Administrative Requirements in Super Circular Track A-110
January 28, 2014
As previously reported, the Office of Management and Budget recently published its final guidance on grant reforms. The "Super Circular" streamlines requirements, supersedes eight existing OMB Circulars, and concludes a two-year effort by OMB and the Council on Financial Assistance Reform (COFAR).
Here are the significant reforms to the administrative requirements (formerly circulars A-102, A-110, and A-89) in the uniform guidance. (Future articles will focus on cost principles and audit requirements.)
Definition of Supplies
The uniform guidance makes it explicit that a computing device is a supply if "the acquisition cost is less than the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000." COFAR, determining that sensitive information on computers could be more efficiently protected through guidance on internal controls for sensitive information, rather than prescriptive requirements for the devices themselves, did not make changes to the final rule that some had proposed.
Review of Risk
Federal agencies and pass-through entities will be required to evaluate the risk associated with a recipient before making awards. The awarding agency may consider financial stability; the quality of management systems; the recipient's performance history; reports and findings from audits; and "the applicant's ability to effectively implement statutory, regulatory, or other requirements imposed on non-federal entities," among other factors.
The former Circular A-102 serves as the basis for the conformed procurement standards. The revised language requires entities to maintain "oversight" rather than a "system"-a response to concerns that the proposed language would have increased the administrative burden on not-for-profit organizations because it required maintaining a contract administration system to ensure contractors performed in accordance with the terms, conditions, and specifications of their contracts and delivery orders.
In addition, conflict-of-interest guidance was expanded to include organizational conflict of interest; it requires nonfederal entities to have "strong policies preventing organizational conflicts of interest which will be used to protect the integrity of procurements under federal awards and subawards."
A new procurement method-micro purchases-was added to the final guidance. This method applies to the purchase of supplies or services when the aggregate dollar amount does not exceed $3,000. These purchases may be awarded without soliciting competitive quotes if the nonfederal entity considers the price reasonable.
The federal awarding agency must require the recipient to relate financial data to performance accomplishments of an award. Recipients "must also provide cost information to demonstrate cost-effective practices." The intent is to help awarding agencies improve program outcomes, share lessons learned, and spread the adoption of promising practices.
Under the new guidance, institutions must establish and maintain effective internal controls over federal awards. These internal controls "should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)."
The guidance also calls on nonfederal entities to "take reasonable measures to safeguard protected personally identifiable information." The General Accounting Office is currently revising the Standards publication (also known as the Green Book).
Voluntary committed cost sharing is not expected under federal research proposals. Further, it "cannot be used as a factor during the merit review of applications or proposals, but may be considered if it is both in accordance with federal awarding agency regulations and specified in a notice of funding opportunity."
Only mandatory cost sharing or cost sharing specifically submitted in the project budget will be included in the organized research base for computing indirect (F&A) costs for research projects.
Requirements for Pass-Through Entities
The uniform guidance lists several data elements that pass-through entities must include at the time of a subaward, including "an approved federally recognized indirect cost rate negotiated between the subrecipient and the federal government or, if no such rate exists, either a rate negotiated between the pass-through entity and the subrecipient" or a 10 percent de minimis rate. Although NACUBO, the Council on Governmental Relations, and others had asked OMB to remove the requirement for subrecipient monitoring of institutions covered by the Single Audit Act, OMB did not include that exemption in the uniform guidance.
In a timely manner, nonfederal entities must disclose in writing any violations of federal criminal law involving fraud, bribery, or gratuity violations affecting the award. Failure to make these disclosures could result in suspension or debarment.
COFAR offered online training sessions on the Administrative Requirements, Cost Principles, and Audit Requirements on January 27 and plans to make the recordings available to view "on demand" on their website.
Senior Policy Analyst
- NACUBO Expresses Concerns with ED Proposal to Expand Federal Financial Responsibility Rules
- IRS Proposes Modifications to 1098-T Reporting
- ED Policy to Require Annual Student Aid Compliance Audits Beginning FY17
- 2016 Intermediate Accounting and Reporting Fall
October 24-25, 2016
- ON-DEMAND: The CBO's Role in Diversity and Inclusion on Campus
- ON-DEMAND: The Clery Act: Strategic Planning to Mitigate Institutional Risk
- ON-DEMAND: Title IX: Key Issues Surrounding Institutional Compliance
- ON-DEMAND: NACUBO Live! Higher Education Accounting Forum
- ON-DEMAND: Responsibility Center Management: Two Different Perspectives