The New A-133 Compliance Supplement and It's Impact
1. THE NEW A-133 COMPLIANCE
SUPPLEMENT AND ITS IMPACT ON
GRANT AUDITS
August 29, 2013
Steven Spillan, Esq.
sspillan@bruman.com
Brustein & Manasevit, PLLC
2. About the Speaker
• Steven Spillan joined Brustein & Manasevit, PLLC in
January 2006 as a Legislative Assistant. In 2011, Mr.
Spillan became as Associate with the Firm. Mr. Spillan
assists clients with federal grants management and
various federal education programs, including the
Elementary and Secondary Education Act, the Carl D.
Perkins Career and Technical Education Act, the
Workforce Investment Act, the Higher Education Act, and
the Family Educational Rights and Privacy Act. Mr. Spillan
also works with the Legislative Director and clients to
develop their federal legislative strategies and facilitates
their representation before Congress and administrative
agencies.
3. Agenda
• 2013 Changes
• Compliance Requirements
• ARRA Changes
• Agency Changes
• Proposed Changes in “Super Circular”
4. Purpose of Compliance Supp
• Assist auditors in determining compliance requirements
relevant to the audit, audit objectives, and suggested
audit procedures for federal programs.
5. Applicability
• Any non-federal entity that expends $500,000 or more in
federal funds in a year.
• Must have Sing Audit.
• Often leads to OIG audits or program monitoring findings.
6. 2013 Changes
• Most changes focus on auditing ARRA programs.
• Changes to/ Applicability of Compliance Requirements.
• Simplified Acquisition Threshold.
• Agency-Specific changes.
7. Compliance Requirements
• 14 areas of concern that auditors are directed to look for
when completing A-133 Single Audits.
• If “deleted” from certain programs’ Single Audit
requirements, pass-through entities still responsible for
ensuring compliance.
8. Compliance Requirements
• Deleted “Davis-Bacon Act” and “Special Tests and
Provisions,” from programs if:
• Inclusion was based solely on ARRA funding, and
• The program(s) is continuing without ARRA funding.
9. Compliance Requirements
• Eliminated applicability of certain requirements
due to lack of materiality to the affected
program/cluster:
• Equipment and Real Property
• Procurement and Suspension and Debarment;
• Program Income; and
• Real Property Acquisition and Relocation
Assistance
10. Compliance Requirements
• Modified, “Procurement and Suspension and
Debarment,” to
• update and clarify compliance requirements;
• update suggested audit procedures for testing compliance; and
• recognize that some programs/awards may have authorized use of
higher simplified acquisition threshold,
11. Procurement - ARRA
• Section 1605 of ARRA:
• Prohibits the use of ARRA funds for a project for the construction,
alteration, maintenance, or repair of a public building or work
unless all of the iron, steel, and manufactured goods used in the
project are produced in the United States.
• Buy American Act
12. Procurement - Audits
• ARRA Construction projects:
• documented that the iron, steel, and manufactured goods used in
the project are produced in the United States, or
• requested and received any waivers of the Buy-American
requirements.
13. Procurement - Audits
• Exceptions to “Buy American”:
• The recipient or subrecipient is covered by an international
agreement and the scope of that agreement or
• The recipient has requested and been granted an exception
14. Procurement - Audits
• Verify that the Federal awarding agency
approved procurements exceeding $100,000
when required.
• noncompetitive negotiation,
• only a single bid or offer was received,
• awarded to other than the apparent low bidder, or
• specifying a “brand name” product
15. Procurement - Audits
• $100,000 threshold remains in government-wide use
unless:
• Agency/program has issued guidance raising the threshold, or
• Increased threshold is specified in the terms and conditions of
award.
16. Reporting
• Modified “Reporting,” to revise coverage related to the
Federal Funding Accountability and Transparency Act
(FFATA), including updating suggested audit procedure
(compliance) #11, and the “Good Faith Effort for
Submission” section.
17. FFATA Reporting
• Recipient reporting of each first-tier subaward or
subaward amendment that results in an obligation of
$25,000 or more in Federal funds;
• Contractor reporting of each first-tier subcontract award of
$25,000 or more in Federal funds.
18. FFATA Reporting – Triggering Event
• Grant or cooperative agreement: obligation of funds
rather than a payment;
• Contract: awarding or modifying a first-tier subcontract.
19. FFATA Reporting
• Reporting must be accomplished by the end of the month
following the month in which the reportable action
occurred
• Grants funds obligated on Oct. 1 must be reported by November 30
20. Reporting - Audits
• Auditors are not required to report audit findings when
there is evidence that a recipient demonstrated a “good
faith” effort to submit the information.
21. Reporting - Audits
• Good Faith Evidence:
• emails or phone logs of communication between a recipient and
the awarding agency or GSA; or
• computer screen shots that illustrate recipient attempts to upload
information into FSRS.
22. Programmatic Changes
• Part 4 of Compliance Supplement lists changes for
federal agency programs.
• Each grant recipient should check applicable sections
23. U.S. Department of Education
• Addition of “ESEA Flexibility” in Title I programs.
• Discussions effect of flexibility on existing audit
procedures and subsequent changes.
24. ESEA Flexibility
• Transferability - In a “Flexibility” State, an SEA
or an LEA may transfer up to 100% of the
funds available under one or more of the
authorized ESEA programs among those
programs and into Title I, Part A (without prior
notification).
• not subject to any set-aside requirements of but still subject to all
other requirements.
25. ESEA Flexibility (cont)
• A “Flex” State may have enacted laws or promulgated
regulations, etc… to meet flex requirements.
• Use of federal funds for these purposes would not violate
the “required by law” presumption of supplanting
26. ESEA Flexibility
• Schoolwide – A Title I school with less than
40% low-income children may operate a
schoolwide program if:
• Identified as a priority or focus school, and
• LEA is implementing interventions consistent with the turnaround
principles based on the needs of the students, designed to
enhance the entire educational program in the school
27. ESEA Flexibility
• In Flex State – may serve a Title I-eligible high school with
a graduation rate below 60% that is identified as a priority
school:
• May allocate funds to that school out of rank order of poverty and
based on the needs of the school.
28. Title II-A Confusion
• Title II-A - Must reserve an amount equal to or greater
than the amount of funds reserved for professional
development in fiscal year (FY) 2001.
• Statute and Guidance specify funds are to be used for both public
and private school professional development services.
29. Title II-A Confusion
• 2013 Supplement: Title II-A reservation funds just for
private school services.
• When Supplement conflicts with current laws and
regulations, follow the law.
30. Additional ED Changes
• Time & Effort:
• Time-and-effort requirements in a schoolwide program specific to
the Education Jobs Program (Section III.B.2.b).
• Use of a substitute system for time-and-effort reporting (Section
III.B.2.c).
31. Upcoming Changes
• OMB Super Circular February 2013:
• Greater simplicity
• Greater consistency
• Obama Executive Order on Regulatory Review
• Comment period closed June 2, 2013.
• Final rules expected…?
32. Super Circular Changes
• Single Audit Threshold raised to $750,000
• 7 Compliance Requirements Eliminated
• Greater focus on risk
• Time & Effort Changes
33. Eliminating 7 Compliance Requirements
1. Equipment
2.
3.
4.
5.
Management
MOE/EarMarking
Procurement
Program
Income
David Bacon
6. Real Property
Acquisition
7. Period of
Availability
34. Eliminated Requirements
• Agencies can request special tests for A-133 items
removed (e.g., equipment management, period of
availability of funds)
35. Impact on Audits?
• Elimination of compliance requirements does not mean
elimination of compliance.
• Lack of Single Audit review requires greater subrecipient
monitoring.
• Pass-through entities still responsible for ensuring
compliance
36. Other Single Audit Changes
• Federal awarding agencies shall use “cooperative audit
resolution mechanisms” to improve federal program
outcomes through better audit resolution, follow-up and
corrective action
37. Cooperative Audit Resolution
• This approach is based upon “Federal agencies offering
appropriate amnesty for past noncompliance when audits
show prompt corrective action”
38. Audit Findings
• The auditor shall report known questioned costs greater
than $25,000 for major programs
• If not a major program (auditor normally will not find
questioned costs) but if auditor becomes aware of
questioned costs greater than $25,000 for non-major
programs – must report
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43. This presentation is intended solely to provide general information and
does not constitute legal advice. Attendance at the presentation or
later review of these printed materials does not create an attorneyclient relationship with the presenter(s). You should not take any action
based upon any information in this presentation without first consulting
legal counsel familiar with your particular circumstances.
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