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OMB New Uniform Guidance Session 4


>>HELLO, EVERYONE, MY NAME IS RODNEY CLEMENTS
AND WELCOME BACK. WE ARE WEBCAST SERIES NUMBER FOUR, IMPLEMENTING
OMB’S NEW UNIFORM GUIDANCE FOR THE ICDBG AND IHBG PROGRAMS.
THIS IS SERIES FOUR OF NINE, SUBPART D. POST FEDERAL AWARD REQUIREMENTS, STANDARDS
FOR FINANCIAL AND PROGRAM MANAGEMENT. ALSO I WANT TO REMIND EVERYBODY THIS IS A
— THE FOURTH IN A SERIES OF NINE SEGMENTS THAT WE PUT TOGETHER FOR THE TRAINING ON THE
UNIFORM GUIDANCE. ALSO, JUST TO REMIND YOU OF OUR SUPPLEMENTAL
WEBCAST RESOURCES THAT ARE AVAILABLE FOR YOU TO DOWNLOAD AS WE GO THROUGH THE TRAINING,
EACH TRAINING SEGMENT. SO, A QUICK POP QUIZ, WHO REMEMBERS WHERE
THE FORMER REQUIREMENTS WERE LOCATED IN THE OLD REGULATIONS?
ANYBODY GOT IT?>>24 C.F.R. PART 85.
>>FOR EXTRA BONUS POINTS? .20.
I REMEMBER IT BACK IN THE DAY WHEN WE WERE ALWAYS GOING OVER THE REGULATIONS, IT’S LIKE,
85.20, GOING TO THE CHECKLIST, MAKING SURE WE HAD EVERYTHING IN PLACE FOR THE FINANCIAL
MANAGEMENT REQUIREMENTS. OKAY, SO WHAT WE’RE GOING TO BE FOCUSING ON
IN THIS SEGMENT IS WHAT HAS CHANGED. SO WE KNOW YOU’RE USED TO 85.20, SO WHAT CHANGED
WITH THE NEW SECTION NOW THAT’S LOCATED AT 300 THROUGH 316?
WE WANT TO FOCUS, WHAT REALLY HAS CHANGED FOR US?
DOES IT MATTER? IS THERE ANY IMPACT THAT WE NEED TO BE AWARE
OF? AND THERE’S A COUPLE OF THINGS, THE GOOD NEWS,
NOTHING HUGE THAT’S GOING TO SHAKE OUR WORLD, BUT A COUPLE THINGS THAT WE DO NEED TO PAY
ATTENTION TO AND MAY REQUIRE SOME ADDITIONAL ACTION WHEN WE GO BACK HOME AND IMPLEMENT
THIS. FIRST, BEFORE WE ACTUALLY JUMP INTO WHAT CHANGES
HAVE BEEN MADE IN THE NEW UNIFORM GUIDANCE, I WOULD LIKE TO TAKE THIS TIME TO JUST SHOW
YOU A COUPLE OF THE DOCUMENTS THAT ARE IN YOUR BOOK TO MAKE SURE THAT YOU UNDERSTAND
WHAT’S THERE, HOW IT CAN BE USED AS A JOB AID FOR YOU WHEN YOU GO TO — BOTTOM LINE
IS, YOU’RE ALL LOOKING AT, JUST TELL ME WHAT I NEED TO DO.
WHAT CHANGED AND WHAT DO I NEED TO DO. THE ATTEMPT IS TO TRY TO DO SOME JOB AIDS
TO HELP YOU CREATE A CHECKLIST TO SAY, HEY, ARE WE MEETING THIS REQUIREMENT, AND YOU CAN
KIND OF FOLLOW THROUGH THAT CHECKLIST AND MAKE SURE THAT YOUR SYSTEMS, YOUR FINANCIAL
MANAGEMENT SYSTEMS, ARE SUFFICIENT TO MEET THESE STANDARDS.
SO THE FIRST THING THAT I’D LIKE YOU TO LOOK FOR, IF YOU LOOK IN YOUR TAB UNDER THE DOCUMENT
THAT IS CALLED THE SIDE BY SIDE COMPARISON CHART, SUBPART D.
WHAT WE DID IN THIS PROJECT IS TO REALLY TAKE THE UNIFORM GUIDANCE, PUT IT IN AN EXCEL WORKSHEET,
JUST AS IT’S STATED, IN THE RIGHT COLUMN PUT THE OLDER REGULATIONS, THE PART 85 REGULATIONS,
SO WE COULD DO A SIDE BY SIDE COMPARISON TO REALLY SEE WHAT CHANGED.
SO THE DOCUMENT THAT YOU’RE LOOKING FOR IS CALLED THE SIDE BY SIDE COMPARISON CHART OR
CROSSWALK, AND WE’RE LOOKING IN THIS SEGMENT AT SUBPART D.
SO THAT’S ONE DOCUMENT. AS I’M GOING THROUGH THIS, YOU CAN ACTUALLY
FOLLOW THROUGH, FOLLOW DOWN WITH ME ON THAT, OR IF YOU’D LIKE, YOU CAN FOLLOW THROUGH THE
NORMAL — THE REGULAR PRINTED COPY WE HAVE FOR YOU OF THE UNIFORM GUIDANCE ITSELF.
EITHER WAY. THE OTHER TOOL THAT I’D LIKE TO — LIKE YOU
TO HAVE SIDE BY SIDE IS THE DOCUMENT WE CALL THE ASSESSING OMB UNIFORM GUIDANCE CHANGES,
IMPLICATIONS, AND RECOMMENDATIONS FOR OUR HUD ONAP RECIPIENTS.
SO IF YOU FIND THAT IN YOUR TAB, IF YOU PULL THAT OUT, LET ME EXPLAIN WHAT THIS TOOL IS.
THIS IS JUST A SUBJECT — WHAT THE CHANGES — ONE COLUMN IS THE SUBJECT, SO IT’S A BROAD
CATEGORY SUBJECT. THE NEXT COLUMN IS THE CHANGES THAT WERE ENACTED
BY THE UNIFORM GUIDANCE. THE LAST COLUMN YOU’LL SEE IS A DISCUSSION,
A SHORT DISCUSSION OF WHAT IS THE IMPLICATIONS OF THAT CHANGE AND OUR RECOMMENDATION BECAUSE
OF THAT CHANGE. SO AS WE GO THROUGH THESE, IF YOU HAVE THIS
SIDE BY SIDE, YOU’LL SEE ONCE WE GET TO 302 A PARAGRAPH (B), WE’LL ANALYZE THE CHANGE,
YOU’LL SEE WE HAVE A RECOMMENDED ACTION FOR THAT CHANGE.
SOME OF THESE — WHAT WE’RE GOING TO SEE IN THE SEGMENT, A LOT OF THE LANGUAGE IS JUST
EXPANDED AND IT’S MADE MORE CLEAR TO US WHAT IS INTENDED, YOU KNOW, A LOT MORE CLARITY.
SO THAT’S A GOOD THING. BUT THERE ARE A FEW CHANGES THAT DO RESULT
IN — AND THAT ARE GOING TO REQUIRE SOME ACTION ON OUR PART.
SO LET’S GET STARTED. LET’S SEE WHAT WE’VE GOT HERE.
THE FIRST PARAGRAPH, PARAGRAPH A AND B, THESE ARE NEW STATEMENTS, NEW POLICY STATEMENTS
THAT ARE HERE IN THE SECTION. THEY WEREN’T IN THE FORMER REGS UNDER 85.20.
SO THEY ARE A COMPARISON OF THE RESPONSIBILITY, REALLY, OF WHAT THE ROLE OF THE FEDERAL AGENCY
IS VERSUS THE ROLE OF THE NONFEDERAL ENTITY. SPEAKING OF NONFEDERAL ENTITY, HOW MANY HAVE
RECOGNIZED THAT YOU HAVEN’T SEEN THE WORD GRANTEE IN THE UNIFORM GUIDANCE?
ANYWHERE. IT’S BEEN COMPLETELY ELIMINATED AND SO ANYBODY
— LET’S TAKE A QUICK LOOK AT THE DEFINITION. DAVID DID SUCH A GOOD JOB TEACHING US HOW
TO GRAB THE DEFINITIONS. SOMEONE, LOOK UP NONFEDERAL ENTITY AND GIVE
ME THAT DEFINITION. NONFEDERAL ENTITY.
YOU KIND OF UNDERSTAND ITS MEANING BY ITS WORDS, RIGHT?
NONFEDERAL ENTITY MEANS A STATE, LOCAL GOVERNMENT, INDIAN TRIBE, INSTITUTE OF HIGHER EDUCATION,
OR NONPROFIT ORGANIZATION THAT CARRIES OUT A FEDERAL AWARD AS A RECIPIENT OR SUBRECIPIENT.
>>SO, WE — IF YOU’RE A HOUSING BLOCK GRANT RECIPIENT, WE HAVE A VERY SPECIFIC MEANING
FOR THAT. AND SO IT’S A DIFFERENT THING HERE.
SO WE’RE NOT GOING TO SEE THE WORD GRANTEE OR RECIPIENT IN THE UNIFORM GUIDANCE.
IT’S ALWAYS GOING TO BE NONFEDERAL ENTITY. SO LET’S TAKE A LOOK AT WHAT ARE THOSE POLICY
STATEMENTS THAT ARE ADDED HERE IN SECTIONS A AND B FOR THE FEDERAL AGENCY VERSUS THE
NONFEDERAL ENTITY? THE FIRST STATEMENT THAT THEY EMPHASIZE FOR
FEDERAL AGENCIES, IS THAT THEY MUST MANAGE AND ADMINISTER THE FEDERAL AWARD, ENSURE THAT
IT’S IMPLEMENTED IN ACCORDANCE WITH THE U.S. STATUTORY AND PUBLIC POLICY REQUIREMENTS AND
MAKE SURE THEY COMMUNICATE THAT TO THE NONFEDERAL ENTITY, ALL RELEVANT PUBLIC POLICY REQUIREMENTS.
SO ON OUR SIDE, FOR THE NONFEDERAL ENTITY, OUR RESPONSIBILITY, THE POLICY STATEMENT SAYS
IS TO COMPLY, OF COURSE, WITH ALL OF THE REQUIREMENTS OF THE FEDERAL AWARD, BUT ALSO THERE’S THIS
INTERESTING INSERT IN THERE AND REFERENCES IN THERE WHERE IT SAYS SUBMIT A FEDERAL FUNDING
ACCOUNTABILITY TRANSPARENCY ACT. THE FFATA HAS BEEN AROUND SINCE ACTUALLY 2005,
WHICH INCLUDES SOME REPORTING DATA ON SUBAWARDS AND EXECUTIVE COMPENSATION.
AND YOU’LL NOTICE, ACTUALLY, IN THIS PARAGRAPH, IT REFERENCES AND INCORPORATES THE REQUIREMENTS
OF 2 C.F.R. 170. SO SPECIFICALLY WHAT THAT MEANS IS, A MANAGEMENT
SYSTEM TO ENSURE THAT THE FFATA SUBAWARD, IF YOU ARE A SUBRECIPIENT AND YOU ARE A PASS-THROUGH
ENTITY AND GIVE A SUBAWARD THAT’S GREATER THAN $25,000, IT’S GOING TO TRIGGER SOME REQUIREMENTS
FOR YOU TO REPORT THAT INFORMATION ON THE FFATA SUBAWARD REPORTING SYSTEM.
AND IT HAS TO BE DONE WITHIN THE MONTH FOLLOWING — THAT YOU MADE THE AWARD.
AND ALSO, AS PART OF THE EXECUTIVE COMPENSATION, THIS IS GOING TO APPLY TO VERY FEW TRIBES,
BUT THE STATEMENT IS, THE REQUIREMENT IN 2 C.F.R. 170 IS THAT WE’RE REQUIRED TO REPORT
ON TOTAL COMPENSATION OF OUR TOP FIVE EXECUTIVES. IT’S APPLICABLE ONLY IF MORE THAN 80% OF OUR
ANNUAL GROSS REVENUES ARE FROM THE FEDERAL GOVERNMENT AND THOSE REVENUES ARE GREATER
THAN $25 MILLION ANNUALLY. SO THAT’S GOING TO LIMIT THE APPLICATION OF
TRIBES FOR THAT, BUT IT IS A REQUIREMENT IF YOU MEET THAT CRITERIA, THAT YOU WOULD NEED
TO COMPLY WITH. NEXT PARAGRAPH — NEXT SECTION, HERE’S A WHOLE
NEW SECTION, 200.301 ON PERFORMANCE MEASUREMENT. AGAIN, NOT SOMETHING THAT WE HAVE TO — THAT’S
GOING TO REQUIRE US TO DO SOMETHING, BUT IT JUST REINFORCES THE POINT THAT RECIPIENTS
ARE — THE AGENCY, ACTUALLY, IS REQUIRED TO — IS MANDATED TO RELATE FINANCIAL DATA TO
PERFORMANCE ACCOMPLISHMENTS AND DEMONSTRATE COST EFFECTIVENESS.
THE INTENT HERE IS REALLY TO MAKE SURE THAT GRANT PROGRAMS ARE ACHIEVING A PROGRAM-SPECIFIC
OUT COME. SO IT’S, AGAIN, NOT ABOUT — IT’S GETTING
AWAY FROM COMPLIANCE. IT’S MORE ABOUT, WHAT ARE WE ACTUALLY GETTING
DONE WITH THIS. AND SO WE HAVE ALL SEEN THE CHANGES IN OUR
IHP, APR COMBINED, AND WE CAN SEE THAT HUD — ONAP HAS ALREADY IMPLEMENTED MANY OF THESE
CHANGES WHERE NOW WE’RE BEING ABLE TO ACTUALLY LINK DOLLARS SPENT ON SPECIFIC OUT COME, AN
OBJECTIVE THAT WE’RE ACHIEVING UNDER IHP. SO MANY OF THESE THINGS HAVE ALREADY BEEN
IMPLEMENTED. AGAIN, IT’S ALSO SAYING WE WANT YOU TO — THE
DATA SHOULD BE MEASURED IN A WAY TO HELP IMPROVE OUTCOMES.
SO SHARE LESSONS LEARNED. SPREAD THE ADOPTION OF PROMISING PRACTICES.
KIND OF AN IDEAL STATEMENT, BUT THAT’S THE INTENT THAT THE UNIFORM GUIDANCE IS SAYING
FOR THE AGENCIES, HEY, MAKE SURE WHAT YOU DO HAS A WAY OF, IF WE’RE DOING SOMETHING
GOOD, HOW DO WE REPLICATE IT AND MAKE SURE WE CONTINUE THAT.
302 B, NOW WE’RE GOING TO A SECTION THAT WE’VE SEEN BEFORE, SO THIS IS WHERE THE OLD REGULATION
IN 85.20 KIND OF PICKED UP AND WE’RE MORE AWARE OF THIS LANGUAGE.
ESSENTIALLY WHAT HAS HAPPENED HERE IS SOME REARRANGING OF THE TEXT AND A COUPLE OF NEW
SENTENCES THAT GOT ADDED, IN SOME CASES DIMINISHED IN SOME WAY.
LET’S COVER IT. HERE’S THE THINGS THAT YOU’LL RECOGNIZE.
85.302 B, THE MANAGEMENT SYSTEM MUST STILL INCLUDE ACCURATE, COMPLETE, CURRENT FINANCIAL
RESULTS OF ALL AWARDS. THE SOURCE AND APPLICATION OF FUNDS OF ALL
FEDERALLY FUNDED ACTIVITIES, EFFECTIVE CONTROL OVER AND ACCOUNTABILITY OF ALL FUNDS, PROPERTY,
AND OTHER ASSETS, AND THEN A COMPARISON OF EXPENDITURES WITH YOUR BUDGETS.
SO HOW WE MEASURE THAT. DOES OUR SYSTEM ALLOW US TO DO THAT.
A COUPLE OF THINGS YOU MIGHT NOTICE, IF YOU’RE GOING THROUGH THE TEXT, YOU CAN SEE THERE’S
A — SECTION THAT USED TO DESCRIBE THE SOURCE DOCUMENTATION, RECORDS AND CONTRACTS, ALL
THOSE EXAMPLES HAVE BEEN REMOVED FROM THE LANGUAGE AND IT SIMPLY SAYS SOURCE DOCUMENTATION.
SO IT COULD MEAN ALL OF THOSE THINGS AND IT COULD MEAN OTHER THINGS AS WELL, BUT THE EXAMPLES
HAVE BEEN REMOVED. SO WHAT’S CHANGED?
HERE’S THE NEW THINGS. IT’S HIGHLIGHTED FOR YOU.
THE FIRST ONE, IDENTIFICATION — PARAGRAPH 1 UNDER 302 B.
AND YOU MIGHT RECOGNIZE IT. IT SAYS — LET ME GRAB MY TEXT.
IDENTIFICATION IN ITS ACCOUNTS OF ALL FEDERAL AWARDS RECEIVED AND EXPENDED AND THE FEDERAL
PROGRAMS UNDER WHICH THEY WERE RECEIVED. FEDERAL PROGRAM, FEDERAL AWARD IDENTIFICATION
MUST INCLUDE, AS APPLICABLE, THE CFDA, CATALOG, FEDERAL ASSISTANCE TITLE AND NUMBER, THE FEDERAL
AWARD IDENTIFICATION NUMBER AND YEAR, NAME OF THE FEDERAL AGENCY, AND THE NAME OF THE
PASS-THROUGH ENTITY IF ANY. IF YOU’RE A SUBRECIPIENT, IT WOULD NAME YOUR
PASS THROUGH ENTITY. ANYBODY RECOGNIZE THAT DATA, WHERE YOU’VE
SEEN TAKE BEFORE? ALL MY FISCAL PEOPLE, YOU WOULD PROBABLY SAY,
OH, YEAH, THAT’S THE SEFA. THE SCHEDULE OF EXPENDITURES FOR FEDERAL AWARDS
THAT WE PROVIDE TO THE AUDITOR EVERY YEAR. SO THIS LANGUAGE GOT MOVED RIGHT FROM A 133
INTO THIS SECTION UNDER FINANCIAL MANAGEMENT AND SO FORTH, WHICH IS LOGICAL BECAUSE WHY
— WE’LL TALK ABOUT THIS. WHEN WE’RE AWARDING IT OR AUDITING IT, WE
WANT TO KNOW WE’RE SET UP OUR FINANCIAL MANAGEMENT SYSTEM, IT SHOULD BE AT THE BEGINNING.
A LOGICAL CHANGE AND A GOOD CHANGE. SO THE IMPLICATION HERE, APPLICATION FOR THIS
IS TO MAKE SURE YOUR FINANCIAL MANAGEMENT SYSTEM IS SET UP TO TRACK THIS DATA.
NOT AT THE END OF A FISCAL YEAR, BUT WHEN THAT AWARD COMES IN TO YOUR OFFICE, IT NEEDS
TO BE PART OF YOUR PROCEDURES TO INPUT THAT EITHER INTO YOUR ACCOUNTING SYSTEM CHART OF
ACCOUNTS, HOWEVER YOU CURRENTLY IDENTIFY THAT ON A SPREADSHEET, THAT DATA NEEDS TO BE ABLE
TO BE PRESENTED TO AN AUDITOR OR A HUD STAFF ON DEMAND.
THE NEXT THING — SORRY. THE NEXT THING, THE BIG CHANGE.
THE NEXT BIG COUPLE CHANGES ARE TWO DIFFERENT WRITTEN PROCEDURES THAT YOU NEW LANGUAGE FOR
US. CONTENT IS STILL THE SAME.
THERE WAS — IT FORMERLY SAID — IT DIDN’T SAY WRITTEN PROCEDURES, IT JUST SAID PROCEDURES
FOR IMPLEMENTING, MINIMIZING THE TRANSFER, THE TIME OF TRANSFER OF FUNDS BETWEEN RECEIVING
THE FUNDS AND DISBURSEMENT. SO NOW IT SIMPLY REFERENCES PROCEDURES TO
IMPLEMENT REQUIREMENTS OF 200.305 WHICH IS HOW WE MAKE OUR PAYMENTS.
THE SECOND PROCEDURE IS WRITTEN PROCEDURES FOR DETERMINING ALLOWABILITY OF COST.
THIS IS WHERE WE THINK IT’S GOING TO BE A LITTLE BIT OF AN IMPACT FOR FOLKS.
SOMETIMES I HEAR IN THE TRAININGS THAT WE’VE DONE SO FAR THAT SOME FOLKS ARE, WELL, WE
HAVE A VERY ESTABLISHED PROCEDURE, SO-AND-SO IS VERY KNOWLEDGEABLE OF COST PRINCIPLES AND
OUR FISCAL OFFICER HAS BEEN DOING THIS FOR A LONG TIME, AND IF HE SEES ANYTHING, THEN
HE WILL ALERT, YOU KNOW, THE EXECUTIVE DIRECTOR AND YOU KNOW IT GETS CAUGHT.
THAT’S GREAT, IF YOU HAVE THAT. THE QUESTION THEN IS, IS IT WRITTEN.
IS THAT ACTUALLY SOMEWHERE WRITTEN WHO, WHAT, WHERE, WHEN, AND HOW, YOU KNOW?
SO IT’S GOT TO BE A PROCEDURE THAT SAYS, YOU KNOW, WHO IS ASSIGNED THAT RESPONSIBILITY,
WHO HAS ACCOUNTABILITY FOR MAKING THAT DETERMINATION, SO, ANYWAY, I JUST WANT TO EMPHASIZE, THAT’S
PROBABLY THE MOST DRAMATIC CHANGE WITH THESE REVISIONS, IS THAT WE HAVE TO MAKE SURE WE
ACTUALLY HAVE A WRITTEN PROCEDURE FOR BOTH PAYMENTS AND FOR ALLOWABILITY OF COST.
I THINK IT’S GOING TO BE KIND OF INTERESTING TO SEE ONE OF THE TRAININGS WE’VE DONE, WE’VE
HAD FOLKS KIND OF TALK ABOUT — SOME FOLKS SAY, THEY THINK THEY HAVE IT IMBEDDED IN THEIR
ACCOUNTING PROCEDURES, THAT THEY HAVE THAT ACCOUNTED FOR AND THEY CAN DEMONSTRATE A WRITTEN
PROCEDURE. OTHERS ARE LIKE, YEAH, WE’RE GOING TO HAVE
TO WRITE THAT. SO I THINK IT’S GOING TO BE GOOD BECAUSE ULTIMATELY
WHAT THIS IS ABOUT, AND WE’LL GET TO THAT NEXT, IS ABOUT INTERNAL CONTROLS.
THE WHOLE, REALLY, LARGER EMPHASIS OF THE UNIFORM GUIDANCE AS I SEE IT IS ABOUT INTERNAL
CONTROLS. AND THAT’S THE SYSTEM THAT WE HAVE IN PLACE
TO PREVENT US FROM MAKING MISTAKES ON OUR BEHALF, YOU KNOW, SO I THINK THAT’S WHAT’S
REALLY IMPORTANT HERE, IS TO GO, HEY, WE DON’T WANT A PROCEDURE FOR A PROCEDURE SAKE, BUT
WE WANT A PROCEDURE THAT REALLY ALLOWS US TO CATCH MISTAKES.
SO IF WE ARE GETTING READY TO WRITE OUT A CHECK TO DONATE MONEY TO OUR LOCAL YOUTH GROUP,
SOMEBODY CAN SAY, HEY, DONATIONS ARE NOT ALLOWED. THAT’S UNALLOWABLE UNDER SUBPART E AND THEY
CAN CITE THE CITATION, AND WE ALMOST — WE DODGED A BULLET THERE.
SOME NEW LANGUAGE ADDED IN B 2, PARAGRAPH (B) TWO.
LET’S LOOK AT THAT. IT HAS TO DO WITH REPORTING ON AN ACCRUAL
BASIS OR A CASH BASIS. SO THIS COULD BE, FOR ALL MY FISCAL PEOPLE,
MY NONFISCAL PEOPLE, JUST AS A REFRESHING OF YOUR MEMORY, ACCOUNTING FOR ACCRUAL IS
WHEN WE RECORD THE REVENUE AND EXPENSES WHEN THEY ARE INCURRED REGARDLESS OF WHEN THE CASH
IS IN HAND. IF WE HAVE A CASH ACCOUNTING SYSTEM, WE DON’T
ACCOUNT FOR THAT OR RECORD THAT CASH UNTIL IT’S ACTUALLY IN OUR HAND.
SO THE DIFFERENCE BETWEEN ACCRUAL AND CASH BASIS OF ACCOUNTING.
WHAT THIS LANGUAGE IS SAYING HERE, IF A FEDERAL AWARDING AGENCY OR PASS-THROUGH, AGAIN, ANOTHER
EMPHASIS ON PASS THROUGH ENTITY, IS — THE AGENCY CANNOT REQUIRE YOU TO CHANGE YOUR ACCOUNTING
SYSTEM TO ACCRUAL. IF YOU CAN — IF YOU ARE CASH, THEN THE AGENCY
MUST ALLOW YOU TO DEVELOP YOUR REPORTING, YOUR ACCRUAL DATA, BASED ON ANALYSIS OF DOCUMENTATION
ON HAND. TRANSLATE YOUR CASH REPORTS AND PUT THEM INTO
AN ACCRUAL-BASED FORM FOR 425 REPORTS, APR REPORTS, ET CETERA.
AND SO THE EMPHASIS HERE, IF YOU ARE A SUBRECIPIENT OR A PASS-THROUGH ENTITY, MAKE SURE YOU’RE
NOT — TAKE A LOOK AT YOUR SUBRECIPIENT AGREEMENTS, MAKE SURE YOU’RE NOT REQUIRING YOUR SUBRECIPIENT
TO CHANGE THEIR ACCOUNTING SYSTEM INTO AN ACCRUAL ACCOUNTING SYSTEM.
ANY QUESTIONS ON THAT? DOES THAT SOUND OKAY?
OKAY. NEXT SECTION, 303.
INTERESTING CHANGE OR SOME NEW LANGUAGE HERE THAT’S KIND OF INTERESTING FOR US TO TAKE
A LOOK AT HERE. THIS SECTION IN RED IS THE NEW LANGUAGE.
SO THE LANGUAGE SAYS, WE MUST ESTABLISH AND MAINTAIN — AGAIN, I WANT — BEFORE WE GO
INTO THE SECTION, REMIND YOU WHAT DAVID SHARED EARLIER ABOUT THE DIFFERENCE BETWEEN “SHOULD”
AND “MUST”, THIS IS WHERE IT REALLY MEANS SOMETHING BECAUSE THERE IS BOTH MUST AND SHOULD
IN THIS PARAGRAPH. SO THE MUST IS, WE MUST ESTABLISH AND MAINTAIN
EFFECTIVE INTERNAL CONTROLS OVER THE FEDERAL AWARD PROVIDING REASONABLE ASSURANCE THAT
IT’S BEING MANAGED IN COMPLIANCE WITH STATUTES, REGULATIONS AND TERMS OF AWARD.
THAT’S OUR MUST. THE SHOULD IS, INTERNAL CONTROLS SHOULD BE
IN COMPLIANCE WITH GUIDANCE IN STANDARDS FOR INTERNAL CONTROL IN THE FEDERAL GOVERNMENT,
SO THAT’S A DOCUMENT OTHERWISE KNOWN AS THE GREEN BOOK, IT’S ISSUED BY THE COMPTROLLER
GENERAL OF THE UNITED STATES. YOU CAN GO ON WEBSITE GOOGLE THAT, AND YOU
CAN HAVE IT AT YOUR FINGERTIPS RIGHT AWAY FOR FREE.
DOWNLOAD IT. THE OTHER DOCUMENT THAT THEY REFERENCE HERE
IS THE INTERNAL CONTROL INTEGRATED FRAMEWORK THAT WAS ISSUED BY COMMITTEE OF SPONSORING
ORGANIZATIONS OF THE TREADWAY COMMISSION. OTHERWISE KNOWN AS COSO.
THAT HAS BEEN AROUND FOR A LONG TIME, SINCE THE ’70S, SO THE FRAMEWORK, THE — BASICALLY
FIVE COMPONENTS OF THE FRAMEWORK, WHICH ARE CONTROL ENVIRONMENT, RISK ASSESSMENT, CONTROL
ACTIVITIES, INFORMATION AND COMMUNICATION, AND MONITORING, AND ALONG WITH THAT, 17 PRINCIPLES
UNDER EACH OF THOSE, THAT’S BEEN AROUND FOR A LONG TIME.
AND IN FACT YOU’VE PROBABLY — IF YOU’VE HAD AUDIT FINDINGS IN THE PAST, IN SOME WAY YOU’VE
USED OR — IT’S BEEN REFERENCED IN YOUR AUDIT. AND WE’VE HAD TO PUT A CORRECTIVE ACTION IN
PLACE BASED ON A PRINCIPLE OR FRAMEWORK FROM ONE OF THESE TWO DOCUMENTS.
SO, AGAIN, WHAT THIS IS SAYING IS, INTERNAL CONTROLS SHOULD BE IN COMPLIANCE.
SO IT’S A — NOW, HOW MANY KNOW THAT AUDITORS, WHEN THEY SEE SHOULD, THAT’S LIKE YOU BETTER
DO IT, RIGHT? BECAUSE WHY NOT?
YOU SHOULD DO IT. AND SO THAT’S WHY IT’S REALLY IMPORTANT TO
UNDERSTAND THE CLARIFICATION. THERE MIGHT HAVE TO BE SOME COMMUNICATION
WITH YOUR AUDITOR IF THEY COME BACK AND SAY, HEY, YOU’RE NOT IN COMPLIANCE WITH COSO.
YOU CAN SAY, WELL, THAT’S A BEST PRACTICE, THAT’S A RECOMMENDED BEST PRACTICE UNDER COFR.
AND THEN THERE’S THE FACT DOCUMENT. IF YOU LOOK AT THE DOCUMENT THAT WE HAVE ASSESSING
THE OMB GUIDANCE, I ACTUALLY HAVE THE CITATION FOR YOU FOR THAT.
IT’S ON PAGE 5 OF THAT DOCUMENT, OF THE ASSESSING THE UNIFORM GUIDANCE CHANGES, IMPLICATIONS
AND RECOMMENDATIONS. SO COFR FACT NUMBER 303-3.
WHAT THEY DID, IT’S REALLY HELPFUL, AFTER — BECAUSE ALL THE FEDERAL AGENCIES ARE STRUGGLING
TO MAKE SENSE OF THE UNIFORM GUIDANCE WITH THE NEW CHANGES, WHAT CHANGED, SO THEY’VE
ESTABLISHED THE FREQUENTLY ASKED QUESTIONS DOCUMENT, AND THEY KEEP UPDATING IT WHEN NEW
QUESTIONS COME, AND IT’S WELL DONE, A GREAT INDEX BY SUBJECT, SO YOU CAN GO AND FIND THINGS
THAT — SO THAT’S WHERE THIS DIRECTION COMES FROM IN THE COFR SPECIFICALLY.
YOU MAY HAVE TO SHOW THAT TO YOUR AUDITOR, SAY, NO, THIS MEANS BEST PRACTICE, YOU KNOW,
RECOMMENDED BEST PRACTICE. THIS DOESN’T MEAN THAT WE MUST HAVE IT.
THE MUST IS THAT WE MUST HAVE EFFECTIVE INTERNAL CONTROLS.
SO, YOU KNOW, IF THERE IS AN ISSUE, YOU’RE GOING TO HAVE TO USE SOMETHING FROM COSO TO
ACTUALLY MAKE A CHANGE IN YOUR POLICY, WHO DOES WHAT, YOUR PROCEDURE, ET CETERA.
SO WHAT WE’RE RECOMMENDING, BOTTOM LINE, IS THAT YOU TAKE THIS TIME TO DO SOME FURTHER,
DEEPER DIVE AND TRAINING ON THE GREEN BOOK AND THE COSO FRAMEWORK.
WE CAN’T DO THIS IN THIS TRAINING BUT WE RECOMMEND THAT YOU TAKE THIS OPPORTUNITY TO ACTUALLY
— TO INITIATE WITHIN YOUR AGENCY SOME FURTHER TRAINING IN THAT.
BOTTOM LINE IS, MIGHT AS WELL DO IT NOW RATHER THAN LATER WHEN THE AUDIT HITS.
AND SO THE INTERESTING THING TO POINT OUT, IF YOU WILL LOOK AT THAT SEGMENT, IF YOU GO
TO PAGE 5 ON THAT DOCUMENT, ASSESSING THE OMB UNIFORM GUIDANCE CHANGES, IMPLICATIONS,
I JUST WANT TO READ SOMETHING REAL QUICK. IT SAYS WHILE NONFEDERAL ENTITIES MUST HAVE
EFFECTIVE INTERNAL CONTROL, THERE IS NO EXPECTATION OR REQUIREMENT THAT THE NONFEDERAL ENTITY
DOCUMENT OR EVALUATE INTERNAL CONTROLS PRESCRIPTIVELY IN ACCORDANCE WITH THESE THREE DOCUMENTS OR
THAT THE NONFEDERAL ENTITY OR AUDITOR RECONCILE TECHNICAL DIFFERENCES BETWEEN THEM.
SO THEY ARE PROVIDED SOLELY TO ALERT THE NONFEDERAL ENTITY TO SOURCE DOCUMENTS FOR BEST PRACTICES.
SO HERE’S THE KEY THING I WANT TO POINT OUT TO YOU.
NONFEDERAL ENTITIES AND THEIR AUDITORS WILL NEED TO EXERCISE JUDGMENT IN DETERMINING THE
MOST APPROPRIATE AND COST EFFECTIVE INTERNAL CONTROL IN A GIVEN ENVIRONMENT OR CIRCUMSTANCE
TO PROVIDE REASONABLE ASSURANCE FOR COMPLIANCE WITH FEDERAL PROGRAM REQUIREMENTS.
SO, BOTTOM LINE IS, IF YOU GET YOURSELF IN AN AUDIT FINDING, IT’S GOING TO BE ON AN INTERNAL
CONTROL ISSUE, IT’S A DIALOGUE THAT YOU NEED TO HAVE AROUND THESE DOCUMENTS WITH YOUR AUDITOR
AS TO WHAT WOULD BE THE — WITH THESE — WITHIN THE FRAMEWORK, WHAT IS THE APPROPRIATE CONTROL
OR INTERNAL CONTROL THAT WE NEED TO IMPLEMENT OR PROCEDURE WE NEED TO IMPLEMENT IN ORDER
TO BE MORE EFFECTIVE AND MORE IN COMPLIANCE. OKAY.
SO THAT’S A RECOMMENDATION. TAKE THIS CHANCE TO DO A DEEPER DIVE INTO
THE COSO FRAMEWORK. WHAT’S NEXT?
THREE NEW SENTENCES HERE IN PARAGRAPHS B THROUGH D THAT WEREN’T IN OUR FORMER REGULATIONS.
EVALUATE AND MONITOR THE NONFEDERAL ENTITY’S COMPLIANCE WITH STATUTE, REGULATIONS, AND
THE TERMS AND CONDITIONS OF FEDERAL AWARDS. TAKE PROMPT ACTION WHEN NONCOMPLIANCE IS IDENTIFIED.
THAT’S ONE OF THE THINGS I’VE SEEN, AND WE’LL TALK ABOUT THAT IN THE AUDIT SESSION.
WE HAVE TO TAKE THE NEW LANGUAGE, DON’T WAIT SIX MONTHS TO TAKE CORRECTIVE ACTION WHEN
THERE’S AN AUDIT ISSUE OR NONCOMPLIANCE; TAKE IMMEDIATE ACTION.
SO THAT’S ADDED LANGUAGE THAT REINFORCES THAT. AND THEN ALSO TAKE REASONABLE MEASURES TO
SAFEGUARD PROTECTED PERSONALLY IDENTIFIABLE OR SENSITIVE INFORMATION.
SO THIS IS AGAIN TAKING US INTO THE 21ST CENTURY OF, YOU KNOW, THE REALITIES OF THEFT OF IDENTITY,
SO WE HAVE THAT RESPONSIBILITY TO MAKE SURE WE’RE PROTECTING SENSITIVE INFORMATION WITHIN
OUR ORGANIZATIONS. 304, A NEW SECTION ALSO, BONDING.
SO AGAIN, IT JUST MAKES IT CLEAR THAT THE AGENCY HAS THE AUTHORITY, WHEN THEY GUARANTEE
OR INSURE A LOAN, IF THEY THINK IT’S INADEQUATELY PROTECTED, THEY HAVE THE ABILITY TO REQUIRE
ADDITIONAL BONDING, FIDELITY BONDS THAT HAVE TO DO WITH FRAUDULENT ACTS — OR DISHONEST
ACTS OF EMPLOYEES. THEY MAY REQUIRE THAT.
SO WHAT WE’RE SAYING HERE, HUD RESERVES THE RIGHT TO REQUIRE ADDITIONAL BONDING.
BUT ALSO CROSS-REFERENCE 325 AND SPECIFICALLY THE APPLICABLE EXCEPTIONS OF 10026, A 12 FOR
THE INDIAN HOUSING BLOCK GRANT AND THEN 24 C.F.R. 1003.501 A 8, THE ADDITIONAL — PROGRAM
SPECIFIC BONDING REQUIREMENTS UNDER PROCUREMENT. SO WE’LL BE COVERING THAT IN THE NEXT SEGMENT
ON PROCUREMENT, BUT THOSE ARE THOSE EXCEPTIONS THAT WE’VE HAD, SO WE HAVE THE ADDITIONAL
WAYS THAT WE CAN DO BONDING WITH OUR CONTRACTORS. WE HAVE SOME EXCEPTIONS FROM THE UNIFORM GUIDANCE.
THOSE STILL STAND. SO, 305 B.
305 B. NEXT SECTION.
PAYMENTS. AGAIN, THIS IS WHERE — ONE OF THOSE PLACES
WHERE IT’S JUST EXPANDED LANGUAGE. THE ACTUAL — WHEN YOU REALLY BREAK THIS DOWN,
THERE’S NOT REALLY SOME REALLY NEW LANGUAGE, I THINK, JUST FURTHER CLARIFICATION, SO AGAIN
MINIMIZING TIME OF TRANSFER, FUNDS APPLY TO PASS THROUGH ENTITIES AS WELL, SO KEEPING
THAT — MINIMIZING THE TIME FROM RESET — RECEIPT TO DISBURSEMENT, IT APPLIES TO PASS THROUGH
ENTITIES. ALSO NEW LANGUAGE, WHETHER THE PAYMENT IS
MADE BY ELECTRONIC FUNDS, TRANSFER, ISSUANCE, REDEMPTION OF CHECKS, WARRANTS OR PAYMENT
BY OTHER MEANS. IT JUST SAYS, HOWEVER THE PAYMENTS ARE MADE,
THIS STANDARD APPLIES. SO FOR OUR CASE, THIS IS VERY WELL REGULATED
AND WE HAVE A TIGHT SYSTEM UNDER THE LOCCS SYSTEM FOR ALL — LOCCS SYSTEM FOR ALL OUR
GRANTS, SO IT’S NOT REALLY A BIG CHANGE FOR US.
THERE IS THIS NEW LANGUAGE ON THE TIMING OF THE ADVANCE THAT WAS ADDED IN HERE.
THEY’RE SAYING AS CLOSE AS IS ADMINISTRATIVELY FEASIBLE TO THE ACTUAL DISBURSEMENTS.
IN HUD, YOU KNOW, THIS HAS BEEN WELL ESTABLISHED UNDER PROGRAM GUIDANCE, PIH NOTICES, WE ALL
ARE FAMILIAR WITH THE THREE-DAY RULE, AND THAT’S HUD’S STANDARD FOR REALLY — YOU KNOW,
INTERPRETING OR ENFORCING THIS LANGUAGE HERE, WHICH IS AS CLOSE AS ADMINISTRATIVELY FEASIBLE.
IT ALSO — NEW LANGUAGE POINTS OUT THAT WHEN YOU’RE DOING A DRAWDOWN, IT’S ALSO, WHAT WOULD
BE THE PROPORTIONATE SHARE OF AN ALLOWABLE INDIRECT COST.
WE HAVEN’T DISCUSSED ALLOWABLE COSTS, BUT IF YOU ARE DOING DRAW DOWN FOR INDIRECT COST,
IT’S NOT THE ENTIRE INDIRECT COST FOR SIX MONTHS; IT’S BASED ON THAT RATE.
IT’S THE PROPORTIONATE SHARE OF THE ALLOWABLE COSTS, YOU CAN DRAW THAT DOWN.
ALSO, THE STATEMENT HERE IS ADDED IN HERE, TIMELY PAYMENT, THAT IT’S EXPECTED THAT YOU
MAKE TIMELY PAYMENT TO CONTRACTORS IN ACCORDANCE WITH THE CONTRACT PROVISIONS.
IN OTHER WORDS, WE’RE NOT — IN NO WAY DOES THIS LANGUAGE PREVENT US FROM MAKING TIMELY
PAYMENTS TO OUR CONTRACTORS. JUST TO REINFORCE THIS, BECAUSE IT’S ALWAYS
A BIG DEAL, PROGRAM INCOME, THERE IS A PROVISION IN THE UNIFORM GUIDANCE, PARAGRAPH 5, THAT
SAYS THE NONFEDERAL ENTITY MUST DISBURSE FUNDS AVAILABLE FROM PROGRAM INCOME BEFORE REQUESTING
ADDITIONAL CASH PAYMENTS. SO JUST TO REMEMBER, REMIND EVERYONE THAT
WE HAVE PROGRAM-SPECIFIC EXCEPTIONS TO THIS UNDER 24 C.F.R. 10026 A 3 FOR OUR INDIAN HOUSING
BLOCK GRANT. SO WE ARE NOT REQUIRED TO EXPEND PROGRAM INCOME
BEFORE DRAWING DOWN ADDITIONAL FUNDS. SO WE HAVE THAT SPECIFIC PROGRAM REGULATION.
ICDBG, THAT STILL DOES APPLY AS STATED.>>THIS IS A NEW SECTION AND I THINK WE STRUGGLED
WITH DETERMINING WHETHER IT WAS A CHANGE OR NOT.
IT IS NEW LANGUAGE. STANDARDS GOVERNING THE USE OF BANKS, AND
OTHER INSTITUTIONS AS DEPOSITORIES. SO THIS LANGUAGE IS THAT AWARDING AGENCY MUST
NOT REQUIRE SEPARATE DEPOSITORY ACCOUNTS OR ESTABLISH ELIGIBILITY REQUIREMENTS FOR THEM.
HOWEVER, THE EXCEPTION IS THAT THE ENTITY MUST BE ABLE TO ACCOUNT FOR THE FUNDS, THE
RECEIPT, OBLIGATION, EXPENDITURE OF FUNDS. IF THEY DON’T HAVE THE ABILITY OR CAPACITY
TO ACCOUNT FOR AND KEEP — WHAT WE’RE TALKING ABOUT IN 302 A — B, IF THEY CAN’T MEET THOSE
STANDARDS, THEN THIS WOULD BE NULLIFIED. ADVANCE PAYMENTS MUST BE PLACED IN INSURED
ACCOUNTS WHENEVER POSSIBLE. PARAGRAPH 8 GOT ADDED ON HERE REGARDING THAT
VERY SAME TOPIC. ADVANCE PAYMENTS MUST BE IN INTEREST-BEARING
ACCOUNTS AND THEN THEY HAVE SOME EXCEPTIONS TO THAT.
IF IT’S GOING TO BE LESS THAN $120,000 A YEAR AWARD, THE EARNING — ANTICIPATED INTEREST
EARNINGS ARE LESS THAN $500 PER YEAR, OR THE MINIMUM BALANCE REQUIREMENTS OF THAT BANK
MAKE IT NOT FEASIBLE. IN OTHER WORDS, IF YOU HAVE TO PAY A BANK
A CHARGE FOR THAT BANK ACCOUNT TO HAVE A — YOU KNOW, A CERTAIN INTEREST RATE, IT’S COSTING
YOU MONEY RATHER THAN EARNING MONEY, THEN THAT’S — THAT WOULD BE THE EXCLUSION HERE.
SO, THE INTERESTING THING, TOO, THIS CHANGE, THE INTEREST UP TO $500, IT USED TO BE $100.
SO THAT AMOUNT WAS INCREASED TO $500. THAT CAN — BE RETAINED FOR ADMINISTRATIVE
EXPENSE. BROKE WITH THE LOCCS SYSTEM AND THE THREE-DAY
RULE, IT’S VERY UNLIKELY THAT’S ANYBODY IS GOING TO EARN INTEREST ON THEIR CHECKING ACCOUNT,
BUT IT MAY HAPPEN. BOTTOM LINE, IF IT DOES, IT’S VERY CLEARLY
TELLING US THAT WE MUST REMIT THAT INTEREST. IF IT’S OVER $500.
WE MUST REMIT THAT INTEREST TO THE DEPARTMENT OF HEALTH AND HUMAN SERVICES PAYMENT MANAGEMENT
SYSTEM. AND IF YOU LOOK AT THE GUIDANCE, THERE’S A
LONG DETAILED INSTRUCTIONS WITH THE BANKING ROUTING NUMBER AND EVERYTHING IN THERE FOR
HOW WE TRANSMIT OR REMIT THAT INTEREST BACK TO THE FEDERAL GOVERNMENT.
SO, CLARIFICATION, BOTTOM LINE, NO, IT DOES NOT APPLY TO THE INDIAN HOUSING BLOCK GRANT
RECIPIENTS WHO HAVE BEEN APPROVED TO INVEST THEIR IHBG FUNDS UNDER 24 C.F.R. 1000.58.
THAT’S A DIFFERENT PROCESS. IF YOU’RE APPROVED TO INVEST YOUR FUNDS THROUGH
HUD, THEN OF COURSE THIS PROVISION WOULD NOT APPLY.
309, PERIOD OF PERFORMANCE, NEW SECTION, NOT A LOT OF IMPACT FOR US.
PROBABLY ALREADY COVERED WITH WHAT’S COVERED IN YOUR TERMS AND CONDITIONS OF YOUR GRANT,
BUT, AGAIN, JUST MAKING IT VERY CLEAR TO US THAT, YOU KNOW, NONFEDERAL ENTITY MAY CHARGE
THE FEDERAL AWARD ALLOWABLE COSTS INCURRED DURING YOUR PERIOD OF PERFORMANCE.
ANY COSTS INCURRED BEFORE OR AFTER. SO AGAIN THIS BECOMES MORE IMPORTANT, AGAIN,
IF YOU ARE A PASS-THROUGH ENTITY, TO MAKE SURE THAT YOU ARE DEFINING THE PERIOD OF PERFORMANCE
IN THAT AWARD. WHEN FUNDS CAN BE CHARGED TO THAT GRANT.
310, NEW SECTION, INSURANCE COVERAGE. SO IT’S NEW LANGUAGE FOR US IN THE UNIFORM
GUIDANCE, HOWEVER, WE HAVE SOME PROGRAM-SPECIFIC REQUIREMENTS IN 1,036 THAT MANDATES ADEQUATE
INSURANCE REGARDLESS. A LOT OF TIMES WHAT YOU FIND IN SOME OF THESE
REGULATIONS IS THAT THE PROGRAM-SPEC REGULATIONS ALREADY ADDRESS THAT REQUIREMENT.
THIS IS UNIFORM GUIDANCE, SO IF IT WASN’T, YOU WOULD APPLY THIS.
312. FEDERALLY OWNED AND EXEMPT PROPERTY, ANOTHER
NEW SECTION. WE KIND OF FREAKED OUT BECAUSE WE SAID, HEY,
WAIT, THIS IS GOING TO BE A HASSLE TO DO ALL THIS REPORTING FOR FEDERALLY — EXEMPT PROPERTY.
THE BOTTOM LINE IS, WE LEARNED THAT HUD DOES NOT HAVE OWNERSHIP TO — FEDERAL OWNERSHIP,
AND SO IT IS THEREFORE — THIS PROVISION IS NOT APPLICABLE TO OUR INDIAN HOUSING BLOCK
GRANT OR ICDBG RECIPIENTS. OUR PROPERTY IS NOT FEDERALLY OWNED PROPERTY.
THAT’S AN EASY ONE. AND THEN REAL PROPERTY, AGAIN, THIS WAS A
NEW — THIS IS KIND OF A NEW SECTION IN THE CONFORMING REGULATIONS THAT GOT PUBLISHED
LAST YEAR, DECEMBER 7TH, 2015. WHEN YOU LOOK AT THE ADMINISTRATIVE REQUIREMENTS
THAT WERE LISTED THERE, THIS IS ONE OF THE EXCEPTIONS THAT SAYS IT DOES NOT APPLY EXCEPT
AS PROVIDED IN 24 C.F.R. 5109 AND SO 5109 IS HUD’S POLICY FOR THE EQUAL PARTICIPATION
OF RELIGIOUS ORGANIZATIONS IN HUD’S PROGRAMS AND ACTIVITIES.
IT’S TO MAKE SURE THAT HUD FUNDS ARE NOT USED FOR PROGRAMS OR STRUCTURES THAT ARE INHERENTLY
RELIGIOUS ACTIVITIES. SO IF SO, THERE HAS TO BE SOME COST ACCOUNTING
TO SEPARATE THAT COST BETWEEN THOSE ACTIVITIES, ELIGIBLE ACTIVITIES AND WHAT — WOULD BE AN
INHERENTLY RELIGIOUS ACTIVITY. SO THAT’S KIND OF NEW FOR US.
WE DIDN’T HAVE THAT IN THE FORMER EXCEPTIONS UNDER THE FORMER REGS.
THAT CAME IN EFFECT DECEMBER 7TH, 2015.>>313, EQUIPMENT, NO CHANGES FOR US FOR.
SAME AS ALWAYS. IT APPLIES EXCEPT IN ALL CASES IN WHICH THE
EQUIPMENT IS SOLD. THE PROCEEDS ARE PROGRAM INCOME.
THERE’S THE TWO CITATIONS. THAT HASN’T CHANGED.
BUT THERE IS SOME EXPANDED LANGUAGE ON THIS THAT WE WANT TO POINT OUT TO YOU.
AGAIN, NOT A HUGE IMPACT FOR US, BUT JUST SO WE KNOW.
UNLESS OTHERWISE PROVIDED BY STATUTE, TITLE MUST VEST AS A CONDITIONAL TITLE.
SO WHAT WE’VE COME TO LEARN IS THAT THAT HAS ALWAYS BEEN IN EFFECT, THAT THE EQUIPMENT
THAT WE PURCHASED UNDER USING FEDERAL FUNDS, IT ALWAYS HAD A CONDITIONAL TITLE, AND THE
CONDITIONS ARE THAT THE EQUIPMENT SHOULD BE USED FOR AUTHORIZED PURPOSES, IN THAT PERIOD
OF PERFORMANCE, WE’RE NOT ALLOWED TO ENCUMBER THAT PROPERTY WITHOUT APPROVAL FROM THE FEDERAL
AGENCY, AND THEN HERE’S — HERE’S WHAT WE HAVE TO DO.
WE HAVE TO FOLLOW THE USE AND DISPOSITION REQUIREMENTS OF PARAGRAPH (B), C, AND E, THAT
CAN BE A LITTLE CONFUSING, IF YOU LOOK AT THE ACTUAL TEXT.
IT’S GOING, WHAT, WE HAVE TO DO — WE HAVE TO SEPARATE THE — CALCULATE HOW MUCH MONEY
IS GOING TO BE USED AND WE HAVE TO RETURN THAT TO THE FEDERAL GOVERNMENT.
IT CAN GET A LITTLE CONFUSING. GOOD NEWS IS THAT WE HAVE THE EXCEPTION FOR
THIS, AND THAT IS THAT WE HAVE THIS EXCEPTION HERE THAT, NO, IF — IF THAT — IF YOU ARE
GOING TO DISPOSE OF THAT EQUIPMENT OR SELL IT, IT’S GOING TO BE PROGRAM INCOME.
SO WE DON’T HAVE TO WORRY, REALLY, ABOUT THE DISPOSITION REQUIREMENTS OF B, C, AND E OF
THAT SECTION. INTERESTING NEW LANGUAGE THAT GOT ADDED HERE
FOR US, A NEW ORDER OF PRIORITY FOR THE USE OF THE EQUIPMENT WHEN WE NO LONGER NEED THAT
FOR THE ORIGINAL PROGRAM PROJECT. SO THIS IS GOING TO REALLY AFFECT SOME OF
US BECAUSE THAT HAPPENS. THE TRAINING WE WERE AT LAST WEEK, WE HEARD
THAT VERY — A SIMILAR SCENARIO FOR THIS. A PIECE OF EQUIPMENT THAT THE TDHE WAS NO
LONGER NEEDING, HOW CAN IT BE DISPOSED OF, WHAT’S THE ORDER OF PRIORITY.
THIS CLARIFIES THAT THE FIRST ORDER OF PRIORITY IS THAT IT GOES TO THE FEDERAL AWARDING AGENCY
WHICH FUNDED THE ORIGINAL PROGRAM OR PROJECT SO IF THERE’S ANOTHER FEDERAL PROGRAM, SO
IN THIS CASE IHPG DOESN’T NEED IT, THAT WOULD BE THE FIRST ORDER OF PRIORITY.
AFTER THAT, THEN IT’S FEDERAL AWARDS FROM OTHER FEDERAL AWARDING AGENCIES.
SO THAT’S WHERE IT COULD BE DISPOSED OF, TO A PROGRAM THAT IS SAY FUNDED UNDER THE BIA,
ANOTHER FEDERAL AGENCY, FOR THE TRIBE. AND SO OTHER LANGUAGE, AGAIN, INCLUDES CONSOLIDATED
EQUIPMENT FOR INFORMATION TECHNOLOGY SYSTEMS. AGAIN, THE THREAD THROUGH THE UNIFORM GUIDANCE
IS TALKING A LOT ABOUT INFORMATION SYSTEMS, TECHNOLOGY.
WHEN WE GET INTO COST PRINCIPLES, WE’LL SEE SOME NEW THINGS LIKE WE WERE TALKING ABOUT
WITH THE DEFINITION FOR SUPPLIES, IT INCLUDES NOW COMPUTER EQUIPMENT.
THAT’S UNDER $5,000. THAT’S A BIG CHANGE FOR US.
OKAY. A COUPLE THINGS THAT’S IMPORTANT FOR US TO
KNOW HERE. A CHANGE FOR US UNDER 314, SUPPLIES.
THERE’S NEW LANGUAGE FOR US IN OUR PROGRAM-SPECIFIC REQUIREMENTS THAT CAME OUT WITH THE CONFORMING
AMENDMENTS IN THE DECEMBER 7TH, 2015 PUBLICATION. AND THAT’S THIS REQUIREMENT HERE, BOTH FOR
ICDBG AND IHBG EXCEPT THIS ALL CASES IN WHICH THE SUPPLIES ARE SOLD THE PROCEEDS SHALL BE
PROGRAM INCOME. YOU MIGHT ASK, WHY DO THEY DO THAT?
IT’S THE SAME AS EQUIPMENT, RIGHT? WHY DID WE NEED TO DO THAT?
WHEN YOU LOOK AT THE NEW LANGUAGE UNDER 314 FOR SUPPLIES, IT MIGHT MAKE A LITTLE MORE
SENSE. THE LANGUAGE IS TITLE TO SUPPLIES WILL VEST
IN THE NONFEDERAL ENTITY UPON ACQUISITION. SO HERE’S THE KEY.
IF YOU SEE THIS LANGUAGE HERE WHERE IT SAYS THE PROJECT OR PROGRAM, IT USED TO JUST SAY
AT THE END OF A GRANT. SO WHENEVER WE WRAPPED UP THE END OF THAT
GRANT, THEN IF THERE WAS LEFTOVER SUPPLIES, WE COULD — WE WOULD EITHER GIVE THAT TO THE
— ANOTHER PROGRAM OR FEDERAL PROGRAM THAT WE HAD IN CASE WE COULD SELL IT AND DISPOSE
OF IT. SO NOW IT SAYS REALLY CLEARLY THAT, AT THE
COMPLETION OF THE PROJECT OR PROGRAM, AND THE SUPPLIES ARE NOT NEEDED FOR ANY FEDERAL
AWARD, THE NONFEDERAL ENTITY MUST RETAIN THE SUPPLIES FOR USE ON OTHER ACTIVITIES OR SELL
THEM. THE KICKER HERE THAT KILLS US IS, HEY, BUT
WHAT — BUT MUST IN EITHER CASE COMPENSATE THE FEDERAL GOVERNMENT FOR ITS SHARE.
SO IT’S LIKE, ARE YOU SERIOUS? WE GOTTA COUNT ALL OUR SUPPLIES.
THIS IS JUST CLARIFYING, THAT’S WHY IT WAS IMPORTANT FOR THIS EXCEPTION TO BE PUT IN
THERE, SO THIS CLARIFIES THAT IF WE DO SELL THOSE SUPPLIES, IN ALL CASES IN WHICH WE DO
SELL THOSE SPLICES, IT WOULD JUST BE PROGRAM INCOME.
JUST GOING RIGHT BACK INTO YOUR PROGRAM. SO, WE REALLY DON’T EXPECT — THERE’S NEVER
GOING TO BE A PLACE — TIME WHERE YOU NEED TO DISPOSE OF SUPPLIES AND THEN COMPENSATE
THE FEDERAL GOVERNMENT BACK FOR THAT IN OUR CASES.
IF WE HAVE LEFTOVER LUMBER, WE’RE GOING TO USE IT ON THE NEXT HOUSE, RIGHT?
ALL RIGHT. LAST THING, WE’RE ALMOST DONE.
315. THIS IS NEW FOR US.
THIS WAS FORMERLY EXCEPTED UNDER 85.34, IT DID NOT APPLY SO IT’S NOT EXCEPTED IN THIS
— IN THE NEW EXCEPTIONS THAT CAME OUT IN DECEMBER 215.
BUT OUR ASSESSMENT, IT HAS LITTLE OR NO IMPACT FOR US AS INDIAN HOUSING BLOCK GRANT PROGRAMS,
THIS IS ONE OF THOSE TRANSPLANTS THAT I THINK IS MORE RELEVANT TO OUR INSTITUTES OF HIGHER
EDUCATION FOR RESEARCH GRANTS. SO BASICALLY IF WE HAD COPYRIGHT, PATENT,
TRADEMARK, THIS ADDRESSES THOSE INTANGIBLE PROPERTIES AND THE REQUIREMENTS FOR HOW THE
FEDERAL GOVERNMENT WOULD MANAGE THAT INFORMATION. THAT PRETTY MUCH WRAPS UP SUBPART D.
THAT WAS A QUICK RUN THROUGH. HOPEFULLY YOU GOT THE RELEVANT — MAIN THING,
WRITTEN PROCEDURES IS KIND OF THE KEY THING THAT IS NEW THAT WE NEED TO DO, GO BACK AND
DO WRITTEN PROCEDURES FOR THE WAY WE DO COST PAYMENTS AND THEN ALSO FOR HOW WE DETERMINE
ALLOWABLE COSTS. AND THEN THE OTHER THING, RECOMMENDATION,
TAKE A DEEPER DIVE INTO THE COSO FRAMEWORK FOR INTERNAL CONTROLS.
TAKE THIS OPPORTUNITY TO, YOU KNOW, EMPOWER YOURSELF TO GET MORE PROFICIENT IN THAT.
ULTIMATELY IT’S GOING TO IMPROVE YOUR MANAGEMENT SYSTEMS AND YOUR EFFICIENCY AS AN ORGANIZATION.
THAT’S IT.

Reynold King

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