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OMB Circulars Review

September 12, 2011Maryland Governor’s Grants Office Annual Conference

Adrianne FieldingManaging editor, Thompson Publishing Group

Lead blogger, www.fundingattractions.com

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(Alphabet) Soup Is Good Food…

• NTIA• CDC• FFATA• STEM• OIG• ARRA• HHS• FEMA• DOL• FHWA

• CFDA• GAGAS• GAO• NTIA• HRSA• SBIR/STTR• RUS• PART• CFR• And on … and on …

But It’s Really More Like a Stew…

• A-21• 2 C.F.R. Part 220• A-87• 2 C.F.R. Part 225• A-97• FR-5500-N-30FA • PL 106-107• A-102

• 93.086• A-110• 2 C.F.R. Part 215• A-122• 2 C.F.R. Part 230• A-133• 11.557• EPA-R6-SMMP2-2011

It All Might Leave You Feeling…

WHAT’S REALLY IMPORTANT FORGRANT-ACTIVE ORGANIZATIONS?

What are OMB Circulars and Why Should I Care?

• OMB = Office of Management and Budget – http://www.whitehouse.gov/omb/– Housed within Executive Office of the President– Reports directly to the president– Implementation and enforcement of presidential policy

across the federal government through:• Budget development and execution • Management • Regulatory review and paperwork reduction• Legislative clearance and coordination • Executive orders and presidential memoranda to agency heads

What are OMB Circulars and Why Should I Care?

• OMB Circulars – Instructions or information issued to federal agencies in the major categories within OMB’s purview: – Budget – State and Local Governments – Educational and Non-Profit Institutions – Federal Procurement – Federal Financial Management – Federal Information Resources / Data Collection – Other Special Purpose

• All OMB Circulars: http://www.whitehouse.gov/omb/circulars/index.html

But I’m Not a Federal Agency -So Why Should I Care?

• It depends on where you work…– Federal government– State, local or tribal government– Nonprofit– Institution of higher education

• And what you do…– Prepare and submit grant applications– Manage grant-funded projects – Oversee fiscal aspects of awarded grants– Monitor subrecipients

OMB Circulars Are Organized by Audience…

• OMB Circulars – Instructions or information issued to federal agencies in the major categories within OMB’s purview: – Budget – State and Local Governments – Educational and Non-Profit Institutions – Federal Procurement – Federal Financial Management – Federal Information Resources / Data Collection – Other Special Purpose

…And Major Subject Areas

• For grant professionals, the most important OMB circulars address:– Administrative Requirements– Cost Principles– Audits

Which Circulars Apply to Me?

State, local or tribal

government

College or university

Hospital orother nonprofit

Administrative Requirements A-102 A-110 A-110

Cost Principles A-87 A-21 A-122

Audits A-133 A-133 A-133

Administrative Requirement Circulars

Establish standards for consistency and uniformity in management of grants and cooperative agreements

• Circular A-102 – Applies to state, local, and tribal governments– Also known as the “Common Rule”– Moved to 44 C.F.R. Part 13– Block grants and some entitlement programs are exempt– http://www.whitehouse.gov/omb/circulars_a102/OMB

• Circular A-110– Applies to higher education, hospitals, other nonprofits– Moved to 2 C.F.R. Part 215– http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circ

ulars/a110/2cfr215-0.pdf

Administrative Requirement Circulars

• Major topics:– Cash management– Equipment and real property management– Matching funds/cost sharing– Period of availability of federal funds– Procurement and suspension and debarment– Program income– Reporting– Subrecipient monitoring

Cost Principle Circulars

Establish principles for cost regulation in grants, contracts and other fiscal agreements

• OMB Circular A-21 (Moved to 2 C.F.R. Part 220)– Applies to educational institutions– http://www.whitehouse.gov/sites/default/files/omb/assets/omb/fedr

eg/2005/083105_a21.pdf• OMB Circular A-87 (Moved to 2 C.F.R. Part 225)

– Applies to state, local, and tribal governments– http://www.whitehouse.gov/sites/default/files/omb/assets/omb/

fedreg/2005/083105_a87.pdf• OMB Circular A-122 (Moved to 2 C.F.R. Part 230)

– Applies to nonprofits– http://www.whitehouse.gov/sites/default/files/omb/assets/omb/

fedreg/2005/083105_a122.pdf

Cost Principle Circulars

• The cost principles for a nonfederal entity apply to all of the federal awards received by that entity– Federal agency state agency (A-87) nonprofit (A-122)– Federal agency nonprofit (A-122)– “To each their own”

• Major topics include– Selected cost items– Allowable and unallowable costs– Indirect costs, e.g., F&A costs for colleges and universities

Audits – Where the Proof’s in the PuddingSingle Audit Act of 1984• Entities spending over specified amount of federal

funds in a given year must obtain a single audit– Annually, based on entity’s fiscal year– Current expenditure threshold: $500,000 – Conducted by independent auditor– Major tool for federal government to assess recipients’

compliance with requirements in other OMB circularsOMB Circular A-133 specifies implementation of the

Single Audit Act

Audit Circulars

Provide standards for consistent and uniform audits of non-federal entities expending federal funds

• OMB Circular A-133– Applies to state, local governments, other nonprofits– http://www.whitehouse.gov/sites/default/files/omb/

assets/a133/a133_revised_2007.pdf• A-133 Compliance Supplement

– Released annually by OMB– http://www.whitehouse.gov/omb/circulars/

a133_compliance_supplement_2011

Circular A-133 –How Single Audits Should Be Conducted• Implementation of Single Audit Act of 1984• Updated as necessary (most recently in 2007)• Corresponds with

– Generally accepted audit standards (from AICPA)– Government Accounting Standards (from GAO)

• Major subject areas– Audit basics– Auditees– Federal agencies and pass-through entities– Auditors

Circular A-133 Compliance Supplement

• Released each year• Program-specific guidance for auditors• Typically covers about 150 programs• Program objectives, procedures and applicable

compliance requirements• Special tests and procedures for specific programs• Recommends approach for determining applicable

compliance requirements and test procedures for federal programs not listed in the supplement

Circular A-133 Compliance Supplement –The 14 Major Compliance Areas14 major compliance areas subject to testing during a single audit, plus suggested

tests and procedures• Activities Allowed or Unallowed• Allowable Costs/Cost Principles• Cash Management• Davis-Bacon Act• Eligibility• Equipment and Real Property Management• Matching, Level of Effort and Earmarking• Period and Availability of Federal Funds• Procurement and Suspension and Debarment• Program Income• Real Property Acquisition and Relocation Assistance• Reporting• Subrecipient Monitoring• Special Tests and Procedures

Next Steps, per Circular A-133

• Completed single audit packages – Submitted to Federal Audit Clearinghouse – Publicly viewable– Distributed to funding agencies, pass-through entities

• Noncompliance audit findings• Audit findings can lead to

– Corrective actions, e.g., repayment of disallowed costs– Designation as “high risk” recipient (resulting in increased

scrutiny/award conditions)– Damage to public opinion

Audit Findings Can Seriously Jeopardize Future Federal FundingMultiple factors:• Greater transparency and accountability for federal spending• More scrutiny of funding agency decisions• Increased pressure on federal agencies to scrutinize

applicants more closely– No prior single audits (i.e., limited experience managing federal

awards)?– Many, recurring or unaddressed audit findings?– Audit findings with a significant financial impact (especially ones

related to unallowable costs, cash mismanagement, procurement, and subrecipient monitoring)?

• Heightened attention to preventing or limiting– Waste, fraud and abuse– Improper payments

The OMB Circulars Are Your Backstage PassThey let you …• get under the hood of your grant programs• read the minds of agencies and auditors• understand and anticipate what they expect and will

look at in terms of how you manage federal grants

Remember, the circulars are the articulation of how the executive branch wants grants administration to be done … they set the requirements and the oversight priorities.

Get Into the Driver’s Seat

• Understand the requirements you’ll be held to and how that will be evaluated

• Design better projects• Build solid, program-compliant budgets• Write smarter applications• Identify responsible partners• Establish better systems and processes• Conduct more effective subrecipient oversight

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Understanding the Circulars Isn’t Enough

• READ THY AWARD DOCUMENTS• READ THY AWARD DOCUMENTS (yes, again)• Funding agency grant policy manual

– e.g., Commerce, NOAA, NIH• Funding agency program-specific grant guidance,

support documentation, and other technical assistance materials

• Know thy Program and Grants Officers– Take advantage of recipient workshops, TA sessions, etc.

Questions or Comments?

Adrianne Fielding

adrianne.fielding@thompson.comBlog: www.fundingattractions.com

Twitter: @ThompsonGrants

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