Theory and Practice: Changes to OMB Single Audit

©2015 Sikich LLP. All rights reserved.
Theory and Practice – Changes
to OMB Single Audit Guidance
and Guide for Implementation
March 18, 2015
Ray Krouse, CPA & Marc DeVries, CPA

Welcome to Uniform Single Audit
Guidance Training
» Introductions
» Ray Krouse, CPA, Partner, Not-for-Profit Services Team
» Marc DeVries, CPA, Director of Government Services -
Wisconsin
» About Sikich

Objectives
» Learn about important changes to the Single Audit guidance that will
affect your organization
» Learn what you can do to effectively implement the new guidance
and avoid audit findings

History of the Single Audit
» First Single Audit Act became law in 1984
» Prior to 1984, all federal programs were audited separately
» Standardized audit requirements for states, local governments
and Indian tribes
» Issued OMB A-128 “Audits of State and Local Governments”
» In 1990, OMB extended the Single Audit requirements to
not-for-profit agencies with OMB A-133, superseded A-128
» In 1996, Single Audit Act was revised
» In 2013, Uniform Single Audit Guidance supersedes eight OMB
Circulars

Uniform Guidance
» Drafted by the Council on Financial Assistance Reform (COFAR)
created in 2011
» Combines eight previously separate sets of OMB guidance into one
comprehensive document:
» A-21, A-87, A-89, A-102, A-110, A-122, A-133,
portions of A-50
» Cost principles, common rule, program information,
audit requirements
» Eliminates conflicting and overlapping guidance
» Results in consistency and efficiency
» Focuses on performance instead of compliance
» Improves the integrity of financial management
» Reduces audit burden for approx. 5,000 entities while maintaining
coverage of more than 99% of federal dollars awarded

Application
» As a general rule:
» Federal agencies that make federal awards
» Non-federal entities (NFE)
» Definition: “…a state, local government, Indian tribe,
institution of higher education or nonprofit organization that
carries out a federal award as a recipient or subrecipient.”
» May apply to for-profit entities, foreign public entities or foreign
organizations (federal agency discretion)
» 200.101(d) details exceptions to the general rule
» 200.102 explains the process for case-by-case exceptions

Implementation Date for Uniform
Guidance
» Effective immediately for all federal agencies that make awards to
non-federal entities
» For recipients of federal funds, effective for grants initiated by
federal government after December 26, 2014
» Implementation TIP: Determine which grants are subject to
Uniform Guidance vs. A-133 to determine by which compliance
supplement you are governed

Useful Information
Q. Where can I find the Uniform Guidance?
A. OMB website: Policy Statements
http://www.whitehouse.gov/omb/grants_docs/
» Also has crosswalks and text comparisons: Useful for comparing old
guidance to new Uniform Guidance; very detailed
» Cost principals text comparison – 174 pages
» Audit requirements text comparison – 46 pages
» Administrative requirements text comparison – 123 pages
» Definitions text comparison – 76 pages
» We can help you implement these requirements – contact information at
the end of the presentation
» This presentation and presentation materials will be available at:
http://www.sikich.com/develop-an-implementation-plan-for-omb-changes

Administrative Requirements

Conflict of Interest
» Section 200.112 requires NFE to disclose in writing any potential
conflict of interest
» Implementation TIP: Develop a conflict of interest policy and
implement a process that tracks conflicts of interest. This could be
an annual inquiry and reminder to board members and staff to
inform management of potential conflict of interest (in fact and
appearance)
» Program managers should be aware of contracts entered into
under their program(s). This person should be assigned
responsibility for notifying the proper staff and/or governing body
(i.e. the key decision makers) about these contracts and
soliciting written responses regarding conflicts of interest
» Although not required, relationships between those determining
eligibility and program applicants should also be disclosed.
Conflicts of interest may exist for program participants

Mandatory Disclosures
» Section 200.113 – Mandatory Disclosures
» Non-federal entity must disclose in a timely manner in writing to
the federal awarding agency or pass-through entity all violations
federal criminal law involving fraud, bribery and gratuity
violations that could affect the federal award

Performance Measurement
» 200.201 – Allows for the use of fixed amount agreements
» Payments are based on meeting specific requirements, not
based on costs incurred
» No governmental review of actual costs
» 200.301 – Requires recipients to relate financial data to performance
accomplishments
» Implementation TIP: Discuss performance reporting requirements
with your granting agencies. Consider building performance
measurement and costing processes into your financial reporting
systems

Pass-Through Entities
» Section 220.330 - Contractor vs. Subrecipient
Subrecipient (must list award on Schedule of Expenditures of
Federal Awards (SEFA))
1. Determines who is eligible to receive what federal financial
assistance
2. Has its performance measured against whether the objectives
of the federal program are met
3. Has responsibility for programmatic decision-making
4. Has responsibility for adherence to applicable federal program
compliance requirements
5. Uses the federal funds to carry out a program of the
organization as compared to providing goods or services for a
program of the pass-through entity

Contractor (does not list award on SEFA)
1. Provides the goods and services within a normal business operation
2. Provides similar goods and services within normal business
operation
3. Operates in a competitive environment
4. Provides goods or services that are ancillary to the operation of the
federal program
5. Is not subject to compliance requirements of the federal program

» Section 200.210 - If you pass grants through to another subrecipient
(not contractor), you must communicate specific information
» Implementation TIP: Establish internal controls that ensure you are
communicating the following information to all subrecipients:
» Recipient name (must match name registered in DUNS)
» Recipient DUNS number
» Unique Federal Award Identification Number (FAIN)
» Federal award date
» Period of Performance of Grant including starting and ending
date

» Information Contained in a Federal Award from Pass-Through
» Amount of federal funds obligated and awarded
» Budget approved by federal awarding agency
» Approved cost sharing or matching (if applicable)
» Federal award project description
» Name of federal awarding agency
» CFDA number and name
» Identification on whether award is R&D
» Indirect cost rate (if applicable) or if the de minimis rate of 10% is
charged
» General terms and conditions of grant

» Section 200.331 – Subrecipients
» Ensure that subawards are clearly identified to subrecipient by
including all the required federal award identification (CFDA,
amount, term, etc.)
» Communicate all applicable federal requirements to
subrecipients and any additional requirements necessary to fulfill
your responsibilities to the federal government as a pass-through
» Communicate federally recognized indirect cost rate
» Subrecipient must allow access to records

» Subrecipient monitoring
» Monitoring the subrecipient includes:
» Ensure that the subaward is being used or authorized
purposes
» Review financial and programmatic reports
» Follow-up on deficiencies noted in prior reviews
» Verify that audit is conducted (and Single Audit if applicable)
on subrecipient
» Consider agreed upon procedures if necessary
» Implementation TIP: Establish processes for monitoring and
calendar deadlines for each monitoring requirement and build into
this process a method to track progress throughout the year (i.e.
checklist, etc.). Subrecipient monitoring should be documented.

Financial Management
» Section 200.302 – Changes to financial management policy are highlighted
in red italics:
» Financial management system of the recipient of grant award must be
able to:
» Identify, in its accounts, all federal awards received by CFDA#,
federal award ID # and year, name of federal agency and pass-
through
» Financial results of each federal award
» Records that identify source and application of federal funds
» Effective control over assets acquired with federal funds
» Comparison of expenditure and budgeted amount of federal awards
» Written procedures for determining allowability of costs
» Implementation TIP: Design your chart of accounts to accommodate the
required information. Design and document internal controls over
determining the allowability of costs.

Financial Management
» Section 200.302 also includes a requirement for written procedures
to implement the requirements of Section 200.305 – Payment:
» For pass-through entities, payment methods must minimize the
time between receipt of funds and transfer to subrecipient
» For advance funding requests, the same applies, time between
receipt and disbursement must be minimal
» For reimbursement requests, federal awarding agency or pass-
through agency must make payment within 30 days of receipt of
request, unless there is a reasonable belief that the request is
improper
» All program and program related income must be used prior to
requesting funds
» Implementation TIP: Establish written procedures for cash
management requirements contained in Section 200.305.

Internal Control
» Section 200.303 – moves guidance on internal controls previously
discussed in audit requirements (which are typically considered after
the fact) to administrative requirements
» NFE must establish and maintain effective internal control over
awards in order to be in compliance with all provisions of award
» In accordance with COSO (Committee on Sponsoring
Organizations) and the Standards for Internal Control in the
Federal Government
» Must take prompt action when instances of non-compliance
are identified
» Take reasonable measures to safeguard protected personally
identifiable information
» Implementation TIP: Design IC in accordance with 200.303 and train
your employees.

Internal Control
» Implementation TIP: It is important to note that a key factor in
establishing IC is monitoring their effectiveness. When designing
internal controls, management should consider processes for
monitoring them. Where monitoring results prove that IC are not
functioning effectively, management should evaluate why and either
redesign IC and/or train employees on the IC and the importance of
IC.

Examples of Internal Controls
» Environment – Board and management demonstrates a commitment to
integrity and ethical values
» Education – Communication and training on grant requirements and
internal controls over compliance
» Risk assessment – Identifying risks to the achievement of program
objectives
» Segregation of duties – Separating authorization, custody and record
keeping roles to prevent fraud or error by one person
» Authorization of transactions – Review of particular transactions by an
appropriate person
» Retention of records – Maintaining documentation to substantiate
transactions
» Supervision or monitoring of operations and controls – Observation or
review of ongoing operational activity and effectiveness of internal
controls

Examples of Internal Controls
» Physical safeguards – Usage of cameras, locks, physical barriers, etc.
to protect property, such as merchandise inventory
» Top-level reviews-analysis of actual results versus organizational goals
or plans, periodic and regular operational reviews, metrics and other
key performance indicators (KPIs)
» IT general controls – Controls related to: a) Security, to ensure access
to systems and data is restricted to authorized personnel, such as
usage of passwords and review of access logs; and b) Change
management, to ensure program code is properly controlled, such as
separation of production and test environments, system and user
testing of changes prior to acceptance, and controls over migration of
code into production
» IT application controls – Controls over information processing enforced
by IT applications, such as edit checks to validate data entry,
accounting for transactions in numerical sequences, and comparing file
totals with control accounts

Procurement
» Section 200.317-200.326
» Requires procurement procedures to be documented. Section
200.319(c) contains specific requirements for procedures
» Requires non-federal entities to maintain oversight to ensure
contractor performance
» Requires written standards of conduct covering conflict of
interest. Section 200.318(c) contains specific requirements for
policy language
» NFE must avoid acquisition of unnecessary or duplicate items
and considering consolidating procurements for more
economical purchasing
» NFEs are encouraged to enter into intergovernmental
agreements (cooperative purchasing)

Procurement
» Encourages use of federal surplus property in lieu of purchasing
new equipment
» Must award contracts to only responsible contractors who possess
the ability to perform the contract. Consider contractor integrity,
compliance with public policy and past performance
» Must maintain records for the procurement history including
rationale for selection of contractor and basis for contract price
» Time and materials contracts are not disallowed, but only used when
no other contract is suitable. A ceiling price must be set in such a
contract
» Appendix II contains mandatory contract language

Procurement
» Must perform cost or price analysis in connection with every
procurement action in excess of the Simplified Acquisition Threshold
(currently $150,000)
» Must negotiate profit as a separate element of price for each
contract where no price competition and in all cases where cost
analysis is performed
» 200.319 – Prohibits the use of statutory imposed state or local
geographic preferences in procurement
» Cannot have unreasonable requirements to limit competition

Procurement
» Section 200.320 – Methods of Procurement to be Followed (5)
1. Micro-purchases of supplies and services less than $3,000
($2,000 for purchases subject to Davis-Bacon) do NOT require
quotes to be received and effort should be made to distribute
evenly these purchases to qualified suppliers
2. Small purchases from supplies and services between $3,000
and $150,000 do require quotes but NO pricing analysis
3. Sealed bids are required for purchases of $150,000 or greater
and require public solicitation, firm fixed price contract is
awarded, and must include at least two responsible bidders,
and bids will be opened publicly and award is usually to lowest
bidder (based on fixed price). Section 200.320(c) contains
specific requirements for sealed bids

Procurement
4. Competitive proposals used for projects over $150,000 and
may be fixed price or cost reimbursement
» This method is typical for architectural / engineering
professional services and price is not used, instead contract is
awarded to most qualified competitor with compensation subject
to negotiation
» Section 200.320(d) contains specific requirements for
competitive proposals
5. Noncompetitive proposals (sole source)
» Item is only available from one source
» Emergency
» Failure of competitive proposal process
» Express permission granted by federal agency
» There is a ONE YEAR GRACE PERIOD for implementing Procurement
Requirements

Procurement
» 200.322 – Recovered materials – applies to States and political
subdivisions of states – purchases >$10,000 must contain the highest
percentage of recovered materials practicable.
» This area is highly susceptible to audit findings.
» Implementation TIP: READ THE GUIDANCE CAREFULLY. Adopt a
written procurement policy that incorporates the specific requirements
of Sections 200.317 – 200.326
» Implementation TIP: Establish a written conflict of interest policy that
incorporates the specific requirements of Section 200.318(c)
» Implementation TIP: Educate staff and elected officials that are involved
with federal grants on these policies
» Implementation TIP: Have elected officials/staff certify that they have
received, read, and understand the procurement and conflict of interest
policies
» Implementation TIP: Develop a contract template that incorporates all
required elements in Appendix II

Cost Principles

Direct Costs
» Section 200.413(c)
» Salaries of administrative and clerical staff should normally be
treated as indirect costs, unless all of the following are met:
» These salaries are integral to the project or activity
» Individuals involved can be specifically identified with the
project or activity
» These costs are explicitly included in the budget or have prior
written approval of the federal awarding agency
» The costs are not also recovered as indirect costs

Indirect Costs
» Written procedures for determining allowability are required
» Section 200.414
» Organizations will use their negotiated rate for indirect costs.
Q. I don’t have a negotiated rate. Do I need one?
A. No. You can elect to use a de minimis rate of 10% of modified total direct
costs which may be used indefinitely.
Q. How do I negotiate an indirect cost rate?
A. That will depend on the type of entity you have. See Appendix III-VII of the
Uniform Guidance for specific instructions on negotiating IC rates. In most
cases you will negotiate with your cognizant agency.
Q. What if I already have a negotiated rate?
A. Then you can apply for a one-time, four-year extension of your current
rate.

Compensation – Personal Services
» 200.430 (i) – Standards for documentation of Personal Services
» OMB concluded that the standards for documentation were
unnecessarily burdensome and outdated, in comparison to the
current technology
» OMB is also concerned that findings in this area focus on
incorrect documentation rather than internal control weaknesses
or instances of fraud.
» So, OMB no longer requires:
» Semi-annual certifications for employees that spend 100% of
their time on a single federal program
» Signed timesheets for non-exempt employees or exempt
employees that spend less than 100% of their time on a
single federal program

» Now requires that records are:
» Supported by system of internal controls that provides
reasonable assurance that the charges are accurate,
allowable, and properly allocated
» Reasonably reflect the total activity for which the employee
is compensated (both grant related and non grant related)
» Incorporated into the official records of the NFE
» Comply with established policies of the NFE
» Encompass both federally assisted and all other activities

» If entity does not comply with new internal control standards, the old
documentation rules will apply
» Budget estimates – do not qualify as support but may be used on an
interim basis
» System of internal controls must include processes to review the
after the fact interim charges and make all necessary
adjustments such that the final amount charged is accurate
» Salaries used in meeting matching requirements are subject to the
same rules

» Implementation TIP: The decision to change your current system
is voluntary. New standards do not disallow the use of signed
timesheets and semi-annual certifications. If this is working for
you, no change is necessary, provided you meet the
requirements of A-21/87/122 for documentation of personal
service charges.
» Implementation TIP: For those employees who spend all or a
portion of their time on federally funded programs, the decision
to eliminate paper should include a system of verifiable
approvals for all employees’ time that is both charged to grants
and not charged to grants. Segregation of duties and
review/approval processes must be designed into the
recordkeeping system.

Other New Compensation Principles
» 200.430 - Personal Services - other items to note:
» Several additional cost principles related to institutions of higher education:
» Incidental activities (h)(1)(ii)
» Salary basis (h)(2)
» Consulting (h)(3)
» Extra service pay (h)(4)
» Periods outside the academic year (h)(5)
» Part-time faculty (h)(6)
» Sabbatical leave (h)(7)
» 200.431 - Fringe benefits:
» Cost of personal use of automobiles furnished by the entity is
unallowable (f)
» For institutions of higher education:
» Tuition benefits (j)
» On-behalf payments of benefits (k)

Advertising and Public Relations
» Section 200.421 – Advertising and Public Relations
» Allowable costs:
» Recruitment of personnel for performance of federal award
» Procurement of goods and service for federal award
» Program outreach to meet requirements of federal award
» Public relations for communicating with public the specific
activities and accomplishments of the federal award
» Unallowable costs
» Advertising to promote the non-federal entity
» Promotional items such as gifts and souvenirs

Conferences
» Section 200.432 – Conferences
» Only allowable if the meeting, seminar or symposium whose
primary purpose is to disseminate technical information and is
necessary and reasonable for successful performance of a
federal award (i.e. financial aid conference)
» Cost of identifying, but not providing, locally available dependent
care for attendees is allowable

Other Changes
» 200.428 – Collection of Improper Payments - new
» Costs incurred by NFE to recover improper payments are
allowable as either direct or indirect as appropriate
» 200.433 – Contingency Provisions – clarifies allowability of
contingency charges:
» Permissible to the extent that improve the precision of cost
estimates
» Charges for “contingency reserve” for the occurrence of events
of which cannot be foretold with certainty are unallowable.
» 200.436 – Depreciation - new
» Depreciation charges are in accordance with GAAP
» “Cost” of donated equipment is FMV at the time of donation

Other Changes
» 200.438 – Entertainment costs – formerly disallowed
» Costs that are programmatic in purpose and are authorized by
the federal agency (budget or prior written permission) are
allowed.
» 200.440 – Exchange rates – not previously addressed as cost
» Cost increases for fluctuations in exchange rates are allowable
costs – subject to prior federal approval
» Gains must also be considered prior to closeout
» 200.444 – General government expenses - new
» Indian tribes and Councils of Governments may charge up to
50% of CEO and CEO staff salaries and expenses directly
attributable to grant management in their indirect cost plan
without documentation

Other Changes
» 200.453 – Materials and supplies costs - new
» Now includes computing devices, no requirement for them to be
solely dedicated to federal award but must be necessary
» 200.454 – Memberships/subscriptions - clarified
» Clarifies that memberships in entities whose primary purpose is
lobbying is unallowable
» 200.461 – Publications and printing - new
» Costs of publication of results of research are allowable
» 200.463 – Recruiting costs - new
» Costs of short-term travel visas are allowable to the extent that
they are necessary and reasonable and directly relate to grant
purpose

Other Changes
» 200.464 – Relocation costs – clarified
» Continuing costs of ownership of a vacant home is allowable for
up to six months following vacancy
» 200.465 – Rental costs - clarified
» Defines “family” for less than arm’s length transactions
» “Rental” of property owned by persons affiliated with the NFE,
including commercial and residential real estate, for purposes
such as home office space is unallowable
» 200.474 – Travel costs – new
» Temporary dependent care costs above and beyond regular
dependent care costs that directly results from travel is allowable
(with certain provisions)

Cost Principles Revisited
» We have now covered almost all changes to cost principles. However:
» Implementation TIP: Program managers should review the types of
costs currently charged to their grants and read the new guidance to
check for changes in allowability.
» Implementation TIP: Program managers should then educate all grant
related staff on the changes to avoid incurring costs that are
unallowable and ultimately will fall to the NFE to cover.
» Implementation TIP: Any questions that arise from this review should be
directed to the federal or pass-through agency for clarification
(preferably written).
» Implementation TIP: If you have already incurred unallowable costs as
a result of the guidance changes, reverse them before closeout (you
still have time to do this).

Audit Requirements

Audit Requirements
Expenditure Threshold for Audit
Under A-133:
» A non-federal entity that expends $500,000 or more in a year shall have a single or
program-specific audit conducted for that year.
Under Uniform Guidance:
» A non-federal entity that expends $750,000 or more in a year shall have a single or
program-specific audit conducted for that year.
Q. What if you are a non-federal entity that administered grants initiated both before
and after December 26, 2014?
A. Section 200.111 – Subpart F – Audit Requirements are effective for non-
federal entities beginning on or after the effective date of this guidance. So if your
fiscal year begins before 12/26/14 you are subject to the A-133 threshold ($500k), after
that you are subject to Uniform Guidance ($750k).

Audit Requirements
Non Federal Agency’s Responsibility for Contractor Compliance
» Subrecipient/contractor definitions do not change.
» However, Uniform Guidance clarifies recipient/subrecipient
responsibility for its contractors’ compliance with procurement
requirements
» For auditees – the auditee is responsible for ensuring
contractor’s compliance with procurement requirements
» For auditors – if a major program includes contractor
relationships, the scope of the audit must include determining
whether contractor transactions are in compliance with
procurement requirements
» Implementation TIP: Pass-through agencies should understand
procurement requirements and educate subrecipients on
requirements. Pass-through agencies should build procurement
monitoring into subrecipient monitoring processes.

Audit Requirements
Remedies available to federal and pass-through entities when a
recipient or subrecipient does not have an audit performed (additional
sanctions available under Uniform Guidance are in red):
» Temporarily withhold cash payments
» Disallow overhead costs/the cost of the activity that is not in
compliance
» Suspend or terminate the federal award
» Initiate suspension and debarment proceedings
» Withhold any further federal awards for the project/program
» Take other remedies that may be legally available

Audit Costs
» Additional regulations placed on audit costs that may be charged to
federal programs:
» If auditee is under expenditure threshold, the cost of a financial
statement audit may be part of an indirect cost pool whose costs
are allocated to a federal grant
» Costs of agreed-upon procedures engagements that monitor
subrecipients and that determine subrecipient compliance with
matching, level of effort, earmarking are no longer allowable

Schedule of Expenditures of
Federal Awards
» Must include a total for clusters of programs
» For loan or loan guarantee programs, identify in the notes to the
SEFA the balances outstanding at the end of the audit period. This is
in addition to including the total federal awards expended for loan
and loan guarantee programs in the schedule
» If entity elected to use the 10% de minimus indirect cost rate, this
must be disclosed in the notes to the SEFA
» Implementation TIP: Build the new SEFA requirements into your
SEFA.

Audit Findings Follow-Up
» Summary of prior year findings must report on status of findings
related to the financial statements which are required to be reported
in accordance with GAGAS.
» When audit findings were not corrected or only partially corrected,
the summary schedule must now describe the reasons for the
finding’s recurrence.

Report Submission
» Indian tribes may opt not to submit their Data Collection Form to the
Federal Audit Clearinghouse, instead they would be responsible for
making copies of their reporting package available for public
inspection.
» Indian tribes may include confidential business information that
would be redacted under the FOIA.
» Uniform Guidance eliminates the requirement for a subrecipient to
submit its reporting package to the pass-through agency when there
are findings related to the grant(s) passed through that agency, or
when there are no findings, the requirement to communicate with
the pass-through agency that an audit was conducted in accordance
with Uniform Guidance and there were no findings.
» Must not include personally identifiable information (PII)

Cognizant Agency Requirements
» Non-federal entities expending more than $50 million in federal
assistance will be designated a cognizant agency.
» Cognizant agencies will cooperate with OMB to lead a project that
evaluates audit quality.
» Audit quality evaluation projects will occur every six years starting in
2018.
» The community of independent auditors will be advised of any
noteworthy or factual trends related to Single Audit quality.
Significant problems will be reported to State licensing agencies.

Major Program Determination
» A/B threshold increases from $300,000 to $750,000
» New guidance – only HIGH RISK AUDIT FINDINGS will cause HR
A:
» Resulted in modified opinion
» Material Weakness in IC
» Known or likely questioned costs >5% of total program
expenditures
» Perform risk assessments on Type B programs until high-risk Type B
programs have been identified up to at least ¼ of the number of low-
risk Type A’s.
» New guidance reduces the audit burden for approximately 5,000
entities nationally while still maintaining coverage of over 99%.

Major Program Determination –
Type A/B Thresholds
» Type B Threshold = 25% of Type A Threshold
$750,000 or .03 of Federal awards expended < or equal to $100 million
$3,000,000 or .003 of Federal awards expended >$100 million and <$10 billion
$30,000,000 or .0015 of Federal awards expended >$10 billion
Federal Award Expenditures Are Larger Of: Total Federal Awards Expended Are
Type A if:

Audit Coverage
» Guidance reduces the minimum coverage as follows:
» Coverage for High Risk auditee – 40% (currently 50%)
» Coverage for Low Risk auditee – 20% (currently 25%)
» Deviation from use of risk criteria for first year audits – no longer an
available option for auditors.
» Also – auditee cannot be low risk if auditor determines there is
substantial doubt about the auditee’s ability to continue as a
going concern.

Epilogue

2015 Compliance Supplement
» 2015 compliance supplement has been drafted and is in review
process now. Expected to be released in April.
» What we know so far:
» ARRA programs are removed from the supplement
» Davis-Bacon eliminated from compliance requirements
» However, Davis-Bacon requirements may appear in
individual grant compliance supplements as Special
Tests and Provisions
» Real Property Acquisition and Relocation Assistance is
eliminated from compliance requirements
» New Part 3.2 will be used by auditors to audit programs
subject to the Uniform Guidance (3.1 for the old guidance).
Part used will depend on when the grant was initiated.

Questions
Thank you for listening and good luck with the implementation!
Please feel free to call us with any questions, of if you need help.
We can help you avoid audit findings!
Ray Krouse, CPA
Partner
P: (630) 566-8515
E: rkrouse@sikich.com
Marc DeVries, CPA
Director, Government Services
P: (262) 754-9400 x 352
E: mdevries@sikich.com

Appendix – Implementation TIPS
» Successful implementation:
» Understand the new Guidance
» Read Guidance, text comparisons, crosswalks
» Develop plan to implement
» Modify policies/procedures
» Conflict of interest
» Procurement
» Payments
» Allowable costs
» Train staff
The following TIPS will be useful in implementation!

» Refer to the above slides for further details about requirements!
» Implementation date:
» Determine which grants are subject to Uniform Guidance vs. A-133 to
determine which compliance supplement you are governed by.
» Conflict of interest:
» Develop a conflict of interest policy and implement a process that tracks
conflicts of interest. This could be an annual inquiry and reminder to board
members and staff to inform management of potential conflict of interest (in
fact and appearance)
» Program managers should be aware of contracts entered into under
their program(s). This person should be assigned responsibility for
notifying the proper staff and/or governing body (i.e. the key decision
makers) about these contracts and soliciting written responses
regarding conflicts of interest.
» Although not required, relationships between those determining
eligibility and program applicants should also be disclosed. Conflicts of
interest may exist for program participants.

» Performance measurement:
» Discuss performance reporting requirements with your granting
agencies. Consider building performance measurement and
costing processes into your financial reporting systems.
» Pass-through agencies:
» establish internal controls that ensure you are communicating
the following information to all subrecipients:
» Recipient name (must match name registered in DUNS)
» Recipient DUNS number
» Unique Federal Award Identification Number (FAIN)
» Federal award date
» Period of Performance of Grant including starting and ending
date

» Pass-through agencies (continued):
» Amount of federal funds obligated and awarded
» Budget approved by federal awarding agency
» Approved cost sharing or matching (if applicable)
» Federal award project description
» Name of federal awarding agency
» CFDA number and name
» Identification on whether award is R&D
» Indirect cost rate (if applicable) or if the de minimis rate of 10% is
charged
» General terms and conditions of grant

» Subrecipient monitoring
» Establish processes for monitoring and calendar deadlines for
each monitoring requirement in Section 200.331 and build into
this process a method to track progress throughout the year (i.e.
checklist, etc.). Subrecipient monitoring should be documented.
» Financial management:
» Design your chart of accounts to accommodate the required
information in Section 200.302. Design and document internal
controls over determining the allowability of costs.

» Internal control
» Design IC in accordance with 200.303 and train your employees.
» It is important to note that a key factor in establishing IC is
monitoring their effectiveness. When designing internal controls,
management should consider processes for monitoring them.
Where monitoring results prove that IC are not functioning
effectively, management should evaluate why and either
redesign IC and/or train employees on the IC and the importance
of IC.

» Procurement:
» READ THE GUIDANCE CAREFULLY. Adopt a written
procurement policy that incorporates the specific requirements of
Sections 200.317 – 200.326.
» Establish a written conflict of interest policy that incorporates the
specific requirements of Section 200.318(c).
» Educate staff and elected officials that are involved with federal
grants on these policies.
» Have elected officials/staff certify that they have received, read,
and understand the procurement and conflict of interest policies.
» Develop a contract template that incorporates all required
elements in Appendix II.

» Cost principles:
» Program managers should review the types of costs currently
charged to their grants and read the new guidance to check for
changes in allowability.
» Program managers should then educate all grant related staff on
the changes to avoid incurring costs that are unallowable and
ultimately will fall to the NFE to cover.
» Any questions that arise from this review should be directed to
the federal or pass-through agency for clarification (preferably
written).
» If you have already incurred unallowable costs as a result of the
guidance changes, reverse them before closeout (you still have
time to do this).

» Audit requirements:
» Pass-through agencies should understand procurement
requirements and educate subrecipients on requirements. Pass-
through agencies should build procurement monitoring into
subrecipient monitoring processes.
» Build the new SEFA requirements into your SEFA

Theory and Practice: Changes to OMB Single Audit

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