to learn due to a new practice involving a partnership with a health care provider that visits the center for regular checkups.
An applicant can really show its comprehension of the initial reporting process in the goals and objectives section by breaking down the information based on reporting frequency and content. This section can list goals and objective and then provide separate lists on what will be accomplished in six-month increments, under this particular example. Any promising practices referenced in the narrative should be highlighted in the objectives or goals section.
Using this process can ease recipient reporting if the grant is awarded by already having the goals and objectives divided into reporting time periods. Even if the reporting frequency or content changes from application to award notice, applicants will still have a good start in providing quality reports.
As applicants and grantees rework performance reporting practices, they should contact program officials for insights and check the Federal Register and federal agency websites regularly for any notices or updates for programs of interest.
Program officials are generally able to provide the latest information on federal agency activities. Now is a good time for outreach, with the fiscal year 2014 grantmaking winding down, and preparations for fiscal year 2015 competitions just getting under way. This means officials should have time to talk about any changes resulting from the uniform grant guidance.
The Federal Register is a common place where draft regulations will be released; however, some agencies like the Department of Education are starting to release the information on their agency websites first. Additionally, applicants can take advantage of the ED and Department of Health and Human Services funding forecast websites. These sites offer initial details on upcoming solicitations and can be a great place to obtain the latest program details and find the current program contact.
Child and Adult Care Food Program: National Average Payment Rates, Day Care Home; Food Service Payment Rates, and Administrative Reimbursement Rates for Sponsoring Organizations of Day Care Homes for the Period July 1, 2014 Through June 30, 2015 — Action: The Food and Nutrition Service announced the annual adjustments to the national average payment rates for meals and snacks served in child care centers, outside-school-hours care centers, at-risk after school care centers, and adult day care centers; the food service payment rates for meals and snacks served in day care homes; and the administrative reimbursement rates for sponsoring organizations of day care homes, to reflect changes in the Consumer Price Index. Contact: Tina Namian, 703-305-2590. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-07-16/pdf/2014-16718.pdf.
National School Lunch, Special Milk, and School Breakfast Programs: National Average Payments/Maximum Reimbursement Rates — Action: The Food and Nutrition Service announced the annual adjustments to the national average payments for meals served in the National School Lunch and School Breakfast Programs; to the maximum reimbursement rates for lunches served in the National School Lunch Program; and to the rate of reimbursement for milk served in the Special Milk Program for Children. Contact: Rosemary O’Connell, 703-305-2590. More information: http://www.gpo.gov/fdsys/pkg/FR-2014-07-16/pdf/2014-16719.pdf.
Food Distribution Program: Value of Donated Foods From July 1, 2014 Through June 30, 2015 — Action: The Food and Nutrition Service announced the national average value of donated foods or, where applicable, cash in lieu of donated foods, to be provided in school year 2015 for each lunch served by schools participating in the National School Lunch Program, and for each lunch and supper served by institutions participating in the Child and Adult Care Food Program. Contact: Carolyn Smalkowski, 703-305-2662. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-07-15/pdf/2014-16550.pdf.
Draft Guidance for Applicants for Competitive and Capacity Grants Administered by the National Institute of Food and Agriculture; Availability — Action: The National Institute of Food and Agriculture made available a draft guidance entitled "National Institute of Food and Agriculture Federal Assistance Policy Guide". Contact: Melanie Krizmanich, 202-401-1762. More information: http://www.gpo.gov/fdsys/pkg/FR-2014-07-14/pdf/2014-16398.pdf.
Justice for Families Program: Domestic Violence Mentor Court Initiative Solicitation — Deadline: August 22, 2014. Eligibility: Federal, state and local courts. Fund uses: To recognize well-established specialized courts and enable them to guide other courts and court-based programs wishing to significantly improve their responses to domestic violence cases and ensure victim safety and offender accountability. Contact: Krista Blakeney-Mitchell, 202-305-2651; email@example.com. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=259309.
Charter Schools Program: Grants for National Leadership Activities —Deadline: September 12, 2014. Eligibility: State educational agencies with a statute specifically authorizing the establishment of charter schools and public and private nonprofit organizations, including nonprofit charter management organizations. Fund uses: To expand the number of high-quality charter schools available to U.S. students by providing financial assistance for the planning, program design and initial implementation of these types of schools. Contact: Brian Martin, 202-205-9085; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259430.
Training and Technical Assistance to Improve Water Quality and Enable Small Public Water Systems to Provide Safe Drinking Water — Deadline: September 2, 2014. Eligibility: Institutions of higher education and nonprofits. Fund uses: To provide training and technical assistance for: small public water systems to maintain compliance with the Safe Drinking Water Act; and small publicly-owned wastewater systems, communities served by onsite/decentralized wastewater systems and private well owners to improve water quality under the Clean Water Act. Contact: Stephen Hogye, 202-564-0631; smallsystemsRFA@epa.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259628. Health
Obstetric-Fetal Pharmacology Research Centers — Deadline: September 15, 2014. Eligibility: State and local governments, institutions of higher education, public housing authorities and nonprofits. Fund uses: To fund research centers providing an arena for multidisciplinary interactions among basic and clinical scientists interested in establishing high quality translational research programs in the area of obstetric pharmacology. Contact: Questions, 301-435-0714; GrantsInfo@nih.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259508.
Pilot Centers for Precision Disease Modeling — Deadline: October 1, 2014. Eligibility: State and local governments, institutions of higher education, public housing authorities, nonprofits and for-profits. Fund uses: To support centers focusing on collaborative research projects linking human and animal research to improve the nation’s health care system. Contact: 301-435-0714; GrantsInfo@nih.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259529.
Self-Help Homeownership Opportunity Program — Deadline: September 4, 2014. Eligibility: National or regional nonprofits with the capacity and experience to provide or facilitate self-help homeownership housing opportunities in at least two states. Fund uses: To support sweat equity and volunteer-based homeownership programs for low-income persons and families. Contact: Martha Murray, 202-402-4410; Martha.W.Murray@hud.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259442.
Removal of HOPE for Homeowners Program Regulations — Effective: August 15, 2014. C.F.R.: 24 C.F.R. Parts 200, 257, 4000 and 4001. Action: HUD removed the regulations for the HOPE for Homeowners Program. Contact: Camille E. Acevedo, 800-877-8389. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-07-16/pdf/2014-16613.pdf.
Laura Bush 21st Century Librarian Program — Deadline: September 15, 2014. Eligibility: Public and private libraries run by state and local governments, school districts or nonprofits. Fund uses: To support early career development of new library faculty members who are likely to become leaders in the library and information sciences. Contact: Sandra Toro, 202-653-4662; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259468.
Native Americans/Alaska Natives
Vocational Rehabilitation Services Projects for American Indians with Disabilities — Deadline: September 2, 2014. Eligibility: Tribal governments and organizations. Fund uses: To provide vocational rehabilitation services to American Indians with disabilities who reside on or near federal or state reservations. Contact: August Martin, 202-245-7410; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259708.
Supplemental Nutrition Assistance Program and Expanded Food and Nutrition Education Program (SNAP and EFNAP): Regional Nutrition Education and Obesity Prevention Centers of Excellence — Deadline: August 15, 2014. Eligibility: Land-grant institutions of higher education with SNAP and EFNAP offices. Fund uses: To create new centers that: build the evidence-base for nutrition education and obesity prevention strategies and interventions; and develop effective activities promoting health and prevent/reduce obesity in disadvantaged low-income families and children. Contact: NIFA Help Desk, 202-401-5048. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259530.
Summer Research Training in Aging for Medical Students — Deadline: October 30, 2014. Eligibility: State and local governments, institutions of higher education, public housing authorities and nonprofits. Fund uses: To increase the number of physician scientists focused on aging issues by encouraging medical students, early in their training, to consider pursuing either a basic science or health-services or clinical-research career. Contact: 301-435-0714; GrantsInfo@nih.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259709.
Research Training Groups in the Mathematical Sciences — Deadline: October 14, 2014. Eligibility: Institutions of higher education. Fund uses: To strengthen the nation’s scientific competitiveness by increasing the number of well-prepared U.S. citizens, nationals and permanent residents who pursue careers in the mathematical sciences. Contact: Andrew Pollington, 703-292-4878; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259608.
Federal Railroad Administration FY14 Grant Application Solicitation —Deadline: September 15, 2014. Eligibility: State and local governments and nonprofits. Fund uses: To improve the nation’s railroad infrastructure by funding intercity passenger rail grade crossing improvement projects, positive train control implementation projects and Passenger Rail Corridor Investment Plan projects. Contact: Maryann McNamara, 202-493-6393; Maryann.McNamara@dot.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259274.
Update to NFPA Standards, Incorporation by Reference — C.F.R.: 38 C.F.R. Parts 17, 51, 52 and 59. Action: The Department of Veterans Affairs proposed to amend its regulations incorporating by reference the National Fire Protection Association codes and standards. Contact: David Klein, 202-632-7888. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-07-15/pdf/2014-16414.pdf.
The Department of Labor, Employment and Training Administration, in association with the Department of Education, plans to release a $100 million solicitation this fall to reward partnerships to help more workers participate in registered apprenticeship programs. The program is an extension of the high-profile Trade Adjustment Assistance Community College and Career Training competition.
The American Apprenticeship Initiative will supported by existing H-1B funding from the visa fees employers pay to hire foreign workers in areas where there are shortages of U.S. workers. A CFDA number hasn’t be assigned for the new program, but will be when the solicitation is released in the fall.
AAI will focus on rewarding partnerships between employers, labor organizations, training providers, community colleges, local and state governments, the workforce system, nonprofits and community- and faith-based organizations. The main objective is to expand the availability of registered apprenticeships, which are offered by numerous employers, industry associations and labor-management organizations. Registered apprenticeship programs are offered in a variety of career areas such as advanced manufacturing, healthcare and IT fields. Of special interest are careers where there is a current shortage of U.S. workers.
A registered apprenticeship is a proven and structured “earn and learn” model that pairs paid on-the-job learning with related technical classroom instruction. The apprenticeships offer American job seekers immediate employment opportunities that usually pay higher-than-average wages and offer continued career growth.
DOL’s Office of Apprenticeship, in conjunction with state apprenticeship agencies, administers the Registered Apprenticeship program nationally. These state agencies: register apprenticeship programs meeting federal and state standards; protect the safety and welfare of apprentices; issue nationally recognized and portable Certificates of Completion to apprentices; promote the development of new programs through marketing and technical assistance; and assure all programs provide high quality training and produce skilled and competent workers.
Apprentices learn highly sought-after skill sets and earn portable credentials that would be recognized as U.S. workers move from employer to employer or geographically. They also receive an opportunity to enroll in apprenticeship training at two- and four-year colleges.
New Program Funding Goals
As of this writing, the AAI competition is expected to have three goals: (1) launch apprenticeship models in new, high-growth fields; (2) align apprenticeships to pathways for further learning and career advancement; and (3) scale apprenticeship models that work.
Applicants should focus on fast-growing occupations and industries with open positions such as information technology, high-tech services, healthcare and advanced manufacturing. Training should also provide credentials and/or college credit, linked to the apprenticeship. Finally, ETA seeks programs that are scalable or can be replicated for broader impact, particularly for diverse populations.
DOL, in association with ED, have created the Register Apprenticeship-College Consortium to strengthen relationships between apprenticeship programs and institutions of higher education.
RACC memberships are composed of management groups and associations with Registered Apprenticeship programs, institutions of higher education and state, regional and national organizations. RACC members agree to accept the college credit value of a Registered Apprenticeship completion certificate as recommended by a recognized third party evaluator to transfer credits between member colleges.
Currently, numerous articulation agreements exist between a single college and a local Registered Apprenticeship program. The consortium will create a national network of colleges and Registered Apprenticeship sponsors allowing apprenticeship graduates to attend and complete their postsecondary degrees at member colleges.
Membership is free, but members must agree to abide by the RACC Framework outlining goals, principles and criteria for membership and the RACC Standardsof Good Practice.
Applicants meeting or exceeding any of the proposed AAI goals should be sure to discuss past performance, prior experience and successful implementation in submissions.
Additionally, applicants should become familiar with all the resources available, including the RACC documents. Exploring membership in the RACC also would be a good idea. Subsequent coverage will follow as more information becomes available.
The uniform grant guidance (§200.319) contains new language limiting the use of geographic preference by nonfederal entities when procuring goods and services with federal funding. Applicants should note full and open competition in their budget narratives to reflect purchasing expectations of the uniform grant guidance, if awarded.
Overall, the section focuses on competition in the procurement process. The language seeks to ensure a level playing field in the process used by nonfederal entities, including but not limited to state, tribal and local governments, institutions of higher education and nonprofits, in obtaining goods and services with federal awards. The language stipulates geographic preference generally is only allowed in the procurement process when the federal government allows it.
Under §200.319(b), nonfederal entities: Must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable federal statutes expressly mandate or encourage geographic preference.
The language dilutes state, tribal and local policies providing preference for firms located in their state, city or county in the procurement bidding process when federal funding is involved. The federal government believes these preferences could result in the nonfederal entities not making the most efficient possible use of federal dollars.
As the language indicates, cases exist where federal statutes will expressly mandate or encourage geographic preference. For instance, the Farm Bill law, which oversees the nation’s nutrition funding programs, contains a prime example with its geographic provision allowing school districts to give preference in procuring local, unprocessed agricultural products. Applicants beware, however, because this language pre-dates the uniform grant guidance. It is unclear if other statutory changes will follow.
The provision currently doesn’t dictate that school districts must procure local products, but merely gives preference to local offerings. School districts at this time have free will to decide if they want to use the geographic provision in their procurement practices for these products.
In school districts using this provision, contractors offering local, unprocessed products have an advantage in securing school contracts, but must still compete with those not offering local products.
Under this new language, furthermore, when there is a conflict between state or tribal law and the uniform guidance, the federal guidance prevails. The uniform grant guidance contains numerous other changes to procurement language (§§200.318 -.326); however, §200.319 contains some of the most powerful language by dictating that federal law outweighs state and local law, including tribal law, unless authorized by federal statute, for example, the Farm Bill.
The inclusion of this stricter language, not only limits geographic preference, but also other differences for all nonfederal entities, and shows the federal government is concerned about fair competition in any scenario where federal funding is being used.
In fact, §200.319 drives home this point from the beginning, stating: All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section.
Nonfederal entities should be revising their existing procurement policies to make way for this significant change, and developing plans to incorporate some of this language into proposal and budget narratives to assure federal agencies they are informed and prepared to implement the uniform grant guidance, if awarded.
As the uniform guidance becomes effective for nonfederal entities Dec. 26, grantees and grantseekers can contact program officials from their favorite programs for insights.
Check Solicitations and Dates
Another helpful step would be to review upcoming solicitations very carefully for references to geographic preference and any other procurement language that may either require or exempt compliance. The key is to look at the anticipated award date. If the award is anticipated before Dec. 26, the prior OMB circulars and prior language would apply. If the award is anticipated after Dec. 26 when the uniform guidance takes effect for nonfederal entities, the new language would apply.
Questions to ask program officials could include:
When is the award anticipated and what regulations would apply – the prior circulars or the uniform grant guidance?
Are there any pre-release solicitations underway that would provide a comment period for nonfederal entity input?
For those with multi-year awards and existing geographic preference provisions, how will future award increments be handled?
Commodity Supplemental Food Program (CSFP): Implementation of the Agricultural Act of 2014 — Effective: August 8, 2014. C.F.R.: 7 C.F.R. Part 247. Action: The Food and Nutrition Service amended the regulations for the Commodity Supplemental Food Program to phase out the eligibility of women, infants and children, in accordance with the amendments made by the Agricultural Act of 2014. Contact: Erica Antonson, 703-305-2662. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-07-09/pdf/2014-16055.pdf.
Interdisciplinary Research in Hazards and Disasters or Hazards SEES —Deadline: November 28, 2014. Eligibility: Institutions of higher education. Fund uses: To support well-integrated interdisciplinary research efforts in hazards-related science and engineering to reduce the impact of hazards, enhance the safety of society and contribute to sustainability. Contact: Gregory J. Anderson, 703-292-4693; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259228.
Ryan White Part A HIV Emergency Relief Grant Program — Deadline: September 19, 2014. Eligibility: State and local governments. Fund uses: To provide a continuum of care for people living with HIV disease who are primarily low income, underserved, uninsured and underinsured. Contact: Steven Young, 301-443-6745; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259029.
Prevention & Public Health Fund: Alzheimer's Disease Initiative -- Specialized Supportive Services Project — Deadline: August 6, 2014.Eligibility: State and local governments, institutions of higher education, for-profits and nonprofits. Fund uses: To fill gaps in services and supports for persons living with Alzheimer’s disease and related dementias and their caregivers. Contact: Erin Long, Erin.Long@acl.gov. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258996.
Affordable Care Act: New Access Point Grants — Deadline: August 20, 2014. Eligibility: State and local governments, institutions of higher education, public housing authorities and nonprofits. Fund uses: To increase access to comprehensive, culturally competent, quality primary health care services and improve the health status of underserved and vulnerable populations. Contact: HRSA Call Center, 877-464-4772; CallCenter@HRSA.GOV. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259053.
Prevention & Public Health Fund: Improving Immunization Rates and Enhancing Disease Prevention through Partnerships with Providers and National Organizations — Deadline: August 21, 2014. Eligibility: State and local governments, institutions of higher education and nonprofits. Fund uses: To improve immunization rates by increasing the number of healthcare providers assessing vaccination needs and recommending vaccinations. Contact: 770-488-2700; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259070. Pediatric Cardiac Genomics Consortium — Deadline: October 15, 2014. Eligibility: State and local governments, institutions of higher education, public housing authorities and nonprofits. Fund uses: To identify genetic causes of human congenital heart disease through collaborative research. Contact: Bryan Clark, 301-435-6975; email@example.com. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=259049.
Implementation of Strategic Plans for Billing for Immunization Services in Health Department Clinics — Deadline: August 8, 2014. Eligibility: Public health departments. Fund uses: To enable public health departments to bill health insurance plans, with the intent of capturing immunization service delivery fees. Contact: 770-488-2700; firstname.lastname@example.org. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=259208.
Medicare and Medicaid Programs; CY 2015 Home Health Prospective Payment System Rate Update; Home Health Quality Reporting Requirements; and Survey and Enforcement Requirements for Home Health Agencies — C.F.R.: 42 C.F.R. Parts 409, 424, 484, 488 and 498. Action: The Centers for Medicare and Medicaid Services proposed to update the Home Health Prospective Payment System rates effective Jan. 1, 2015. Contact: Hillary Loeffler, 410-786-0456. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-07-07/pdf/2014-15736.pdf.
Individuals With Disabilities
Rehabilitative Services Administration: Parent Information and Training Centers — Deadline: August 11, 2014. Eligibility: Nonprofits. Fund uses: To help individuals with disabilities meet vocational, independent living and rehabilitation needs through providing training and technical assistance to their parents and guardians. Contact: Tara Jordan, 202-245-7341; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259230.
Native Americans/Alaska Natives
Tribal Management Grant Program — Deadline: August 5, 2014. Eligibility: Native American tribal governments. Fund uses: To allow tribes to assume control of their health care programs, with grantees receiving assistance in planning, evaluation and management. Contact: Paul Gettys, 301-443-2114. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258928.
The National Drug Abuse Treatment Clinical Trials Network —Deadline: December 3, 2014. Eligibility: State and local governments. Fund uses: To develop and test interventions for the management of the wide spectrum of substance use disorders with input from and collaboration with clinical research investigators, healthcare providers, patients and relevant stakeholders. Contact: 866-504-9552; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258914.
Mathematical Sciences Postdoctoral Research Fellowships — Deadline: October 15, 2014. Eligibility: Individuals affiliated with public and private colleges and universities and government agencies. Fund uses: To nurture future leaders in mathematics and statistics by facilitating their participation in postdoctoral research environments that will have maximal impact on their future scientific development. Contact: Bruce Palka, 703/292-4856; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=259269.
Grants for Adaptive Sports Programs for Disabled Veterans and Members of the Armed Forces — Deadline: August 7, 2014. Eligibility: State and local governments, institutions of higher education and nonprofits. Fund uses: To support adaptive sports programs providing opportunities for disabled veterans and disabled members of the military. Contact: Michael Welch, 202-632-7136. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258778.
Military Families Learning Network — Deadline: August 8, 2014. Eligibility: Institutions of higher education including land-grant colleges and universities, state agricultural experiment stations and cooperative extension services and other domestic or foreign organizations. Fund uses: To support cross-cutting programs that serve military families, particularly those who are geographically dispersed, to improve local workforce development in the food and agricultural sciences. Contact: NIFA Help Desk Phone, 202-401-5048. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=259270.
A uniform grant guidance section (§200.431) contains revised language including family-related leave among the examples of allowable paid leave that non-federal entities can provide to their employees through written policies. The section gives family-related leave equal billing with more traditional types of leave, such as vacation, sick, holiday, court, administrative and military. Nonfederal entities who submitted grant proposals this year and who receive funding after Dec. 26 may need to revise grant budgets to align with the uniform grant guidance.
The section focuses on fringe benefits that non-federal entities can offer their employees in compensation packages. §200.431 defines fringe benefits as: allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages.
In addition to leave, other fringe benefits include employee insurance, pensions and unemployment benefit plans.
Employees take family-related leave for a variety of reasons, including child birth, adoption of a newborn or foster child, chronic disease and care of a relative with a serious health condition. Federal agencies, school districts and private sector employers with 50 or more employees have been required under federal law to provide unpaid family-related leave since the passage of the Family and Medical Leave Act in the early 1990s. Grants must also reflect federal law.
Employees can take up to 12 workweeks of unpaid, job-protected leave a year. Additionally, group health benefits must be maintained during the leave as if employees continued to work instead of taking leave. Up to 26 workweeks can be taken during a single 12-month period for military caregiver leave. It may be taken to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember’s spouse, son, daughter, parent or next of kin.
The United States remains the only industrialized country to not have a national paid family leave program, but three states, California, New Jersey and Rhode Island, have adopted these types of programs. These programs are funded through employee-paid payroll taxes and are administered through the state disability programs. Washington State passed a paid family leave law in 2007, but the law was never implemented.
The inclusion of the family-related leave provision in §200.431 aids this burgeoning effort by encouraging those receiving federal funding to provide this paid benefit to their employees. Another funding effort at the Employment and Training Administration (Labor Department) also encourages more states to adopt family-related leave programs. The Women’s Bureau Paid Leave Analysis Grant Program will provide five awards to state governments ranging from $50,000 to $250,000 to conduct paid leave studies to support the development or implementation of paid family and medical leave programs at the state level. The CFDA Number is 17.261; applications are due July 28.
The funded states will use the awards to conduct activities including: (1) statistical analysis such as feasibility, cost benefit and actuarial studies; (2) economic impact analysis; (3) financing, eligibility and benefit modeling; and (4) education, outreach and marketing analysis for implementation purposes.
While states grapple with the paid leave issue, the uniform guidance offers details on how non-federal entities can start providing paid family-friendly leave. The costs are allowable if the benefits are reasonable and are required by law, an employee agreement or an established policy of the non-federal entity.
Nonfederal entities that are recipients and subrecipients of federal funds should review local leave policies and revise, as needed, to align with the uniform grant guidance. The nonfederal entity can establish a policy allowing employees to use any vacation or sick time for family-related leave or offer the fringe benefit as part of a grant budget.
In addition to creating these written leave policies, nonfederal entities are guided by two other criteria:
costs must be equitably allocated to all related activities;
the accounting basis (cash or accrual) selected for costing each type of leave must be consistently followed by the nonfederal entity or specified grouping of employees.
The section offers guidance on handling leave costs for the two types of accounting – cash basis and accrual basis. Cash basis accounting recognizes expenses when the leave is taken, while accrual recognizes the leave when it is earned.
Under §200.431, when nonfederal entities recognize the cost of leave under cash basis accounting, it must be done in the period that it is taken and paid. Additionally, payments for unused leave when an employee retires or terminates employment are allowable as indirect costs in the year of the payments.
The accrual basis accounting may only be used for those types of leave for which a liability as defined by General Accepted Accounting Principles exists when the leave is earned. Most leave, including family-related, would meet GAAP’s liability definition of a present obligation of the federal government to provide assets or services to another entity at a determinable date, when a specified event occurs, or on demand.
Many nonfederal entities require employees to accrue leave, instead of providing the entire allotment at the beginning of each year. This creates a liability situation. When a nonfederal entity uses the accrual basis of accounting, the guidance specifies allowable leave costs are the lesser of the amount accrued or funded – a common provision in federal agency grant solicitations.
Grantseekers should familiarize themselves with all of the “family-friendly” and ‘family-related” provisions in the uniform guidance by conducting a search of the document. For example, a search uncovers family-friendly provisions in §200.432 (Conferences) and §200.474 (Travel Costs). Local policies should be updated to align with the guidance.
New language in these sections gives nonfederal entities flexibility in creating policies that allow their employees to balance personal responsibilities while maintaining successful careers contributing to federal awards. The provisions seek to ease dependent care costs when attending conferences and traveling.
The Centers for Disease Control and Prevention and the National Institute for Occupational Safety and Health are partnering on a program to support states in developing or expanding occupational safety and health surveillance programs. OSH surveillance programs track and develop solutions to address occupational injuries, illnesses, deaths, hazards or exposures.
The State Occupational Safety and Health Surveillance Program, managed by NIOSH, will fund programs that include: OSH data acquisition, analysis and dissemination of findings; outreach and partnership development; developing prevention/intervention recommendations; and state-proposed surveillance priority research projects. The CFDA Number is 93.262.
Overall, the program seeks to ensure that occupational safety and health is part of broader public health goals and objectives. This is accomplished through creating and expanding top-notch programs with four objectives: (1) collect and analyze OSH data, 2) identify work-related disease, injury and exposure trends; 3) set program priorities; and 4) develop OSH prevention and outreach strategies.
The solicitation will fund three types of programs: (1) Fundamental; (2) Fundamental-Plus; and (3) Expanded. Fundamental programs are for states with limited experience in collecting, analyzing and interpreting occupational health indicators.
Occupational health indicators are measures of health (work-related disease or injury) or factors associated with health (workplace exposures, hazards, or interventions) that allow a state to compare its health or risk status with that of other states and evaluate trends over time. Fundamental awardees start by collecting, analyzing and interpreting data on at least 15 of the 20 occupational health indicators uncovered by CSTE. These include data on work-related hospitalizations, hospitalizations for work-related burns and carpal tunnel syndrome cases identified in state workers’ compensation systems. The fundamental-plus and expanded grants go to states with existing, more advanced OSH programs.
NIOSH anticipates making up to 25 new and renewal cooperative agreements worth an estimated $6.5 million in Fiscal Year 2015. It is estimated that a total of $32.5 million may be invested in this grant program over five years. The maximum funding for awards is expected to be: fundamental, up to $130,000 each; fundamental-plus, up to $140,000 each; and expanded, up to $675,000 each. Those creating -- or with interventions dealing with -- work-related adult blood lead cases may be eligible for additional funding.
The grantees should expect substantial federal involvement, with a NIOSH scientist appointed to assist, guide, coordinate or participate in project activities.
State and local governments and institutions of higher education can apply for the funding. NIOSH considers partnerships to be an integral part of success. Strong partnerships with organizations, such as Workforce Investment Act offices and hospitals, can add expertise or specialized experience that can expedite the collection, analysis, interpretation and communication of OSH results. These partnerships can ensure fundamental awardees move to the next levels of fundamental-plus and expanded funding.
The program is run via a standing solicitation, meaning application deadlines are currently set for the next three fiscal years. The first deadline is Sept. 15, with subsequent application due dates the same day in 2015 and 2016. Non-binding letters of intent are due to NIOSH by Aug. 15, for those planning to apply by Sept. 15.
While NIOSH is overseeing the program, applicants must follow the NIH submission system. Applications will use the PHS 398 research grant application forms and instructions for preparing a research grant application. Applicants will submit a signed, typewritten original of the application and three signed photocopies in one package to: Center for Scientific Review, National Institutes of Health, 6701 Rockledge Dr., Room 1040, MSC 7710
Bethesda, MD 20892-7710 (U.S. Postal Service Express or regular mail), Bethesda, MD 20817 (for express/courier service; non-USPS service).
At the time of submission, two additional signed paper copies of the application and all copies of the Appendix files must be sent to: Price Connor, Ph.D., Office of Extramural Programs, National Institute for Occupational Safety and Health, Centers for Disease Control and Prevention, 1600 Clifton Rd, Mailstop E-74, Atlanta, GA 30329-4018. The overnight mail address is 2400 Century Parkway NE (4th floor), Atlanta, GA 30345. Connor’s office can be contacted by phone at 404/498-2530, fax at 404/498-2571 or by e-mail, firstname.lastname@example.org.
Applicants also should be aware that in addition to having a DUNS number and SAM registration, they must have an eRA Commons registration, which provides them access to NIH’s electronic system for grants administration. Applicants must have an active DUNS number and SAM registration in order to complete the eRA Commons registration. eRA Commons requires organizations to identify at least one Signing Official and at least one Program Director/Principal Investigator account in order to submit an application.
Saudi American Educational and Cultural Initiative Grant — Deadline: June 30, 2015. Eligibility: Institutions of higher education, nonprofits and individuals. Fund uses: To support innovative forms of collaboration between Saudi and U.S. non-governmental and community organizations, universities, entrepreneurs, cultural organizations and qualified individuals to promote mutual understanding and respect through long-term partnership and cooperation between the two countries. Contact: Joan Ahmed, email@example.com. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=257748.
National Urban Search and Rescue Response System Readiness Cooperative Agreement — Deadline: July 28, 2014. Eligibility: Current US&R task forces. Fund uses: To fund 28 national task forces staffed and equipped to conduct round-the-clock search-and-rescue operations following earthquakes, tornadoes, floods, hurricanes, aircraft accidents, hazardous materials spills and catastrophic structure collapses. Contact: Centralized Services Information Desk, 800-368-6498; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258616.
Alliance for Innovation on Maternal & Child Health: Cooperative Agreement Expanding Access to Care for the Maternal and Child Health Population: Category 1: Collaborative Engagement; and Category 2: Measuring Collaborative Engagement — Deadline: July 28, 2014. Eligibility: Any public or private entity. Fund uses: To improve healthcare access for new moms and children by: focusing on continuity of coverage and care; improving systems of care for children with special health care needs; and promoting the use of Bright Futures Guidelines for all children. Contact: Sylvia Sosa, 301-443-2259; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258624.
Multidisciplinary and Collaborative Research Consortium to Reduce Oral Health Disparities in Children: A Multilevel Approach — Deadline: February 27, 2015. Eligibility: State and local governments, institutions of higher education, public housing authorities, nonprofits and for-profits. Fund uses: To support research focusing on reducing or eliminating oral health disparities among children from birth to age 21. Contact: Diana Rutberg, 301-594-4798; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258692.
Outstanding Investigator Award — Deadline: January 7, 2015. Eligibility: State and local governments, institutions of higher education, public housing authorities and nonprofits. Fund uses: To provide long-term support to experienced cancer investigators proposing to conduct cutting-edge research. Contact: 301-451-5939; email@example.com. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=258669.
International Research Collaboration on Alcohol and Alcoholism —Deadline: October 5, 2014. Eligibility: State and local governments, institutions of higher education, public housing authorities, nonprofits and for-profits. Fund uses: To foster international collaborations between U.S. substance abuse research investigators and those located in foreign countries. Contact: 301-451-5939; firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258771.
Individuals With Disabilities
Pathways to Careers: Community Colleges for Youth and Young Adults with Disabilities Demonstration Project — Deadline: August 11, 2014. Eligibility: Institutions of higher education, with a focus on community colleges. Fund uses: To support education and career development efforts successfully getting youth with disabilities into a job or on a career path. Contact: Cassandra Mitchell, 202-693-4570; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258621.
Disability and Rehabilitation Research Projects and Centers Program: Minority-Serving Institution Field-Initiated Projects — Deadline: September 2, 2014. Eligibility: Historically black institutions of higher education and Hispanic-serving institutions of higher education. Fund uses: To develop methods, procedures and rehabilitation technologies to maximize full inclusion and integration into society of individuals with disabilities, especially those with the most severe disabilities. Contact: Marlene Spencer, 202-245-7532; Marlene.Spencer@ed.gov.More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=258773.
Native Americans/Alaska Natives
Tribal Colleges Research Grants Program — Deadline: July 25, 2014. Eligibility: Tribal colleges. Fund uses: To assist tribal colleges in building institutional research capacity through applied projects addressing student educational needs and solving community, reservation or regional problems. Contact: NIFA Help Desk Phone, 202-401-5048. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=258848.
Supplemental Nutrition Assistance Program Recipient Trafficking Prevention Grant — Deadline: August 15, 2014. Eligibility: State governments. Fund uses: To aid states in the prevention of SNAP fraud by implementing process improvements designed to detect, investigate and prosecute individuals suspected of trafficking benefits. Contact: Dawn Addison, firstname.lastname@example.org. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258623.
Capacity Building for Non-Land Grant Colleges of Agriculture —Deadline: September 5, 2014. Eligibility: Institutions of higher education other than land-grant institutions. Fund uses: To assist non-land grant institutions of higher education in maintaining and expanding their capacity to conduct education, research and outreach activities relating to agriculture and renewable resources. Contact: NIFA Help Desk Phone, 202-401-5048. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258849.
Demonstration Grants for Domestic Victims of Severe Forms of Human Trafficking — Deadline: August 11, 2014. Eligibility: State and local governments and nonprofits. Fund uses: To provide support services to victims of severe forms of human trafficking, including coordination and referral services. Contact: Katrina Morgan, 855-792-6551; TechAssist@fysb.net. More information: http://www.grants.gov/web/grants/view-opportunity.html?oppId=258675.
Facilitating Research at Primarily Undergraduate Institutions: Research in Undergraduate Institutions and Research Opportunity Awards —Deadline: December 31, 2014. Eligibility: Institutions of higher education that have awarded 20 or fewer Ph.D. degrees in all NSF-supported fields during the combined previous two academic years. Fund uses: To support research by faculty members at institutions of higher education focused on improving participation and completion of advanced degrees at their schools. Contact: 703-292-5111; email@example.com. More information:http://www.grants.gov/web/grants/view-opportunity.html?oppId=258835.
Grants for Adaptive Sports Programs for Disabled Veterans and Disabled Members of the Armed Forces — Effective: July 1, 2014. C.F.R.: 38 C.F.R. Part 77. Action: The Department of Veterans Affairs established a new program to provide grants to eligible entities to provide adaptive sports activities to disabled veterans and disabled members of the Armed Forces. Contact: Michael F. Welch, 202-632-7136. More information:http://www.gpo.gov/fdsys/pkg/FR-2014-07-01/pdf/2014-15191.pdf.
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.