1 Accountability and Transparency: An American Recovery and Reinvestment Act (ARRA) Grant Management Workshop with Michael Brustein October 14, 2009 Michael Brustein, Esq. Brustein & Manasevit 3105 South Street NW Washington, DC 20007 (202) 965-3652 firstname.lastname@example.org www.bruman.com 2 Topics 1. Recent Developments in the Beltway 2. Update on ARRA 3. Basic Guidelines of Grants Management 4. State Administered Program 5. Internal Controls 6. Grant Management 7. Federal Cost Principles 8. Supplement Not Supplant 9. Monitoring and Auditing 3 Recovery Act: Road Map • Overview • State Fiscal Stabilization Funds • Race to the Top ▫ Break • Innovation Funds & Select targeted funds • Reporting & Accountability • Questions and Answers 4 Recovery Act: Fiscal Crisis 5 SFSF: Capturing the Crisis Never allow a crisis to go to waste – Rahm Emanuel, White House Chief of Staff. 6 Recovery Act: Dual Purposes • To help stabilize State and local budgets in order to minimize and avoid reductions in education and other essential services. • Promoting essential education reform in four areas. ▫ Teacher effectiveness and distribution ▫ Pre-K to career data systems ▫ College and career ready standards ▫ Intensive support and effective interventions for the lowest performing schools 7 Recovery Act: Funding Principles • Balance speed and stimulus with careful planning and effective reforms. • States should award funds to LEAs as quickly as is prudent and LEAs should use funds expeditiously but sensibly. 8 Recovery Act: Funding Sent • State Stabilization - $32.5 billion (67% based on approvable application). • Made available April 1: ▫ IDEA, Parts B & C - $6.1 billion (50%) ▫ Title I, Part A - $5 billion (50%) ▫ Vocational Rehabilitation: $270 million (50%) ▫ Independent Living - $52.5 million (100% of formula monies; $87.5 million in competitive grants to follow) • Made available April 10 ▫ Homeless Youth - $70 million (100%) ▫ Impact Aid - $40 million (100% of formula monies; $60 million in competitive grants to follow) 9 Recovery Act: Funding Coming • State Stabilization, phase 2: Sept./Oct….Dec., $16.1 billion (33%) • IDEA, Parts B & C: Sept. 1, $6.1 billion (50%) ▫ Update: The remaining 50%, accelerated and to be available to all states on or around September 1. • Title I, Part A: Sept. 1, $5 billion (50%) ▫ Update: The remaining 50%, accelerated and to be available to all states on or around September 1. • Title I School Improvement Grant : January 2010 (?), $3 billion (100%) • Enhancing Education Through Technology: July 24, $650 million (100%) • Vocational Rehabilitation: Sept. 1, $270 million (50%) Update: The remaining 50%, accelerated and to be available to all states on or around September 1. • Statewide Data Systems: Late 2009/ early 2010.…, $250 million (100%) • Teacher Incentive Fund: Early 2010, $200 million (100%) • Teacher Quality Enhancement: Oct./Nov., $100 million (100%) bruman.com 9 10 Recovery Act: Ed Reform Quid Pro Quo • (1) making improvements in teacher effectiveness and in the equitable distribution of qualified teachers for all students, particularly students who are most in need; • (2) establishing pre-K-to-college-and-career data systems that track progress and foster continuous improvement; • (3) making progress toward rigorous college- and career- ready standards and high-quality assessments that are valid and reliable for all students, including limited English proficient students and students with disabilities; and • (4) providing targeted, intensive support and effective interventions for the lowest-performing schools. 11 Recovery Act: Reporting and Accountability Unique tracking & reporting requirements required for all ARRA funds. 12 ARRA: State Fiscal Stabilization Funds 13 Recovery Act: Key Mechanics • A State must restore fully the levels of State support for elementary and secondary education and for public IHEs for FY 2009 to the greater of the FY 2008 or FY 2009 levels. ▫ For FY 2008, a State must use the actual levels of State support for elementary and secondary education and for public IHEs. ▫ For FY 2009, a State may use (a) the actual levels of State support for elementary and secondary education and for public IHEs; (b) the projected levels of State support for elementary and secondary education and for public IHEs; or (c) prior- enacted levels of State support for elementary and secondary education and for public IHEs that were subsequently revised. • Only funds that a State awards through its primary elementary and secondary education funding formula(e) may be used in determining the levels of State support for elementary and secondary education. 14 Recovery Act: Key Mechanics - MOE • In each of FYs 2009, 2010, and 2011, the State will maintain State support for elementary and secondary education at least at the level of such support in FY 2006. • In each of FYs 2009, 2010, and 2011, the State will maintain State support for public IHEs (not including support for capital projects or for research and development or tuition and fees paid by students) at least at the level of such support in FY 2006. 15 Recovery Act: Key Mechanics - Obligation 1. A Governor must return to the Secretary any funds that the State does not award as subgrants or otherwise commit within two years of receipt of those funds. The Department is awarding funds to States in two phases, and there are separate deadlines by which the Governor must subgrant or commit the funds awarded in each phase. 2. LEAs and IHEs must “obligate” ARRA funds by September 30, 2011. 16 Recovery Act: Mechanics – Uses • Any Education Stabilization funds that an LEA receives may be used for activities authorized under the ESEA, the IDEA, the AEFLA, or the Perkins Act, subject to ARRA and other applicable Federal requirements, including the limited prohibitions. • Critical Reminder: The Education Stabilization funds are ALWAYS Federal ARRA funds. 17 Recovery Act: Mechanics – Impact Aid • ESEA includes the broad Impact Aid authority (see Title VIII of the ESEA), an LEA may use Education Stabilization funds for activities that would be allowable under Impact Aid. ▫ This flexibility applies to all LEAs that receive Education Stabilization funds, and is not limited to those LEAs that also receive Impact Aid funds. ▫ Under the Impact Aid authority, an LEA may use Education Stabilization funds for educational purposes consistent with State and local requirements, subject to ARRA and other applicable Federal requirements, including the limited prohibitions. 18 Recovery Act: Mechanics – Impact Aid • Among other things, the Education Stabilization funds may be used for activities such as: ▫ paying the salaries of administrators, teachers, and support staff; purchasing textbooks, computers, and other equipment; supporting programs designed to address the educational needs of children at risk of academic failure, limited English proficient students, children with disabilities, and gifted students; and ▫ meeting the general expenses of the LEA, investing in pre-K as part of “elementary education,” etc. 19 Recovery Act: Mechanics – Construction • Construction is allowed, Section 8007 of the ESEA, but… ▫ Prohibitions that apply to an LEA’s use of Education Stabilization funds, including prohibitions against using funds for: (a) stadiums or other facilities primarily used for athletic contests or exhibitions or other events for which admission is charged to the general public; (b) improvement of stand-alone facilities whose purpose is not the education of children, including central office administration or operations or logistical support facilities; (c) school modernization, renovation, or repair that is inconsistent with State law. 20 Recovery Act: Mechanics – Restrictions • Casinos and other gaming establishments, aquariums, zoos, golf courses, or swimming pools (Section 1604 of the ARRA); • Financial assistance to students to attend private elem. & secondary schools, (with IDEA exceptions) (ARRA Section 14011); • Maintenance (!) of systems, equipment, or facilities; • Construction, M/R/R of stadiums or other facilities primarily used for athletic contests or exhibitions or other events for which admission is charged to the general public; or • Construction, M/R/R of facilities (a) used for sectarian instruction or religious worship; or (b) in which a substantial portion of the functions of the facilities are subsumed in a religious mission. 21 Recovery Act: Mechanics – Davis Bacon • Buy American: No funds appropriated by the Act may be used for a public buildings/works project unless “all iron, steel and manufactured goods used... are produced in the U.S.” (ARRA Sec. 1605). • Davis Bacon: Any laborers and mechanics employed by contractors or subcontractors on construction, modernization, renovation, or repair projects … must be paid in accordance with the prevailing wage requirements. (ARRA Sec. 1606). 22 SFSF: Phase 2 Background • “[ED] proposes specific data and information requirements that a State receiving funds…must meet with respect to statutory assurances.” (at 37837). • “[ED intends] to use the data information collected in assessing whether a state is qualified to participate in and received funds from other reform oriented programs administered by the Department." (at 37838). 23 SFSF: State Plan – now or later… • State plan must detail ▫ current and planned ability to collect the data needed for a proposed assurance indicators and descriptors, including the status of the States current ability to make the data or information available to the public. ▫ If the State cannot collect or report the data, the plan must describe the process and timeline for developing and implementing the means to do so… no later than September 30, 2011. 24 SFSF: Achieving Equity in Teacher Distribution  • States and districts will need to collect, publish, and analyze basic information about how districts evaluate: ▫ teacher and principal effectiveness and ▫ How districts distribute their highly qualified and effective teachers among schools. • Principals play a critical role in teaching and learning. ▫ “It is important to highlight inequities that result in low-income and minority students being taught in schools overseen by ineffective principals at higher rates than other students.” 25 SFSF: Reminder! • “[ED intends] to use the data information collected in assessing whether a state is qualified to participate in and received funds from other reform oriented programs administered by the Department." (at 37838). 26 RTT: A Moonshot • As Secretary Duncan framed it at the kickoff event on Friday July 24, it is an education “moon shot.” ▫ “It is a once-in-a-lifetime opportunity, and this Department will not pass that up.” 27 RTT: A Moonshot • $4.3 billion for the race to the top fund, the state incentive grant fund in the statute. • Competitive grant designed to encourage and reward states that are implementing significant education reforms across the four core reform / assurance areas. ▫ Implement standards and assessments, ▫ improving teacher effectiveness and achieving equity and teacher distribution, ▫ improving collection and use of data, and ▫ supporting struggling schools. 27 28 RTT: Timing • Phase 1: open in late calendar year 2009. ▫ Fall 2009 – notice inviting applications available ▫ Two months later applications from the states are due ▫ First-half 2010 winners announced for phase 1 and feedback for those who did not win. • Phase 2: open in late spring of 2010. ▫ Application deadline for phase 2, spring 2010 ▫ Winners announced for phase 2, Sept. 2010 • States that apply in phase 1 but not awarded grants may reapply in phase 2, together with first time States. • States apply individually and collaboration will be rewarded 29 RTT: priorities, requirements & criteria • The notice of July 29 provides ▫ “proposed priorities,” ▫ “requirements,” and ▫ “selection criteria.” ED expects to set “a high bar on both state reform conditions and reform plan criteria.” (at 37805). 30 RTT: Proposed Priorities • Five proposed priorities for the competition ▫ Priority 1 is absolute (the state must address this in the application). ▫ Priority 2 is a competitive preference priority (May earn points and use as tiebreaker). ▫ Priorities 3-5 are invitational priorities. (No points are awarded, USED encourages). 31 RTT: Proposed Priority 1 Priority one: absolute priority – Comprehensive approach to the four education reform areas. • How State & participating districts will use the funds for comprehensive and coherent policies and practices designed to increase achievement and reduce the gap as measured by the National Assessment of Education Progress (NAEP). 32 RTT: Proposed Priority 2 Priority two: competitive preference priority – emphasis on STEM. ▫ Offering rigorous course of study in STEM ▫ Cooperation with industry experts and resources ▫ Prepare more students for advanced study & careers in STEM, including addressing needs of underrepresented groups and women and girls. 33 RTT: Proposed Priorities 3-4: invitational Priority three: Data Interoperability! • Expanding statewide longitudinal data systems to include or integrate data from special-education, limited English proficiency, early childhood, human resources, finance, health, postsecondary, and other relevant areas. Priority four: Program interoperability! • P-20 coordination and vertical alignment • How to address early childhood programs, K-12, postsecondary institutions, and workforce organizations to create a more seamless P-20 route for students. 34 RTT: Proposed Priority 5: invitational • Priority five ▫ School level conditions for reform and innovation that include flexibility and autonomy for: Staff selection, New structures and formats in the school, Budget flexibility and management, Promotion based on credit not on time, and provision of comprehensive services to high needs students. 35 RTT: Requirements - eligibility 1. State must have an approved application under both phase 1 and phase 2 of SFSF. 2. State must not have “any” legal, statutory, or regulatory barriers to linking student achievement or student growth data to teachers for the purpose of teacher and principal evaluation. ▫ “One of the most effective ways to accurately assess teacher quality is the measure growth and achievement of a teachers student.” (at 37806). ▫ The capacity to tie teacher data student achievement data is “fundamental” to race to the top reforms and to the requirement of ARRA that states take action to improve teacher effectiveness. (Id.). 36 RTT: Requirements - Application • Application must be signed by the Governor, State’s Chief School Officer, and the president of the State Board of Education. • State must describe progress to date in each of the four education reform areas, including how the state has used other federal and state funding over the last several years to pursue reforms in these areas. • Provide financial data to compare percentage of total revenues available to the State used to support education (elem., secondary and public high ed.) in FY2009 and FY2008. 37 RTT: Requirements - Application • Provide a detailed plan for the use of the grant funds for each reform plan criterion that includes seven express elements. ▫ 1 Key activity is undertaken ▫ 2 Goals and rationale for the activity ▫ 3 Timeline for implementing ▫ 4 The parties responsible for implement ▫ 5 The resources they will use to support the activities (funding, personnel, systems, etc.) ▫ 6 States annual targets and, where applicable, alignment for the four school years beginning with 2010 – 2011 school year ▫ 7 Information requested as supporting evidence. 38 RTT: Requirements - Application • Submit a certification from the State Attorney General … that that the State’s statements, descriptions, and conclusions concerning state law are accurate and complete and reasonable. 39 ARRA Targeted / Formula Funds August 2009 bruman.com 39 40 ARRA Reporting Overview U.S. Department of Education (ED) officials have made it clear that they expect unprecedented accountability and reporting for the American Recovery and Reinvestment Act (Recovery) funds. bruman.com 41 ARRA Reporting Overview • Key reporting requirements: ▫ Section 1512 quarterly reporting applies to all ARRA funds “recipients” ▫ Section 14008 ARRA SFSF annual reports ▫ List of Programs Subject to Recipient Reporting, available in OMB Guidance Memorandum 09-21-supp1. ▫ Exceptions: Division B of ARRA not required to report Mandatory programs Individuals receiving awards 42 Sec. 1512 Quarterly Reporting • Reporting applies to recipients and the Recovery Act defines a “Recipient” in sec. 1512 as any entity that receives Recovery Act funds directly from the federal government. • Prime recipients may delegate certain reporting requirements to sub-recipients. If the reporting is delegated to a sub-recipient, the delegation must be made in time for the sub-recipient to prepare for the reporting, including registering in the system. 43 Sec. 1512 Quarterly Reporting Structure Planning is critical Has there been delegation of reporting responsibility? • If the reporting is delegated to a sub-recipient, the delegation must be made in time for the sub-recipient to prepare for the reporting, including registering in the system. • If not, prime recipients reporting for the sub- recipients would complete all data elements. 44 Resources & Questions • CDE: ▫ Joinemail@example.com ▫ www.cde.ca.gov/ar • United States Department of Education, ED.gov/recovery • OMB Webinar training materials, http://www.whitehouse.gov/Recovery/WebinarTr ainingMaterials/ • FederalReporting.gov • Brustein & Manasevit, www.bruman.com 45 Basic Guidelines of Grants Management • What Rules Program Statute EDGAR – Education Department General Administrative Regulations GEPA – General Education Provisions Act 46 EDGAR http://www.ed.gov/policy/fund/reg/edgarReg/edgar.ht ml • Part 74 Administration of Grants with Nonprofits • Part 76 State-Administered Programs • Part 80 Uniform Administrative Requirements* 47 Edgar part 80 1. High Risk Grantees 9. Changes 2. Standards for 10. Real Property Financial 11. Equipment Management 12. Supplies 3. Payments 13. Copyright 4. Allowable Costs 14. Debarment 5. Availability of Funds 15. Procurement 6. Cost Sharing 16. Monitoring 7. Program Income 17. Financial Reporting 8. Non-Federal Audit 18. Retention of Records 48 Legal Structure of Federal Programs • Statutes ▫ Program Statutes ▫ General Education Provisions Act (GEPA) • Regulations ▫ Program Regulations ▫ Education Department General Administrative Regulations (EDGAR) • OMB Circulars – 2 CFR • Guidance – 2/03 Non Regulatory Guidance 49 Where to Find Fiscal Requirements? • Office of Management & Budget Circulars • http://www.whitehouse.gov/omb/circulars ▫ OMB Circular A-122, A-87, A-21 Cost Principles ▫ OMB Circular A-133 Single Audit ▫ OMB Circular A-133 Compliance Supplement – Appendix VII – Moran 20009 – Addendum #1 June 30, 2009 50 Nature of State-Administered Programs 51 Difference Between Grants and Contracts • Payments received for goods or services provided as a vendor are not considered federal awards 52 Characteristics of Federal Awards to Grantees / Subgrantees 1. The entity determines eligibility – e.g. CTE students 2. Performance is measured – FAUPL 3. The entity has responsibility for program decision making – How to expend funds 4. Must adhere to program compliance – Cost principles 5. Carries out a program – Workforce training 53 Characteristics of Payment for Goods and Services 1. Provides goods and services within normal business operation 2. Provides similar goods or services to many different purchasers 3. Operates in a competitive environment 4. Provides goods and services that are ancillary to operation of federal program 5. Not subject to compliance requirements of the federal program 54 Sometimes it is difficult to distinguish between grant and contract The substance of the relationship is more important than the form of the agreement 55 Program compliance requirements normally do not pass through to vendors. However, grantee is responsible for ensuring compliance for vendor transactions, including vendor’s records to determine program compliance 56 Essential Elements of Effective Management of 21st CCLC 1. Internal Controls 2. Budget Control 3. Record Management 4. Cash Management 5. Inventory Management 6. Procurement 57 Internal Controls • Internal controls are tools to help program and financial managers achieve results and safeguard the integrity of their programs ▫ Includes processes for planning, organizing, directing, controlling, and reporting on agency operations 58 Objectives of Internal Control • Effectiveness and efficiency of operations • Reliability of financial reporting • Compliance with applicable laws and regulations • Safeguarding assets Budget Control • Must compare actual expenditures to budgeted amounts on a routine basis 59 60 Record Management Systems Sub-grantees must maintain records which adequately identify the source and application of the federal funds 80.20(b)(2) 61 Keep Records That Show : 1. How funds are used 2. Total cost of the project 3. Share of costs provided by other sources 4. Financial records that show compliance 5. Program records that show performance 6. Detailed records needed to satisfy an effective audit. 62 Source Documentation Accounting records must be supported by source documentation such as cancelled checks, paid bills, payroll, t/a records, contracts, etc. 63 Cash Management Minimize time (72 hours) between receipt of funds and satisfying obligations. 64 Cash Management Draw down funds as close as possible to the time of making obligations. 65 Cash Management SEA must monitor sub-grantees to assure they are drawing down cash as close as possible to satisfy obligations. 66 Cash Management Sub-grantees shall promptly remit interest earned on advances. ($100 exception) 67 Life Cycle of the Federal Dollar – The Period for Obligations, Liquidations, and Carryover 68 What constitutes an obligation? • 34 CFR 76.707 • 34 CFR 75.707 Obligations Acquisition of Property Date of binding written commitment Personal Services When services by Employee are performed Personal Services Date of binding by Contractor written commitment Travel When travel is taken 70 Tydings Funds not obligated in the current year shall remain available for obligation during succeeding year 20 U.S.C 1225(b) 71 Typically September Typically Typically 30th for December July 1st State as a 31th for Whole State as a Whole Pre-award Grant Start Post-award Close-out Planning Period of Availability Begins IF Time to Liquidate Application Funds & Obligate Approved or File FSRs Substantially Funds (Period Approvable of Availability) 72 Liquidations Obligations must be liquidated within 90 days after the end of the funding period. 80.23 73 Inventory Management 74 Inventory Management 34 CFR 80.32 • Different rules for equipment and supplies • Equipment ▫ Federal Definition of Equipment Tangible personal property Useful life of more than one year Acquisition cost of $5,000 or more ▫ State may use another definition as long as it includes all property described above • Supplies ▫ Everything else 75 Equipment • Must have adequate controls in place to account for: ▫ Location of equipment ▫ Custody of equipment ▫ Security of equipment 76 Equipment (cont.) • Property records ▫ Description, serial number or other ID, title info, acquisition date, cost, percent of federal participation, location, use and condition, and ultimate disposition • Physical inventory ▫ At least every two years • Control system to prevent loss, damage, theft ▫ All incident must be investigated 77 Equipment (cont.) • Must protect against unauthorized use ▫ May use for other projects as long as use is incidental and does not interfere • When property no longer needed, must follow disposition rules: ▫ Transfer to another federal program ▫ Over $5,000 – pay federal share ▫ Under $5,000 – no accountability 78 Supplies • Must maintain effective control and accountability • Must adequately safeguard all such property • Must assure that it is used solely for authorized purposes 79 80 Procurement Common Problems Potential Solutions Procurement: Common Problems • Controls over purchase orders • Lack of descriptions in contracts/invoices • Lack of approval over payment process 81 82 Understanding the Federal Cost Principles 83 Cost Principles: Basic Guidelines • All Costs Must Be: ▫ Necessary ▫ Reasonable ▫ Allocable ▫ Legal under state and local law ▫ Conform with federal law and grant terms ▫ Consistently treated ▫ Not included as match ▫ Net of applicable credits ▫ Adequately documented 84 Basic Guidelines cont… • Necessary and Reasonable ▫ Must be necessary for the performance or administration of the grant ▫ Must follow sound business practices Arms length bargaining (hint: procurement) Follow federal, state and local laws Follow terms of the grant award ▫ Fair Market prices ▫ Act with prudence under the circumstances ▫ No significant deviation from established prices 85 Basic Guidelines cont… • Allocable ▫ Can only charge in proportion to the value received by the program 86 Direct Cost v. Indirect Cost 87 Administration & Indirect Cost • Direct (directly related) • Indirect (Organization wide) 88 Elements of Cost Principles 89 Advertising & Public Relations Costs Explanation: • Public relations and promotional costs are generally not allowable. 90 Audit Services Explanation: • A percentage of audit costs is allowable, provided the audits are performed in accordance with the Single Audit Act. 91 Communication Explanation: • The following costs are allowable to your grant: telephone facsimile on-line services messenger other similar costs 92 Compensation for Personnel Services Explanation: • This cost item includes compensation paid to teachers, counselors, administrators, coordinators, and other personnel. 93 The Achilles Heel of Federal Compliance: Time Distribution 94 Support of Salaries & Wages Personnel Activity Reports (PAR) 95 PARs Required If Employee Is Working On Two Or More Functions 96 PAR Elements • After the fact (not budgeted) • Account for total activity • Signed by employee or supervisor • Prepared at least monthly 97 Questions on Time and Effort Is the distinction between single or multiple cost objectives based on how employees are paid? 98 Questions on Time and Effort cont… If employee is paid with nonfederal funds, but effort is counted toward a match, are T/E records required? 99 Questions on Time and Effort cont… If the employee works on an activity that is allowable under more than one program, must the time be allocated? 100 Questions on Time and Effort cont… If the employee works in two district positions (ex. instructor during the day and tutor after school) must time records be kept to reflect the supplemental time? 101 Questions on Time and Effort cont… How do you handle t/e for an employee paid over a 12 month period, but works only a 9 month school year? 102 Questions on Time and Effort cont… What if the employee works only a brief time on an activity unrelated to the federal cost objectives? 103 If deviations between budget estimates and actual costs are less than 10% are adjustments required? 104 Memberships, Subscriptions & Professional Activities Explanation: • The cost of your campus’s participation in professional organizations and subscriptions to professional and technical publications is allowable. • You may charge the cost of meetings and conferences when the primary activity is to communicate technical information about the grant. 105 Training Explanation: • Your school’s professional development and training costs are allowable. 106 Travel Costs Explanation: • Travel costs, including transportation, lodging, subsistence, and related items, incurred by your school’s employees when traveling on business are allowable. 107 Supplement Not Supplant • Cannot use federal funds to pay for services, staff, programs, or materials that would otherwise be paid with state or local funds • Always ask: “What would happen in the absence of federal funds?” 108 Supplement Not Supplant cont… • Presume supplanting in 2 situations: 1. Used federal funds to provide services the grantee is required to make available under other federal, state or local laws 2. Used federal funds to provide services the grantee provided with state or local funds in the prior year. 109 Supplement Not Supplant cont… • Presumption may be rebutted: ▫ If grantee/sub-grantee demonstrate it would not have provided the services with nonfederal funds if the federal funds were not available. 110 Supplement Not Supplant cont… • To rebut presumption show: ▫ Fiscal or programmatic documentation to confirm that, in the absence of federal funds, would have been eliminated staff/services in question ▫ State or local legislative action ▫ Budget histories and information ▫ Letter to OK: http://www.ed.gov/policy/elsec/guid/secl etter/030306.html 111 Monitoring & Auditing 112 EDGAR 80.40 • SEA responsible for managing day- to-day operations of sub-grant supported activities • SEA is legally responsible for sub- grantee expenditures 113 EDGAR 80.40 • SEA must monitor sub- grantees to assure compliance with applicable federal requirements and performance goals being achieved 114 EDGAR 80.40 • Grantee monitoring must cover each program, function, or activity 115 OMB Guidance: “Grantee monitoring should occur throughout the year rather than relying solely on a once-a-year audit.” • Reliance on Desk Review is insufficient. OMB • OMB expects pass-through entities to consider various risk factors in developing sub-recipient monitoring procedure (relative size and complexity of award, prior experience) 116 The Single Audit Process • Single Audit Act • A-133 • Role of the Inspector General 117 Pass-through Entity (SEA) Responsibilities Under A-133 1. Identify all awards for sub-recipients 2. Advise subs of all requirements 3. Monitor all subs for compliance 4. Ensure that subs expending over $500,000 have audits 5. Issue management decisions and ensure subs take corrective action 6. Adjust own records necessitated by audits 7. Require sub to permit SEA access to records 118 OMB Circular A-133 Compliance Supplement 119 Pass-through entity may charge to federal grant the cost of “Limited Scope Audit”. 120 Limited Scope Audit Address one or more of the following types of compliance requirements: • Allowable costs / cost principles • Eligibility • Matching / MOE • Earmarking • Reporting 121 QUESTIONS??? 122 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 attorney-client relationship with Brustein & Manasevit. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.
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