The New A-133 Compliance Supplement and It's Impact


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The New A-133 Compliance Supplement and It's Impact

  1. 1. THE NEW A-133 COMPLIANCE SUPPLEMENT AND ITS IMPACT ON GRANT AUDITS August 29, 2013 Steven Spillan, Esq. Brustein & Manasevit, PLLC
  2. 2. About the Speaker • Steven Spillan joined Brustein & Manasevit, PLLC in January 2006 as a Legislative Assistant. In 2011, Mr. Spillan became as Associate with the Firm. Mr. Spillan assists clients with federal grants management and various federal education programs, including the Elementary and Secondary Education Act, the Carl D. Perkins Career and Technical Education Act, the Workforce Investment Act, the Higher Education Act, and the Family Educational Rights and Privacy Act. Mr. Spillan also works with the Legislative Director and clients to develop their federal legislative strategies and facilitates their representation before Congress and administrative agencies.
  3. 3. Agenda • 2013 Changes • Compliance Requirements • ARRA Changes • Agency Changes • Proposed Changes in “Super Circular”
  4. 4. Purpose of Compliance Supp • Assist auditors in determining compliance requirements relevant to the audit, audit objectives, and suggested audit procedures for federal programs.
  5. 5. Applicability • Any non-federal entity that expends $500,000 or more in federal funds in a year. • Must have Sing Audit. • Often leads to OIG audits or program monitoring findings.
  6. 6. 2013 Changes • Most changes focus on auditing ARRA programs. • Changes to/ Applicability of Compliance Requirements. • Simplified Acquisition Threshold. • Agency-Specific changes.
  7. 7. Compliance Requirements • 14 areas of concern that auditors are directed to look for when completing A-133 Single Audits. • If “deleted” from certain programs’ Single Audit requirements, pass-through entities still responsible for ensuring compliance.
  8. 8. Compliance Requirements • Deleted “Davis-Bacon Act” and “Special Tests and Provisions,” from programs if: • Inclusion was based solely on ARRA funding, and • The program(s) is continuing without ARRA funding.
  9. 9. Compliance Requirements • Eliminated applicability of certain requirements due to lack of materiality to the affected program/cluster: • Equipment and Real Property • Procurement and Suspension and Debarment; • Program Income; and • Real Property Acquisition and Relocation Assistance
  10. 10. Compliance Requirements • Modified, “Procurement and Suspension and Debarment,” to • update and clarify compliance requirements; • update suggested audit procedures for testing compliance; and • recognize that some programs/awards may have authorized use of higher simplified acquisition threshold,
  11. 11. Procurement - ARRA • Section 1605 of ARRA: • Prohibits the use of ARRA funds for a project for the construction, alteration, maintenance, or repair of a public building or work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. • Buy American Act
  12. 12. Procurement - Audits • ARRA Construction projects: • documented that the iron, steel, and manufactured goods used in the project are produced in the United States, or • requested and received any waivers of the Buy-American requirements.
  13. 13. Procurement - Audits • Exceptions to “Buy American”: • The recipient or subrecipient is covered by an international agreement and the scope of that agreement or • The recipient has requested and been granted an exception
  14. 14. Procurement - Audits • Verify that the Federal awarding agency approved procurements exceeding $100,000 when required. • noncompetitive negotiation, • only a single bid or offer was received, • awarded to other than the apparent low bidder, or • specifying a “brand name” product
  15. 15. Procurement - Audits • $100,000 threshold remains in government-wide use unless: • Agency/program has issued guidance raising the threshold, or • Increased threshold is specified in the terms and conditions of award.
  16. 16. Reporting • Modified “Reporting,” to revise coverage related to the Federal Funding Accountability and Transparency Act (FFATA), including updating suggested audit procedure (compliance) #11, and the “Good Faith Effort for Submission” section.
  17. 17. FFATA Reporting • Recipient reporting of each first-tier subaward or subaward amendment that results in an obligation of $25,000 or more in Federal funds; • Contractor reporting of each first-tier subcontract award of $25,000 or more in Federal funds.
  18. 18. FFATA Reporting – Triggering Event • Grant or cooperative agreement: obligation of funds rather than a payment; • Contract: awarding or modifying a first-tier subcontract.
  19. 19. FFATA Reporting • Reporting must be accomplished by the end of the month following the month in which the reportable action occurred • Grants funds obligated on Oct. 1 must be reported by November 30
  20. 20. Reporting - Audits • Auditors are not required to report audit findings when there is evidence that a recipient demonstrated a “good faith” effort to submit the information.
  21. 21. Reporting - Audits • Good Faith Evidence: • emails or phone logs of communication between a recipient and the awarding agency or GSA; or • computer screen shots that illustrate recipient attempts to upload information into FSRS.
  22. 22. Programmatic Changes • Part 4 of Compliance Supplement lists changes for federal agency programs. • Each grant recipient should check applicable sections
  23. 23. U.S. Department of Education • Addition of “ESEA Flexibility” in Title I programs. • Discussions effect of flexibility on existing audit procedures and subsequent changes.
  24. 24. ESEA Flexibility • Transferability - In a “Flexibility” State, an SEA or an LEA may transfer up to 100% of the funds available under one or more of the authorized ESEA programs among those programs and into Title I, Part A (without prior notification). • not subject to any set-aside requirements of but still subject to all other requirements.
  25. 25. ESEA Flexibility (cont) • A “Flex” State may have enacted laws or promulgated regulations, etc… to meet flex requirements. • Use of federal funds for these purposes would not violate the “required by law” presumption of supplanting
  26. 26. ESEA Flexibility • Schoolwide – A Title I school with less than 40% low-income children may operate a schoolwide program if: • Identified as a priority or focus school, and • LEA is implementing interventions consistent with the turnaround principles based on the needs of the students, designed to enhance the entire educational program in the school
  27. 27. ESEA Flexibility • In Flex State – may serve a Title I-eligible high school with a graduation rate below 60% that is identified as a priority school: • May allocate funds to that school out of rank order of poverty and based on the needs of the school.
  28. 28. Title II-A Confusion • Title II-A - Must reserve an amount equal to or greater than the amount of funds reserved for professional development in fiscal year (FY) 2001. • Statute and Guidance specify funds are to be used for both public and private school professional development services.
  29. 29. Title II-A Confusion • 2013 Supplement: Title II-A reservation funds just for private school services. • When Supplement conflicts with current laws and regulations, follow the law.
  30. 30. Additional ED Changes • Time & Effort: • Time-and-effort requirements in a schoolwide program specific to the Education Jobs Program (Section III.B.2.b). • Use of a substitute system for time-and-effort reporting (Section III.B.2.c).
  31. 31. Upcoming Changes • OMB Super Circular February 2013: • Greater simplicity • Greater consistency • Obama Executive Order on Regulatory Review • Comment period closed June 2, 2013. • Final rules expected…?
  32. 32. Super Circular Changes • Single Audit Threshold raised to $750,000 • 7 Compliance Requirements Eliminated • Greater focus on risk • Time & Effort Changes
  33. 33. Eliminating 7 Compliance Requirements 1. Equipment 2. 3. 4. 5. Management MOE/EarMarking Procurement Program Income David Bacon 6. Real Property Acquisition 7. Period of Availability
  34. 34. Eliminated Requirements • Agencies can request special tests for A-133 items removed (e.g., equipment management, period of availability of funds)
  35. 35. Impact on Audits? • Elimination of compliance requirements does not mean elimination of compliance. • Lack of Single Audit review requires greater subrecipient monitoring. • Pass-through entities still responsible for ensuring compliance
  36. 36. Other Single Audit Changes • Federal awarding agencies shall use “cooperative audit resolution mechanisms” to improve federal program outcomes through better audit resolution, follow-up and corrective action
  37. 37. Cooperative Audit Resolution • This approach is based upon “Federal agencies offering appropriate amnesty for past noncompliance when audits show prompt corrective action”
  38. 38. Audit Findings • The auditor shall report known questioned costs greater than $25,000 for major programs • If not a major program (auditor normally will not find questioned costs) but if auditor becomes aware of questioned costs greater than $25,000 for non-major programs – must report
  39. 39. Resources: • 2013 A-133 Compliance Supplement: e_supplement_2013 • OMB Proposed Super Circular:!documentDetail;D=OMB2013-0001-0002
  40. 40. QUESTIONS
  41. 41. Do you have a question that you would like answered during the Q&A session? Simply follow the instructions below. To ask a question, please press *1 on your touchtone phone. If you are using a speaker phone, please lift the receiver and then press *1. If you would like to withdraw your question, press *1. 41
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  43. 43. This presentation is intended solely to provide general information and does not constitute legal advice. Attendance at the presentation or later review of these printed materials does not create an attorneyclient relationship with the presenter(s). You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances. 43