The issuance of the new Uniform Grant Guidance (Guidance) will impact states, local governments, Indian
tribes, and nonprofit organizations that expend federal grant funds.  The Guidance combines eight separate grant
circulars into one location.  Organizations that expend federal grants need to begin reviewing the Guidance now to ensure policies and procedures are implemented by the December 26, 2014 effective date.

The Guidance is intended to reduce administrative burden and risk of waste, fraud, and abuse in the
following ways:

1. Eliminating duplicative and conflicting guidance by combining eight circulars into one.

2. Focusing on performance over compliance.  This includes potential OMB waivers for certain compliance requirements, approval of new strategies that improve cost-effectiveness and fixed awards with reduced requirements to meet performance requirements.

3. Encouraging efficient use of information technology, including the purchase and use of information technology  systems.

4. Providing for consistent and transparent treatment of indirect cost and administrative expenses.

5. Limiting allowable costs to make the best use of Federal grants with more clear language regarding certain specific costs such as conferences, morale, and student activities.

6. Setting standard processes to reduce the burden of processing data differently for multiple Federal agencies.

7. Encouraging recipient entities to have family-friendly policies so employees can balance personal responsibilities while maintaining successful careers contributing to Federal grants.

8. Strengthening oversight by requiring Federal agencies and pass-through entities to review risk associated with a potential recipient before making a grant.  The recipient agencies will also be required to disclose relevant conflicts of
interest and criminal violations.

9. Targets oversight where most Federal funds are at risk by raising the single audit threshold from $500,000 to
$750,000.  The higher threshold covers 99 percent of Federal funds, but eliminates approximately 5,000 recipient entities from the single audit.  This saves the government about $250 million per year. Single audit reporting packages will be available to the public under the new Guidance.

The new Guidance consists of three main categories:
Section A: Subparts A-D: Reforms to Administrative Requirements
Section B:  Subpart E: Reforms to Cost Principles
Section C:  Subpart F: Reforms to Audit Requirements

This KT newsletter will review Subparts A through D which cover new acronyms, definitions, general provisions, federal agency requirements, and other administrative requirements.

Subpart A—Acronyms and Definitions (Sections 200.0 through 200.99) —Subpart A is now the primary place to go to find the definitions of terms used throughout the Uniform Grant Guidance. The subpart includes an index for the
definitions.  Below are just of few of the definitions included in Subpart A that have been revised or streamlined.

  • 200.21, Compliance Supplement – Previously it was called the Circular A-133 Compliance Supplement and was included as Appendix B to Circular A-133. The Compliance Supplement will now be Appendix XI to Part 200 of the Uniform Grant Guidance.
  • 200.23, Contractor – Note that the term “vendor” as used in Circular A-133 (in contrast to a subrecipient) isno longer used. The term “contractor” is defined here and will be used instead of “vendor” going forward. See also section 200.330 in Subpart D which further discusses subrecipients versus contractors.
  • 200.79, Personally Identifiable Information (PII) and 200.82, Protected Personally Identifiable Information– These terms, which were not previously defined in grant guidance, are now defined, and will be important to auditors and auditees as single audit reporting packages submitted under the new guidance will be publically available (with exceptions for Indian tribes).  The Guidance states that auditors and auditees must ensure no protected personally identifiable information is included in the reporting package.
  • 200.80, Program Income – A definition of program income, which was not previously defined in Circular A-133, is now defined.
  • 200.90, State – The definition of State no longer includes Indian tribes as Circular A-133 had done. Instead, Indian tribes are now defined separately in section 200.54.

Subpart B—General Provisions (Sections 200.100 through 200.113) – This Subpart discusses the purpose, applicability,
exceptions, and effective date of the Uniform Grant Guidance. A chart is included in section 200.101 that indicates which Subparts are applicable to different types of awards. This section also clarifies that the terms and conditions of federal awards flow down to subrecipients unless the Uniform Grant Guidance or the terms and conditions of a federal award specifically indicate otherwise.  Recipients should pay close attention to section 200.101, Applicability, as exceptions to the Uniform Grant Guidance are only identified there and not elsewhere in the Guidance.  The section also requires recipients to disclose potential conflicts of interest.

Subpart C—Pre-Federal Award Requirements and Contents of Federal Awards (Sections 200.200 through 200.211) –
This Subpart provides more streamlined guidance to federal agencies on information that is required to be provided to non-federal entities for the purpose of applying for and receiving federal awards. Some of the requirements include determining the instrument to be used (e.g., grant agreements, cooperative agreements, or contract), standard formats to announce funding opportunities, standard application requirements, and the standard information that must be
included in each Federal award.  Federal agencies will also be required to consider risk (such as financial stability, prior performance, and management systems) posed by each applicant prior to making an award. The terms and conditions of the award may be impacted by this risk assessment.

Subpart D—Post-Award Requirements for Financial and Program Management (Sections 200.301 through 200.345) – The following presents a summary of Subpart D:

  • 200.303, Internal controls – This section requires non-federal entities to establish and maintain effective internal control that provides assurance an entity is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of federal awards. This is a much more explicit internal control requirement for auditees than that described in previous guidance. The new Guidance states that non-federal entity internal controls should be in compliance with COSO and the GAO’s Green Book (Standards for Internal Control in the Federal Government).
    As noted in a previous KT newsletter, COSO was revised in 2013 (click to read previous article).  Currently, the GAO is in the process of modifying the Green Book in light of the recent COSO revision.  Federal grant recipients shouldbecome more familiar with both COSO and the Green Book.
  • Sections 200.317 through 200.326, Procurement Standards – States will follow the same policies and procedures they use for procurements from non-federal funds (i.e., state procurement statutes).  For other non-federal entities five procurement methods are outlined in the Guidance: micro-purchases (do not exceed $3,000), small purchase procedures (which are subject to the Simplified Acquisition Threshold currently at $150,000), sealed bids, competitive proposals, and noncompetitive proposals (under limited circumstances).  In general, the new procurement standards adopt the majority of the language used from Circular A-102. Therefore, non-federal entities currently subject to Circular A-110 will likely be affected more significantly. However, all organizations should review these changes carefully to determine the impact on their procurement procedures.
  • Sections 200.327 through 200.329, Performance and Financial Monitoring and Reporting – The existing Report of Federal Cash Transactions and the Financial Status Report have been deleted and replaced with the requirement that Federal award agencies use only the OMB-approved government-wide data elements for collection of financial information, which is currently the Federal Financial Report.
  • Section 200.330 through 200.332, Subrecipient Monitoring and Management – Guidance on determining subrecipients versus contractors is now included in Section 200.330. Note that subrecipient monitoring guidance is currently primarily located within the audit requirements (i.e., Circular A-133 and the OMB Compliance Supplement). The Guidance adds more prominence to these requirements and expands them in Section 200.331. For example, 200.331 is very explicit about what information needs to be included by a pass-through entity in its subawards at the time the subaward is made, such as federal award identification, all requirements imposed by the pass-through entity, certain indirect cost information, access requirements, and terms and conditions surrounding closeout. Finally, requirements are included in this section regarding a pass-through entity’s responsibility to evaluate each subrecipient’s risk and develop appropriate subrecipient monitoring in response to the assessed risk.
  • Section 200.33 through 200.337, Record Retention and Access – Rather than addressing the issue throughout the Guidance, a new section was added to clearly articulate the treatment of electronic records. Organizations should, whenever practical, collect, transmit and store Federal award information in open and machine readable formats.

This is a summary of the administrative requirements of the new Guidance.  The full Guidance is available here. Due to the comprehensive nature of the Guidance and the scope of the changes, management should consider developing a detailed plan to ensure compliance by the effective date, which is for years beginning after December 26, 2014.  Recipients need to be ready to implement the Guidance for all new federal awards and for additional funding under existing awards made after December 26, 2014.  Staff that work in the grant function will need to be trained, and any new entity-specific policies and procedures will need developed or modified.

Future KT newsletters will review the Cost Principles and the Audit Requirements under the new Guidance.  Please contact Traci Hanson, Shelley Goodrich, or Sandra Weaver with specific questions.