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Traci Hanson, Author at Ketel Thorstenson, LLP

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June 8, 20140

Traci HansonThe 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 at the following link: This email address is being protected from spambots. You need JavaScript enabled to view it.&cm_mmc=Newsletters-_-CheetahMail-_-GAQCAlert_250-_-MAY14″>Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.  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.


March 5, 20140

The nonpr2015 Traci Hansonofit and governmental regulatory environment is constantly changing, whether it’s tax regulations, accounting requirements, or grant compliance. This article highlights the recent and upcoming changes to the new data collection form, the federal Form 990, the new Uniform Grant Guidance, and the updated COSO.

New Data Collection Form
This January, the Office of Management and Budget (OMB) released the 2013 Data Collection Form, applicable for audit periods ending in 2013. Along with the new form, the Federal Audit Clearinghouse launched a new Internet Data Entry System (IDES) website for filing the data collection form.

The data collection form will look similar to the previous version; however, there are some significant changes. A new column to the Federal Awards page was added, identifying the number of findings for each federal award program. This column will correspond with the new Federal Awards Findings Page, which identifies the following:

  • finding number referenced in the financial statements
  • the type of compliance requirement the finding relates to (see our Federal Compliance Requirements Newsletter Series)
  • whether the finding resulted in a modified opinion (other than clean opinion) or an “other matter”
  • the severity of the finding: material weakness, significant deficiency, or other finding
  • if questioned costs are associated with the finding

Federal loans and loan guarantees will also be reported on the Federal Awards page. If the federal program consists of part loan or loan guarantee, the loan/loan guarantee expenditures should be listed on one line and the non-loan/loan guarantee expenditures on a separate line.

The biggest change to the new website is each user will be required to create an account to review and certify (electronically sign) the data collection form. During the process of preparing the new data collection form, the auditee and auditor will receive an email from IDES directing new users to register a new account. A new account may also be set up by going to and clicking “Submit an Audit.” On the next webpage, a new account can be created with an e-mail address. After registering for an account, you will receive an e-mail to complete registration by creating a password 12 characters long, consisting of uppercase and lowercase letters, numbers and a special character. Once you reach the Account Home page, you will see options to start a new submission, resume work on an uncompleted submission, revise a previously submitted form, and to view archived forms. For security purposes, the password will expire with 30 days of inactivity.

New Form 990
The IRS has released the 2013 Form 990 and instructions, along with all the related schedules. The good news for the 2013 Form 990 and 990 EZ is that no significant changes were made to the basic forms, schedules or questions. A majority of the 2013 changes relate to clarifications for certain requirements and responses. A summary of all changes to the Form 990 and related schedules can be obtained on the IRS website at the following link:

New Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
In December 2013, the U.S. Office of Management and Budget (OMB) issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Grant Guidance or Guidance). Because of the length and complexity of the new guidance, this update will focus an overview of the new guidance. Future KT newsletters will cover general provisions, changes to the OMB Cost Principles, and the new single audit requirements.

The Council of Financial Assistance Reform (COFAR) was established to streamline guidance for federal awards, easing administrative burden and strengthening oversight of the more than $500 billion expended annually in federal funds to reduce risks of waste, fraud, and abuse.

The Uniform Grant Guidance supersedes and streamlines requirements from eight different grant circulars into one set of guidance contained in Title 2 of the Code of Federal Regulations (CFR) as follows:
• Subpart A contains acronyms and definitions used throughout the Guidance.
• Subpart B discusses general provisions including the purpose of the Guidance, its applicability, and effective date.
• Subpart C covers administrative requirements directed primarily at federal agencies including pre-award activities and requirements for the contents of federal awards.
• Subpart D includes many of the administrative requirements including procurement, internal control, and subrecipient monitoring.
• Subpart E includes reforms to the Cost Principles previously found in Circulars A-21, A-87, and A-122
• Subpart F includes the reforms to single audit requirements which were previously found in Circulars A-133 and A-50.

The Uniform Grant Guidance defines non-federal entities as states, local governments, Indian tribes, institutions of higher education, or nonprofit organizations that carry out a federal award as a recipient or subrecipient. Non-federal entities will need to implement the new administrative requirements and Cost Principles for all new federal awards and for additional funding to existing awards made after December 26, 2014. This effective date may be challenging as some entities may have funding subject to the old cost principles and the new Cost Principles within the same fiscal year. OMB is expected to issue additional clarifying guidance relating to the effective date.
The audit requirements in Subpart F will be effective for fiscal years beginning on or after December 26, 2014. Therefore, auditees subject to a single audit with December 31, 2015, year ends will be required to undergo the first single audits conducted under the Uniform Grant Guidance. Early implementation of Subpart F is not permitted.

COSO Framework
Internal control helps entities achieve important objectives and sustain and improve performance. In 1992, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued a report titled Internal Control—Integrated Framework (COSO report). The COSO report defines internal control, describes the components of effective internal control, provides criteria against which internal control can be evaluated, and presents guidance that organizations can follow when reporting publicly on internal controls over financial reporting.

The guidance issued by COSO was among the first internal control frameworks. The concept of internal control changed drastically after COSO issued its guidance. Not only did the new concepts affect how internal control was viewed by businesses, management, and CPAs in the United States, it also served as a basis for changes in the accounting profession’s standards relating to internal control. Basically, COSO is to internal control what GAAP is to financial statements. The COSO framework impacts financial statement audits because the COSO guidance was adopted into the auditing standards and is referenced in the new Uniform Grant Guidance noted above.
In the twenty years since the inception of the original COSO framework, business and operating evironments have changed dramatically, become increasingly complex, technologically driven, and global. At the same time, stakeholders are more engaged, seeking greater transparancy and accountability for internal control systems that support business decisions and governance of an entity.

In May 2013, COSO issued its updated Internal Control—Integrated Framework (the updated framework). This updated framework will replace COSO’s original framework on internal control that was originally issued in 1992. Because COSO considers the key concepts and principles in the original framework still fundamentally sound and widely accepted, entities may continue to use the original 1992 framework until December 15, 2014. After that time, COSO has indicated that it will consider the original framework superseded. However, the COSO Board encourages users to transition their applications and related documentation to the updated framework as soon as is feasible under their particular circumstances. Transition issues and an overview of the updated framework will be discussed in further detail in a future newsletter.

If you have any questions about the above updates please contact any of our non-profit specialists.



December 15, 20130

2015 Traci HansonAs described in our previous articles, 14 different compliance requirements could have a direct and material effect on federal grants received by governmental or nonprofit organizations.  One of the 14 compliance requirements includes 3 separate and unique requirements: matching, level of effort, and earmarking.   These may require that recipients provide a level of contribution to a Federal program, maintain specific levels of performance or achievement, or restrict the amount of Federal funds used for a specific purpose.  Failure to meet these requirements may result in either limitation or termination of future funds. The specific requirements for matching, level of effort, and earmarking are unique to each Federal program and are found in the laws, regulations, and the provisions of contract or grant agreements pertaining to the program.


Matching or cost sharing includes requirements to provide contributions (usually non-Federal) of a specified amount or percentage to match Federal awards.  When an organization receives Federal grants, an operating budget for the federally funded program or project is prepared.  The Federal government may require the recipient to provide contributions to cover a portion of that program’s operations.  The matching requirement is based on the assertion that total program expenses are 100 percent and that, although the Federal government provides assistance for most program expenses, the recipient must still cover a portion of them.  Such proportion is solely decided by the Federal government.  Usually the recipient decides how that contribution is provided and for which expenses, so long as the contribution is verifiable, generally does not originate from another Federal program, and is considered in the operating budget.  The expenses must be necessary and reasonable, allowed under cost principles (see Part I of the Federal Grant Requirement Series), and not used for another Federal program.

The A-102 Common Rule and OMB Circular A-110 (2 CFR section 215.23) provide detailed criteria for acceptable costs and contributions. The following is a list of the basic criteria for acceptable matching:

  • Are verifiable from the non-Federal entity’s records.
  • Are not included as contributions for any other federally assisted project or program, unless specifically allowed by Federal program laws and regulations.
  • Are necessary and reasonable for proper and efficient accomplishment of project or program objectives.
  • Are allowed under the applicable cost principles.
  • Are not paid by the Federal Government under another award, except where authorized by Federal statute to be allowable for cost sharing or matching.
  • Are provided for in the approved budget when required by the Federal awarding agency.
  • Conform to other applicable provisions of the A-102 Common Rule and OMB Circular A-110 and the laws, regulations, and provisions of contract or grant agreements applicable to the program.

Matching may be in the form of contributing the recipient’s own funds for allowable program costs (e.g., paying program utility bills, paying part of program personnel payroll, etc.) or, in some cases, in the form of an in-kind contribution, which are donations of non-monetary objects such as services, materials, property, etc.

Examples of matching include the Head Start program, which requires that recipients provide 20 percent of the total annual expenses in either monetary or in-kind contributions. Recipients of these funds may contribute money to cover teacher payroll, or may contribute a building to house the program classrooms. However, the Federal government requires that in-kind contributions be properly valued and evidenced (such as estimating the value of a building to make sure that it meets 20 percent of the program budget), and certain programs specifically require that matching be made by contributing money only.

As previously mentioned, the match may be a percentage of the total project costs.  If an organization applies for a $100,000 grant that requires a 20 percent match, the match is not $20,000.  To determine match, the requested federal amount is divided by the percentage that is the federal share of the project to arrive at the total project costs. Thus, in this example the organization’s required match would be $25,000 ($100,000 divided by .80 = $125,000).

Level of Effort

Level of effort defines particular goals or objectives the recipient must achieve with the assistance received.  Level of effort may include requirements for (a) a specified level of service to be provided from period to period, (b) a specified level of expenditures from non-Federal or Federal sources for specified activities to be maintained from period to period, and (c) Federal funds to supplement and not supplant (replace) non-Federal funding of services.

Some examples are programs that establish that a recipient must provide medical services to 1,000 patients daily and programs that require that recipients spend over 50 percent of the annual budget on capital projects.

One of the more common level of effort requirements is a part of certain Department of Education grants.  A school district must maintain a combined fiscal effort per student or the aggregate expenditures of the school district from State and local funds (non-federal) for free public education for the preceding year cannot be less than 90 percent of the combined fiscal effort or aggregate expenditures for the second preceding year.  The granting information defines “combined fiscal effort” and identifies what is included and excluded from “aggregate expenditures.”


Earmarking is a requirement that specifies a limited amount or percentage of the program’s assistance that must (minimum) or may (maximum) be used for specified activities.  Examples of this include limits imposed by the Federal government on the amount of Federal funds to cover administrative expenses, or a percentage requirement for total program funds provided to subrecipients.  Earmarking may also be specified in relation to the types of participants covered (e.g. a limit on how many participants a recipient can provide assistance to).

Matching, level of effort, and earmarking are inter-related with other federal grant compliance requirements such as Activities Allowed/Allowable Costs, Reporting, and Subrecipient Monitoring.  Each of these compliance requirements is described in more detail within other parts of our series on Grant Compliance.  The grant recipient should be cognizant of reviewing the grant award along with the OMB Circular A-133 compliance supplement to ensure they are meeting the appropriate requirements.

See our previous newsletters and upcoming newsletter articles providing specific details on each of the 14 compliance requirements. Please contact Traci Hanson, Shelley Goodrich, or Sandra Weaver with specific questions.