Understanding OMB's "Super Circular": Key Changes for Community Development Professionals

1. OMB’s “Super Circular”: What Community Development Professionals Need to Know National Community Development Association Conference Milwaukee, Wisconsin Presented by Bob Lloyd June 22, 2016

2. The Current Federal Fund Accountability Atmosphere • “Government by Horror Story” --- Budgetary Pressures --- Single Audits—Quality Concerns --- Federal Audits (OIG’s, CPA’s Under Contract) --- Qui Tam Lawsuits --- Congressional Oversight • OMB Grants Management Reform

3. The OMB Grant Reform Process • “Trial Balloons” 2/28/12 • Draft Guidance 2/1/13 • Final Guidance 12/26/13 (2 CFR 200) • Agency Draft Rules to OMB 6/26/14 • COFAR FAQ’s (Periodically in 2014) • Revised Guidance and Agency Implementation (12/19/14) (HUD 2--CFR 2400) • Effective Date of Uniform Guidance (12/26/14) • Single Audit Requirements Transition (NFE FY’s Beginning After 12/26/14

4. Transition to New Policies • Applicable to New Awards and New Obligations Issued After 12/26/14 • Supersession of Previous Grants Management Regulations 12/26/14– (24 CFR 84; 24 CFR 85) • OMB Federal Register Issuances (Additions and Technical Corrections) 2015 • HUD Implementation --- SD-2015-01 (2/26/15) --- Conforming Changes to Program Regulations (Effective 1/6/16) --- CPD-16-04 (4/13/16) --- HUD Enforcement Posture (Actions from 12/26/14-1/6/16) • Audit Considerations

5. Your Document Stack • 2 CFR 200 and 2 CFR 2400 (1/1/16) (www.access.gpo.gov) or (www.ecfr.gov) • Frequently Asked Questions (www.cofar.gov) • OMB Granted Class Deviations (www.cofar.gov)

6. The “Big Deals”– Significant Policy Changes • Pre-award Risk Assessment • Internal Controls --- Documentation of Personnel Expenses (PKA Effort Reporting) • Cost Principles --- Indirect Cost Recognition • Procurement of Goods and Services • Subrecipient Management and Monitoring • Reporting • Audit

7. Pre-award Risk Assessment • By Federal Agencies (2 CFR 200.205) --- Financial stability --- Management systems and personnel --- Performance history --- Audit history --- Federal data bases (e.g., EPLS) • By Pass-through Entities (2 CFR 200.331(b)) --- All that…plus extent of other oversight

8. Internal Controls • “Establish and maintain effective internal control that provides reasonable assurance” of compliance with laws, regulations and award terms • Sources of internal control guidance --- GAO “Green Book”—Standards for Internal Control in the Federal Government --- COSO—Internal Control—Integrated Framework AND --- OMB—Part 6, Compliance Supplement for Single Audits

9. Designated Areas for Internal Control • Compliance • Self monitoring and evaluation • Corrective action • Protection of personally identifiable information • Bonding • System standards • Documentation of personnel expenses

10. Documentation of Personnel Expenses • “Time and effort reporting” • Key features --- After the fact determination --- Full disclosure of all effort • Internal control design features --- Timely completion --- Credible signatures • Substitute systems permitted

11. Cost Principles • 2 CFR 200, Subpart E (200.400-475) • Basic policies • General tests of allowability (200.403) • Indirect cost recovery basics and “cross-walks” to the Appendices • “Selected” items of cost • ‘Failure to mention…”

12. Indirect Cost Recognition • By federal agencies (2 CFR 200.414(c)) --- Limited exceptions --- Plan and rate submission requirements • By pass-through entities (2 CFR 200.331(a)(4)) --- Accept federally negotiated NICRA --- Negotiate a rate with subrecipient ----- Likely limited applicability --- Allow de minimis rate (10% of MTDC)

13. Key Changes—Selected Items of Cost • Effort reporting • Conferences • Depreciation • Equipment vs. materials and supplies • Proposal costs • Rental costs • Training and education • Travel

14. Subaward vs. Contract • Distinction reaffirmed (2 CFR 200.330) --- The term “vendor” is gone --- Guidance from Circular A-133, __.210 has migrated to 2 CFR 200.330 --- Key concept: assistance vs. procurement --- Case-by-case determination must be made by pass-through entity

15. Procurement of Goods and Services • Policies for States • Policies for Everyone Else --- 2 Year Grace Period for IHE’s and NPO’s • Required Features --- Standards of Conduct --- Acquisition Planning --- Recipient Responsibility --- Competition --- Solicitation --- Acceptable Methods --- Cost or Price Analysis --- Source Evaluation and Selection --- Contract Award and Clauses (2 CFR 200 Appendix II) --- Contract Administration --- Procurement Records

16. Subrecipient Management and Monitoring • Case-by-Case Determination (2 CFR 200.330) • Risk Assessment (2 CFR 200. 331(b)) • Subaward Agreement (Data Elements and Features—2 CFR 200.331(a) • Subrecipient Monitoring (2 C FR 200.331(d) --- Mandatory Steps --- Discretionary Steps

17. Reporting • Mandatory disclosures (2 CFR 200.112-113) • Financial reporting (2 CFR 200.327) • FFATA subaward reporting (2 CFR 170) • Performance reporting (2 CFR 200.328) --- Extraordinary events • Close-out reporting (2 CFR 200.343) • Reporting on real property (2 CFR 200.329) • Audit reporting package (2 CFR 200.512)

18. Audit • Say a long good-bye to OMB Circular A-133 • Say hello to Subpart F of 2 CFR 200 • Key changes --- Dollar expenditure trigger --- Audit procurement --- Determination of major programs --- Reporting of audit findings ----- Attributes ----- Nomenclature --- Criteria for low-risk auditee

19. Getting with the Program • Train up employees • Review and revise, as necessary, policies and procedures --- Financial management --- Procurement --- Property management --- Subaward management --- Records retention and access --- Reporting --- Human resources • Recognize that regulatory changes create audit vulnerabilities • Be prepared for funding agencies and auditors who don’t yet know the new rules • Use the “lingo” in the new rules in your policies and conversations

20. Presenter Contact Information Bob Lloyd Consultant on Public Management and Government Relations Telephone: (864) 235-8680 (202) 775-0066 Fax: (864) 235-1465 E-mail: consultlloyd@aol.com On the web: www.federalfundmanagement.com