Grants Blog

Posts Tagged ‘Oversight’

Nearly $800 million in undisbursed federal funds remained in expired grant accounts at the end of fiscal year 2011, according to a new report from the Government Accountability Office. And while some agencies have taken steps to reduce that amount and speed the grant closeout process, more work needs to be done.

In a May 2012 follow-up to a 2008 report, GAO repeated its basic recommendation: OMB needs to establish governmentwide guidance for grant closeout.

In the 2012 report, GAO noted that while the total amount of undisbursed funds in FY 11 essentially equaled the amount reported in its previous study, the percentage of total grant funding that those funds represented was lower – meaning that agencies were doing a better job of getting rid of those unobligated monies and closing accounts.

For example, in February 2011, HHS established an interagency workgroup—the Accelerated Closeout Team—led by the Office of Grants and Acquisition Policy and Accountability to coordinate a departmentwide response in strengthening financial controls and accelerating the number of grant and contract closeouts.

“Our analysis shows that there has been an improvement in closing out expired grant accounts with undisbursed balances in PMS since our 2008 report,” GAO said in the report. Nevertheless, GAO continues “The presence of tens of thousands of expired grant accounts in PMS with no undisbursed funds remaining raises concerns that these accounts are not receiving sufficient attention. Reducing the number of accounts with zero balances remaining would help ensure that administrative and financial closeout—the final point of accountability for these grants—is being completed. It would also minimize the amount agencies pay in potential fees for maintaining these accounts, which can accumulate over time.”

If you are interested in learning about effective grant closeout, Management Concepts’ two-day Closeout of Grants for Federal Personnel will be helpful. This course provides students with a framework and actionable process for overseeing and conducting grant closeouts. Visit www.managementconcepts.com/grants for more information.

With the buzzwords “accountability” and “transparency” cited over and over, the House yesterday approved the DATA Act, a measure that would impose strict new reporting requirements on federal agencies and grant recipients.

Recipients would have to report at least quarterly on receipt and use of federal funds. Similarly, federal agencies would have to report at least quarterly on all obligations and expenditures of federal funds. The Treasury Department would also report federal agency obligations and expenditures, and all of this information would be identified by program, budget category, or other Treasury account number so that it could all be easily compared.

An interesting provision in this legislation is that it would not waive the reporting requirements for entities that receive small awards; only certain individuals would be exempt.

The House also attempted to put some teeth behind the measure by allowing federal agencies to impose penalties of up to $250,000 on recipients who fail to meet the reporting requirements. To enforce agency reporting, OMB would be directed to issue guidance requiring compliance with the new act.

The Data Accountability and Transparency Act (HR 2146) would also create a new oversight panel, the Federal Accountability and Spending Transparency Commission. This commission would have extensive power. For example, it would establish reporting deadlines, specify the data elements and the format of reports, and issue guidance to federal agencies and recipients on compliance with the new law.

Also, rather than repealing the Federal Funding Accountability and Transparency Act, as was originally proposed in the House bill, the measure that members approved yesterday would amend that legislation by aligning it with the new reporting and transferring control over FFATA reporting and USAspending.gov from OMB to the new council.

A companion measure was introduced in the Senate earlier this year, but is still awaiting action in the Committee on Homeland Security and Governmental Affairs.

Log in next week (Oct. 17-24) to join an online conversation discussing ways to prevent fraud and abuse in federally funded Recovery Act programs. This week-long public dialog is sponsored by the Recovery Accountability and Transparency Board and the National Academy of Public Administration.

While the scope of this discussion will focus primarily on oversight of Recovery Act funds, the sponsors are also interested in ideas related to the oversight of other federal spending that might be applicable to Recovery Act dollars.

Some of the questions to be addressed include:

The board and the academy encourage a variety of participants from the general public, state and local governments, the private sector, the nonprofit field, and academia. For more information, visit the dialog’s page on Facebook or go to http://www.fedaccountabilitydialogue.org.

Yesterday, a House subcommittee held hearings on “Improving Oversight and Accountability in Federal Grant Programs.” Officials from OMB, GAO, federal agencies, and the private sector all testified. And while (in my opinion) there was not a lot of new information or new ideas, the fact that Congress is now paying more attention to grants management is a fairly significant development.

So here is a link to the subcommittee’s website, where you can find testimony and watch a recorded version of the hearing.

I’m curious to see what action Congress, agencies, or the administration actually take. What do you think? Will we see concrete steps toward improved effectiveness and use of single audits? Will there be changes in the preaward process? Will regulations be amended? Take a look at the testimony and let me know what you think.

Grant recipients (both pass-through entities and subrecipients) may want to take note of an interesting item in OMB’s recent guidance on implementation of the Improper Payments Elimination and Recovery Act (PL 111-204).

OMB says that for grant programs, agencies must consider payment recapture audits at the grant recipient level. “Federal agencies should work with state and local governments to ensure that they have enough resources to conduct payment recapture audits (for example, through direct funding, allowable administrative expenses, or contingency contracts),” OMB writes. It continues, “[G]enerally, federal agencies should not look to pass-through entities for repayment of improper payments identified by payment recapture audits for funds they pass-through until repayment has been made by the sub-recipient or the final payee.”

On this last point, I think it’s important to note that OMB is only referring to monies that were identified in recapture audits.

How agencies will implement this memo remains to be seen, but I thought some might find OMB’s take on the matter interesting.

You can view the complete OMB memo guidance here.

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.

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.

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.

Nearly four years after it was enacted, the Federal Funding Accountability and Transparency Act is once again on OMB’s radar. According to a recent memo, OMB is revamping the USAspending.gov site, creating a new mandate for ensuring the accuracy of Transparency Act data, and perhaps most notably, establishing a deadline for agencies to begin reporting subaward information.

Agencies have been reporting primary recipient award data to USAspending.gov for several years, but now they must begin to collect and report subaward data by October 1 of this year. (That information was supposed to have been available more than two years ago.) This subaward reporting requirement only applies to new awards made on or after that date, and only to first-tier subrecipients.

The information to be collected is similar to what is already being reported for Recovery Act awards, with one notable exception. The Transparency Act requires that entities report the names and total compensation of the five most highly compensated officers if the entity received 80 percent or more of its annual gross revenues in federal awards and $25 million or more in annual gross revenues from federal awards; and if the public does not have access to compensation information through IRS or SEC records.

Well, there is much more to this new OMB memo and it will take more time for me to wade through it all and digest the information. But I wanted to let you know about it as soon as possible. You can read the complete guidance by clicking here.

And remember, we’ll be covering this, as well as other developments, in our Federal Grants Update class. You can find dates and locations of this one-day seminar by clicking here.