COGR Has Its Own Concerns About the 2019 Compliance Supplement

Jerry Ashworth
September 11, 2019 at 11:07:06 ET
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As we continue to wait for the Office of Management and Budget (OMB) to release technical corrections to the 2019 Compliance Supplement, we’re finding out more about what other groups had to say about the supplement. Although the supplement was originally issued in early July, subsequent comment letters, particularly one from the American Institute of Certified Public Accountants (AICPA), have pointed out numerous errors within the supplement that cannot wait to be addressed within the 2020 supplement. Therefore, OMB has stated that it will release technical corrections soon, although “soon” was never specifically defined.

AICPA was not alone in its concerns about the supplement. The Council on Governmental Relations (COGR), an organization supporting the interests of research institutions, issued a letter July 26 on the supplement seeking OMB's response in three particular areas. First, COGR brought up a concern that it raised back in 2017 about the “Cash Management” compliance requirement in Part 3. The organization contends that better language on what is meant by “paid” would help auditors and grant recipients "by not putting federal dollars at risk." It recommended that when defining “paid,” it should be defined as “the placement of the costs into the nonfederal entity’s accounts payable system, which then disburses cash in the normal course of business using the nonfederal entity’s payment policies and procedures.” COGR said this definition would support a longstanding and accepted practice where federal reimbursement is requested after costs are entered into an institution’s accounts payable system.

Next, concerning the “Procurement and Suspension” compliance requirement, COGR suggested that OMB insert simpler, clarifying language into the 2019 supplement to confirm the allowability of research institutions using the $10,000 micro-purchase threshold and the $250,000 simplified acquisition threshold. It added that an authoritative reference to OMB Memorandum M-18-18 could be all that is needed, thereby removing any ambiguity related to these thresholds.

Third, COGR sought an explanation from OMB as to why auditors conducting compliance testing on programs within the Research and Development must test up to seven compliance requirements (six compliance requirements plus the combined "Activities Allowed or Unallowed" and "Allowable Costs and Cost Principles"), rather than up to six for other programs within the supplement.

We will be interested to see how OMB tackles the Compliance Supplement errors when it released the technical corrections and will keep our subscribers abreast of the changes when they occur.

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