Last December, OMB published guidance developed by the COFAR with the intent of establishing better performance and accountability for federal awards. After months of soliciting public opinion and questions, OMB released interim requirements that will go into effect for new awards on Dec. 26, 2014.
The OMB Uniform Grant Guidance sets new requirements for financial management of federal awards, impacting both federal agencies and the recipients of federal dollars. Below we outline what provisions are applicable to grantees, and what you need to know to remain compliant.
Performance for Accountability
The OMB Uniform Grant Guidance shifts how grantees are held accountable for performance and results. Award recipients must demonstrate grant programmatic performance, in addition to a performance management system. This means that auditors will be evaluating both the grant performance itself, as well as the systems put in place to actively manage grant performance and hold all responsible parties accountable throughout the life of the grant.
Recipients will go through a risk evaluation prior to award. In order to apply for federal funds, grantees must show they have corrected past audit issues. This type of review will be required by pass-through entities during the award making process.
Standardized Business Systems and Processes
The guidance encourages grantors and grantees to collect, transmit and store federal award-related information in open and machine-readable formats. This follows President Obama’s Open Data Initiative, which was established by Executive Order in May 2013. The directive made machine-readable the new default for government information. That said, machine-readable data is not yet a requirement.
Instead, recipients must demonstrate that they have created consistent standards and systems across internal business processes and data. Standardization allows for better controls over federal dollars.
Additionally, a federal award identifier must be tracked with the funding. Recipients and sub-recipients must record the award ID in their accounts. This guarantees grantees (both primary and sub-recipients) can easily identify where federal dollars were spent.
Consistent and Transparent Treatment of Costs
Most organizations have established a way to consistently and transparently treat costs. However, this grows more complex if sub-recipients or other external parties are involved in grant program execution. The guidance calls for consistency across parties in how cost information is managed.
Recipients also need to make sure they have internal controls in place in order to easily demonstrate accountability over funds.
Future-proof Your Organization
Overall, the new guidance aims to reduce administrative burden, increase government transparency and strengthen program outcomes. As such, federal award-reliant organizations should aim to:
- Create standards for business processes, data and treatment of costs.
- Centralize grant management processes.
- Commit to measurable performance outcomes.
Specific questions can be submitted to firstname.lastname@example.org. For more information and frequently asked questions, visit the COFAR website.
To learn more about how grant managers can prepare for government grant reform, download our whitepaper, The Changing Landscape of Grant Reporting.
Image Source: Jurgen Appelo