Grants Blog

In another new memo promoting open government, OMB offers details of how the fast-approaching Transparency Act subaward reporting process will work and the related responsibilities of federal agencies, prime grantees, and subgrantees.  

For example, in any new awards issued as of October 1 2010, federal agencies must include a new award term that delineates the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting requirements.

Prime grantees will be required to register in two systems to meet the act’s subaward reporting requirements: the Central Contractor Registration, and the FFATA Subaward Reporting System (FSRS). (FSRS was set up as the portal for Transparency Act subcontract reporting and is now being used to also report subgrants.)

The memo also clarifies that subawardees are not required to do the actual reporting; that is the prime recipient’s responsibility. However, the subawardee is required to provide the prime with all of the information needed.

Further, entities that are already reporting this information for Recovery Act grants through FederalReporting.gov will not be required to duplicate that reporting in FSRS.

These are just a few examples of the information included in the memo. You can view and download the entire 51-page guidance here.

GAO has released the 2010 draft revisions to Government Auditing Standards (the Yellow Book). Comments on the propsoed changes are due Nov. 22, 2010.

The revisions consolidate many of the current Yellow Book chapters, and amend language and requirements to align with AICPA standards. But one of the most significant changes is a shift in the Yellow Book approach to auditor independence. Rather than establishing a specific list of “do’s” and “don’ts”, GAO is proposing a “conceptual framework” for making independence determinations based on each situation’s unique facts and circumstances.

Auditors would identify potential risks to independence, evaluate the significance of those threats, and apply safeguards to eliminate the risks if necessary. The independence section also identifies six specific nonaudit services that would impair auditor independence in the government environment.

The draft Yellow Book is only available in online PDF format. Click here to view the draft and for instructions on submitting comments.

The 2010 A-133 Compliance Supplement is now available on the OMB website. As usual, changes have been throughout the guidance to reflect new statutory and regulatory requirements, and to make technical and clarifying revisions. But perhaps the most important change, at least for this year, is the information on the Recovery Act and its impact on single audits.

The Recovery Act discussion is found in Appendix VII, which is called a rather vaguely named  ”Other OMB Circular A-133 Advisories.” The guidance addresses the impact of these new funds on the SEFA, major program determination, and risk assessment.

I’ll post more information once I have looked through the supplement, but for now, I just wanted to alert everyone to the release.

President Obama has signed the Improper Payments Elimination and Recovery Act of 2010, requiring federal agencies to identify programs most at risk of improper payments, take steps to address those risks, and use a variety to tools to recapture payments that were made in error.

 Specifically, the head of each federal agency must review agency programs and activities every three fiscal years and identify those that are susceptible to “significant” improper payments. Significant improper payments are those that total either $100 million, or 2.5 percent of total program outlays for programs expending $10 million or more per year. Agencies must explain why the programs are at risk, what steps it plans to take to reduce those risks, and the resources it has or needs in terms of personnel, technology systems, and internal controls. The plans will also describe how agency managers, programs, and where appropriate, state and local governments, are held accountable for preventing, detecting and recovering improper payments.

 The new legislation (PL 111-204) also focuses on the use of recovery audits to return improper payments to federal agencies. Also, under the measure, agencies may keep the funds that are recaptured through recovery audits rather than returning them to the Treasury. The money may be reinvested back into the original program, used for agency OIG activities, or support financial management improvement activities.

Well, it’s been a while since I posted to this blog, so this one will make up for the lack of frequency in the amount of volume.

I attended the Association of Government Accountants Professional Development Conference earlier this week and want to share a summary of some of the sessions I attended. My notes are fairly basic and lack some context, so if you need more info, please feel free to contact me directly (lhayes@managementconcepts.com), or post to the blog.

Here we go…

Grants Management Line of Business

Danny Werfel, Controller of OMB’s Office of Federal Financial Management, discussed the agency’s view of lines of business. While he was specifically speaking about financial management systems, the overall principles he discussed also may be applicable to the Grants Management Line of Business (GMLoB). OMB still believes in the concept, but has learned that the model of forcing agencies to move to a complete service center doesn’t work. Instead they are looking to focus more on “shared services.” For example, an agency may  share a vendor invoicing service with other agencies but would not have to migrate their entire financial system to a common source.

 Federal Grants Reporting

The implementation of the Federal Funding Accountability and Transparency Act’s subrecipient reporting requirements in October means a lot of things need to be changed, such as grant terms and conditions, according to Werfel. He said OMB is working on these changes, but gave no details on exactly what actions will be taken or when.

 He also specifically noted one of the most significant and pervasive Recovery Act reporting problems: subsequent reports from the same recipient on the same project often don’t get “linked.” For instance, a change in identifying information, such as a correction to a DUNS number or grant number, means reports are not connected to one another. Anyone looking at a particular entity or project might assume a recipient just stopped reporting on the project, and that another project was started. Werfel emphasized that federal agencies, recipients, and pass-through entities need to be aware of this.

 Recovery Act A-133 Pilot Demonstration Project

OMB plans a second A-133 Recovery Act pilot project that will be announced later this month (July). It will include more states, and probably different programs this time, according to John Fisher, of the HHS Office of Inspector General, and a lead in the implementation of the first pilot project. The second pilot is also likely to focus more on audit resolution. The Recovery Act requires federal entities to make management decisions on the findings that were reported in the pilot project within 3 months (March 31, 2010). But a significant number of the findings still had not been resolved as of July 8, he commented. (It’s important to note that slow and incomplete audit resolution by federal agencies came up in almost every grants session, and several presenters, including Danny Werfel, said OMB and Congress will be taking a close look at this issue.)

 On a side note, Gil Tran was supposed to make this presentation but was not at the conference because he was still working on the A-133 Compliance Supplement, which was supposed to be out “this week,” meaning July 15 or16. One interesting tidbit: Gil has to get sign-off from 19 different federal officials before he can release the supplement.

 Reducing Improper Payments

Werfel said one of the most promising and interesting ideas they are looking at to reduce improper payments is revising A-87 (2 CFR Part 225. the state and local cost principles) to allow states to recapture more indirect costs. This incentive would reward states that reduce improper payments by allowing them to keep more for administrative expenses and offset the costs of program administration. OMB is seriously looking at how A-133 audits can be used more effectively in preventing, rather than simply detecting, improper payments. This could mean anything from speeding up the audit timeline to focusing more on larger entities or larger grant programs. However, he gave no specifics on A-133 revisions.

 Werfel also told attendees that in the fall, OMB plans to launch a grant program to support innovative streamlining and grants management partnership projects. The goal is to promote efficiency while improving program services and is based on ideas submitted to Partner4Solutions.gov.

 Yellow Book Update

The Government Accountability Office is drafting a revised Yellow Book and expects that draft to be ready for public comment in late July or early August, with the final revision complete by February or March 2011. But those are moving targets because GAO is attempting to align the Yellow Book with AICPA standards, which are still in the process of being revised.

 Most of the changes that auditors will see are technical in nature or align Yellow Book requirements with other standards. But one area that will change is the standard for auditor independence. Marcia Buchanan, Assistant Director for Auditing Standards at GAO, said Chapter 3, on auditor independence, will be restructured. There will be a conceptual framework that will serve as a guideline for determining whether an auditor is independent, but there will no longer be a laundry list of prohibited activities. This will give auditors more flexibility and allow them to apply judgment in unique situations.

In an effort to stem payments to ineligible individuals and entities, President Obama has ordered federal agencies to check nearly half a dozen existing databases before making any financial assistance award – including grants.

In a June 18 presidential memo, Obama said that in the preaward phase, agencies must consult, where appropriate, the Social Security Administration’s Death Master File, the General Services Administration’s Excluded Parties List System, the Department of the Treasury’s Debt Check Database, the Department of Housing and Urban Development’s Credit Alert System or Credit Alert Interactive Voice Response System, and the Department of Health and Human Services’ Office of Inspector General’s List of Excluded Individuals/Entities.

OMB will issue guidance on exactly how agencies can meet the new preaward requirements and on the impact the eligibility check will have on funding decisions.

The memo also directs OMB to coordinate these databases, a so-called “Do Not Pay List,” with the new Federal Awardee Performance and Integrity Information System (FAPIIS) so that agencies can access them through a single entry point. (FAPIIS was mandated by the 2009 Defense Authorization Act and will include information about contractors and grantees (and subcontractors and subgrantees) that receive more than $10 million in federal assistance. Those recipients will have to provide information about any criminal convictions, civil penalties, or administrative actions against them. Self-reporting of that information would be included as a term and condition in grant awards.)

To view the presidential memo, click here.

President Obama’s themes of tying performance to funding, and tightening the discretionary budget belt will carry forward into fiscal year 2012 and beyond. In June 2010, OMB issued budget guidance to federal agencies that are now working to develop their FY 12 budget requests for submission to OMB. The guidance, which came in the form of two memos, directs agencies to “identify the programs and subprograms that have the lowest impact on your agency’s mission and constitute at least five percent of your agency’s [FY 10] discretionary budget.” 

In Memo M-10-19, OMB noted that agencies should not simply reduce spending across the board. Instead, agencies should aim to restructure their operations strategically. This should include eliminating low-priority programs and activities, re-engineering staffing plans, improving procurement and grants management processes, and strengthening IT and financial management.

 A follow-up memo, M-10-20, gave more insight into how these reductions are to be achieved. Agencies are to evaluate programs based on their impact on the agency’s mission and relevant administration initiatives. Agencies should consider whether the program has an unclear or duplicative purpose, uncertain federal role, a completed mission, or lack of demonstrated effectiveness, according to the June guidance. The intent is to identify those programs with the lowest impact. OMB emphasized that agencies were not to meet the five-percent low-priority program target with across-the-board reductions or incremental savings in administrative costs.

You can view both of the memos on OMB’s website. Also, remember that these and other recent developments in grants administration will be covered in our Federal Grants Update 2010 seminar which is currently running in locations around the country.

The federal government’s Office of Personnel Management (OPM) is circulating a proposed job classification series that would specify and standardize the use of the job title “Grants Management Specialist.”

Federal law requires OPM to establish official position titles to include a basic title (e.g., Grants Management Specialist) and optional titles such as “lead” or “supervisor”. Agencies must use the official position titles for human resources management, budget, and fiscal purposes.

According to the draft, the so-called Grants Management Series 1109 would include positions which “manage, supervise, lead, or perform administrative business and analytical work involving: (1) the management, award, and obligation of funds for federal assistance such as grants, cooperative agreements, and other related assistance and services using financial, administrative, business, and negotiation procedures; (2) the competitive or non-competitive evaluation of grants proposals; and (3) the administration or termination, and closeout of grants.”

The draft then goes on to list nearly 20 typical job duties of a grants management specialist.

You can read the full draft job classification here.

Comments may be submitted until June 25 to fedclass@opm.gov.

The Department of Health and Human Services is planning to overhaul its researcher financial conflict of interest regulations and is inviting public comment on the proposed changes.

Among other things, the changes would expand the scope and coverage of the regulations, amend the definition of “significant financial interest”, expand research institutions’ responsibilities for identifying and managing conflicts of interest, and strengthen the federal government’s oversight roles and responsibilities.

The conflict of interest regulations are intended to help ensure that there is no bias in the design, conduct, or reporting of government-funded research due to financial relationships between researchers and the private sector. But with the growing inter-relationship between academia, government, researchers, and the private sector, HHS said there is a need to revamp the regulations. According to HHS, financial support of biomedical research increased from $37.1 billion in 1994 to $94.3 billion in 2003, and more than half of the funding in 2003 came from industry sources. At the same time, relationships between academic researchers and industry have also increased from 28% in a 1996 survey to 53% in 2007.

You can view the full Federal Register notice by clicking here. The notice includes information on how to submit comments, which are due July 20.

The Office of Management and Budget has issued yet even more guidance aimed at stepping up recipient reporting under the Recovery Act. And this time, the memo directs federal agencies to take very specific steps to enforce compliance.

Memo 10-17, issued May 4, details five specific steps awarding agencies must take and sets specific deadlines for doing so. Nothing in the memo is especially new, but the fact that OMB included deadlines for agency actions is noteworthy. In summary, federal agencies must notify their recipients of the reporting requirements, contact and report on those entities that don’t comply, enhance oversight for persistently noncompliant grantees, and enforce compliance through all means available to them.

If you want to read the details of the memo, click here.