Your school or government entity has been expected to adhere to various policy and procedure changes since the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards was implemented in December 2014 by the United States Office of Management Budget (OMB). However, there is still plenty to be confused about – especially with regard to the Uniform Grant Guidance (UGG). Hopefully this article will help clear up some of the broader questions you may have as you plan for your next audit.
When Does UGG Apply To You?
New audit requirements took effect for all entities with fiscal years beginning on or after Dec. 26, 2014, which means you are expected to comply with the new administrative requirements and cost principles established for all federal awards (and to all incremental funding increments made to existing awards) that were given after that date. That being said, it’s important to note that the date used when determining whether UGG is applicable for your entity is the date assigned to you by the federal agency that granted the award, not the pass-through agency. Entities that receive federal funding from pass-through agencies will need to communicate with them to determine when UGG applies if it was not already clearly stated in the pass-through agreement.
Why does the timing of your federal award matter? Because awards that were given prior to the new guidance taking effect could result in your entity having expenditures spent under the previous OMB Circular A-133 requirements – all while having expenditures subject to the newer UGG requirements. It is extremely important for your entity to identify which requirements apply to each of your federal grant awards and to track the expenditures made under each award to determine the requirements that are applicable to those expenditures. Obviously this could get pretty difficult to coordinate, especially if your entity has multiple departments that receive their own federal awards, which is why communication is essential.
Communicate with all departments early and often to ensure that everybody is properly identifying and tracking expenditures as determined by the appropriate guidelines.
Key Changes
While the changes resulting from UGG are extensive, you may find that paying close attention to a few common themes could be extremely helpful as you work to comply with the new requirements. Perhaps the most notable change is that your entity is required to have written policies and procedures in place related to the compliance requirements. Some of the most significant policies that you will need to adopt or update are:
- Conflicts of Interest
- Time and Effort/Cost Principles
- Cash Management
- Disposition of Real Property and Equipment
- Procurement
- Subrecipient Monitoring
Remember, it’s not enough to just adopt the necessary policies, to comply with the new guidance, you will be expected to have written procedures in place as well. Federal agencies, oversight agencies and external auditors will be looking for these written policies and procedures, so make sure you are ready to produce them at a moment’s notice.
Next Steps
Because you will be working with auditors who will be following audit procedures that require them to pay close attention to your entity’s written procedures, adoption of all required policies and procedures should be your top priority. This is the first step you can take to protect your entity against possible audit findings and questionable costs.
Finally, you can always email Rea & Associates for additional guidance and insight into UGG and additional steps you can take to prepare for you next audit.
By Chad Gorfido, CPA (Medina office) and Zac Morris, CPA (Millersburg office)
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