The impact of omb circulars super or otherwise on federal programs
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The Impact of OMB Circulars (Super or Otherwise) on Federal Programs. Michael Brustein, Esq. [email protected] Brustein & Manasevit, PLLC Fall Forum 2012. What are “circulars”? Do they matter? Where do they stand in the legal hierarchy?. Administrative Principles.

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The Impact of OMB Circulars (Super or Otherwise) on Federal Programs

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The Impact of OMB Circulars (Super or Otherwise) on Federal Programs

Michael Brustein, Esq.

[email protected]

Brustein & Manasevit, PLLC

Fall Forum 2012


  • What are “circulars”?

  • Do they matter?

  • Where do they stand in the legal hierarchy?


Administrative Principles

  • A-102 – State/Locals 34 CFR Part 80

  • A-110 Postsecondary and Nonprofits 34 CFR Part 74


Cost Principles

  • A-87 State/Locals – 2 CFR Part 225

  • A-21 Postsecondary - 2 CFR Part 220

  • A-122 Nonprofits


Audit Principles

  • A-133 State/Locals/Postsecondary/

    Nonprofits


So Why a Super Circular?


Obama Executive Order 13563

“Regulatory Review”


OMB AdvanceNotice of Proposed Rulemaking – February 12

What will be the effective date of changes?


Council on Financial Assistance Reform (COFAR)

  • 10 members from largest grant making agencies: HHS, AG, ED, Energy, DHS, HUD, DOL, DOT


Expect Revisions to:

  • Cost Principles

    • A-21

    • A-87

    • A-122

  • Administrative Principles

    • A-110

    • A-102

  • Federal Agency Audit Resolution

    • A-50

  • Single Audit

    • A-133


  • Super Circular

    • Increase consistency

    • Decrease complexity

      But allows for disparate treatment depending on type of entity


    Single Audit Threshold

    • Under $1 million in total federal expenditures:

      • No single audit

      • Augmented pass-through role

  • Between $1 million and $3 million

    • More “focused” single audit

  • Over $3 million

    • Full single audit


  • “Focused Single Audit” ($1 to $3 Million)

    • Single auditors to review

      • 2 Compliance Requirements

        • Allowable/Unallowable

        • Federal agency determines – but priority on risk of improper payments, or fraud, waste, and abuse

          (look to Compliance Supplement)


    • Can SEA impose additional compliance requirements??


    “Full Single Audit” Over $3 Million“Universal Compliance Requirements”

    • Allowable Costs

    • Eligibility

    • Reporting

    • Subrecipient Monitoring

    • Period of Availability of Federal Funds

    • Procurement Practices Comply with Suspension/Debarment


    Federal Agencies to identify “non-universal” elements, with focus on preventing fraud, waste, and abuse


    Pass-Through Agencies

    • Attempt to reduce burden on pass-through (SEA)

    • Federal Agencies to better coordinate review of subrecipient internal controls when 2 or more federal agencies funding


    • OMB wants pass-through to focus on programmatic requirements of subawards


    Increasing threshold would increase burden on SEA for monitoring and Limited Scope Audits

    ???


    How do your programs measure up against Circulars?


    Phil Maestri – AEFFA – 10/3/12

    • OIG“Perfect Lens”

    • Program Officials “Reality”

    • OGC ???


    Filter out “noise” on “Success” vs. “Compliance”


    • “Costs must conform to federal laws”

      • A-87

      • A-21


    OIG Final Audit Report ED-OIG/A19K0009

    • “The Department’s External Audit Resolution Process”

      • July 3, 2012


    • OMB Circular A-50 “Audit Follow-Up” provides policies/procedures for use by federal agencies when considering audit reports* where follow-up is necessary

      *OIG and A-133 Single Audit


    Audit is recommendation to Program Operating Component (POC):

    • Sustain Findings

    • Not Sustain Findings

    • Sustain in Part


    POC Issues Program Determination Letter (PDL)

    • Closes Matter

    • Recovery of Funds (Audit, Monitoring Report) 34 CFR 81.30

    • Corrective Action


    • OMB A-50 requires resolution within maximum of 6 months after issuance of final audit report


    OIG Report on External Audit Resolution Process

    • 90% of audits between 2007-2010 not resolved within 6 months


    • Audits were overdue for resolution by an average of 1,078 days and included questioned costs totaling $568 million


    • ED lost $415 million due to the

      5 year statute of limitations


    Why


    • Lack of staff

    • Lack of knowledge among staff

    • Lack of organizational priority on audit activities

    • Overall lack of accountability


    OGC Position

    • Burden of establishing prima facie case

    • Determination of harm to federal interest

      (See Appendix to 34 CFR Part 81)


    • Are POCs more focused on success than compliance?


    • But even if OIG, OGC, POC on same page, findings may still lack merit

      The Tydings Cases


    Questions


    Disclaimer

    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 attorney-client relationship with Brustein & Manasevit, PLLC.  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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