Federal Funding E-Strategies
April 17, 2013 - “If a dog bites a man,” a grizzled old newspaper city editor once apparently snarled at a cub reporter, “it’s not news!” But, he went on, “When a man bites a dog, that’s a story!” The Washington Post recently reported on one such story. The headline read, “Auditor accused of taking $30,000.” The text chronicled the indictment of a former director of internal audit for a suburban county who has been charged with stealing the funds from a local chapter of a national professional association of auditors, where he had served as an officer. Read more
April 3, 2013 - The talk about federal audits this time of year usually centers on the activities of the Internal Revenue Service. But, in the same way that individual taxpayers might try to glean whether something in their return will trigger such an inquiry, recipients of federal grants and cooperative agreements often wonder just how vulnerable they are to getting a visit from the “friendly” Office of the Inspector General (OIG). Read more
March 22, 2013 - The U.S. Office of Management and Budget (OMB) proposal to reform a plethora of federal grants management policies has focused new attention on procedures for developing and presenting indirect (or facility and administrative) cost proposals and negotiating cost rate agreements. In response to an earlier set of “trial balloons,” OMB crafted a completely new presentation of the current policies and released them for comment on Feb. 1. Read more
January 24, 2013 - Federal Reserve Board Chairman Ben Bernanke is probably one of millions of Americans who wishes that he had never tried to warn the federal government about the potential economic impact of automatic tax increases and spending cuts that were scheduled to take effect on Jan. 1 by using the term “fiscal cliff.” Few phrases have gone as viral or become as tiresome as that one. Read more
January 7, 2013 - It’s OK to disagree with federal grant audit findings. That’s right. It’s OK. Who says so? The Government Accountability Office (GAO) and the Office of Management and Budget (OMB) — that’s who. The current federal grant accountability atmosphere is highly charged in some measure because audit findings affecting a limited number of grantees and subgrantees have gotten high profile media attention. And the language that can appear in any audit report involving a federal grant can sound like a fire bell in the night, particularly when read by laymen. The fact that assertions about “significant deficiencies” in internal control or “material noncompliance” with laws and regulations involve auditor judgments is often lost in the discussion. Read more
December 13, 2012 - When any organization applies for a federal grant, someone has to sign a certification that appears on the Standard Form 424, Application for Federal Assistance. He or she promises that the information contained in the document is true, complete and correct. The individual also agrees that any false, fictitious or fraudulent information submitted could subject them to civil, criminal or administrative penalties. Appearing close by the certification is a legal citation: 18 U.S.C. 1001. This refers to the False Claims Act. Read more
November 2, 2012 - The widespread devastation brought on by Hurricane Sandy has led President Obama to make federal disaster declarations for portions of several states. It seems likely that, as fuller assessment of the damage is made, even more state governments will receive those designations and will qualify to receive disaster assistance funds from the Department of Homeland Security’s Federal Emergency Management Agency (FEMA). Read more
October 11, 2012 - Media coverage is replete with stories about organizations that have gotten into trouble because they’ve submitted a false, fictitious or inaccurate financial claim to the federal government in connection with expenditures they made on a federal grant or subgrant. But it’s a real “man bites dog” story when the false claim involves something that was submitted before the grant was ever awarded — such as on the grant application. That’s why it was news when a Virginia school district recently entered into a settlement agreement with the U.S. Read more
September 28, 2012 - A few years ago, a keen observer of the federal grants system relied on an ancient fable told by Aesop to describe how many grantees and subgrantees characterize the system that they are part of. He related that the fable concerns three blind men who encounter an elephant and who attempt to fully describe it by the part of the pachyderm’s body that they touch. One man confronts the elephant’s side and declares it to be a wall; the second touches a leg and announces that it is a tree; and the third grasps the tail and concludes it is a snake. None, of course, are correct. Read more
September 12, 2012 - There are few headlines that can make a federal grant recipient or subrecipient look worse than the one that says it awarded “no bid” contracts. Whenever the media uncover these, they get sanctimonious and act like federal money has been stolen or at least grossly wasted. That’s why being able to justify “sole source” contracts — where your organization either did not seek competition or, if it did, received only one offer — can be very important to your compliance posture. Read more
August 13, 2012 - Office of Management and Budget (OMB) officials have recently told a variety of audiences, including a congressional subcommittee, that they are committed to issuing a notice of proposed rulemaking soon that will introduce specific text changes to its grants administration, cost accounting, and audit circulars and will provide interested parties sixty days in which to comment. The proposal will build on the more than 350 sets of comments that OMB received after it kicked off the initiative in a Federal Register announcement on February 28. Read more
July 25, 2012 - Federal grantor agency officials often use a crude measure for judging how much progress grant recipients are making on project performance. It’s called the “burn rate” — as in “How fast are you burning up your award?” Their assumption, which is not always valid, is that program accomplishments essentially parallel the levels of expenditure being made for budgeted costs. Read more
May 23, 2012 - “Hang a lantern on your problem” is one of the many pieces of political advice that talk show host Chris Matthews (“Hardball,” MSNBC) dished out a few years ago in his best selling book by the same name. Just to get the point across, Matthews stated it another way — “It’s always better to be the bearer of your own bad news.” Using examples of political figures too numerous to name, he effectively questioned the tactic of “stonewalling.” And while he wasn’t referring to federal grants management when making those statements, he could have been. Here’s why…. Read more
April 26, 2012 - All it takes is one incident — like a staff conference sponsored by the U.S. General Services Administration in Las Vegas. When an inspector general audit report detailing excessive spending of taxpayer funds at a location with a reputation for less-than-serious business hit the media recently, “viral” doesn’t properly describe the reaction. If you haven’t seen a news story or a column of condemnation about the infamous GSA Western Region conference that cost a cool $821,000 to put on, perhaps you were hiking in the wilderness on your spring break. Read more
April 11, 2012 - There’s an expression that’s often bantered about in Washington, D.C., to describe a challenge that an organization involved with expending federal funds might unfortunately face — it’s called “The Washington Post test.” In a nutshell, it involves asking yourself this question: “What would this transaction look like if it were to be covered on the front page of The Washington Post?” However, this so-called test is not confined to the nation’s capital or to just newspapers. Read more
March 28, 2012 - With an exception or two required by federal statute,* the standard duration for federal grant record retention is three years. According to the uniform policies crafted by the Office of Management and Budget for governmental and nongovernmental recipients and subrecipients,** the trigger that starts that three-year clock ticking is “the date of submission of the final expenditure report or, for awards that are renewed quarterly or annually, from the date of submission of the quarterly or annual financial report, as authorized by the federal awarding agency.” But nowhere in those policies is there an explicit statement instructing recipients or subrecipients about when and how to dispose of the records. Read more
March 12, 2012 - On February 28, the Office of Management and Budget issued an ambitious set of proposals to reform the governmentwide administrative, cost accounting and audit policies that it imposes on federal grant awarding agencies and they, in turn, impose on grantees and subgrantees. Notice of the proposals was published in the Federal Register and interested parties have been given only until March 29 to submit comments. Read more
February 29, 2012 - A provision of Office of Management and Budget Circular A-133 requires that pass-through entities (grant recipients and subrecipients) that subgrant federal assistance to lower-tier subrecipients determine whether those organizations have met the requirement to have an A-133 audit if they expend more than $500,000 in federal awards during their fiscal year. The requirement in Section 400(d)(4) of the circular represents a specific compliance step that is, itself, readily auditable. And it has often served as the basis for audit findings against the pass-through entity. Read more
February 15, 2012 - Working off a February 2011 executive order on regulatory flexibility issued by President Obama, the Office of Management and Budget is getting ready to go public with renewed efforts to reform federal grants management. According to OMB officials, a public notice will be posted in the Federal Register by the end of this month soliciting ideas from affected organizations about what changes are needed to OMB’s audit and cost principles circulars. The notice will lay out some specific areas of interest that have been developed by task forces largely composed of federal grants management officials and representatives of inspectors general and the Government Accountability Office. The task forces have been meeting for some months framing the reform effort. Read more
January 30, 2012 - If you are looking for a “cook book” for developing and implementing internal controls over your federal grant programs, you won’t find it in the administrative and cost requirements that the federal government imposes on recipients and subrecipients. That often comes as a surprise to those nonfederal entities that must endure the conduct of audits under Office of Management and Budget (OMB) Circular A-133, as well as to the auditors who are required to study and evaluate those internal controls and report any deficiencies. Read more
January 12, 2012 - Too often, federal grantees and subgrantees only look closely at the federal cost principles that apply to their type of organization after auditors have questioned a cost that has been charged to an award. But actually those cost principles are a grants management tool that can and should be used throughout the life cycle of the award, including during budget preparation. Read more
December 7, 2011 - More than a few independent auditors who audit federal grants and cooperative agreements are fond of stating, “If it’s not documented, it didn’t happen.” But like a lot of assertions that are made affecting the field of federal fund management, this one deserves a closer look. Read more
October 12, 2011 - Matching and cost sharing are as old as philanthropy, so the federal government often requires or encourages grant recipients to expend non-federal resources in pursuit of program and project objectives. Solicitations for grant applications and resulting grant agreements identify whether matching or cost sharing is required. However, the rules about what resources are acceptable are contained in the details of two federal governmentwide policy documents: Read more
October 5, 2011 - As a federal fund recipient subject to the annual audit requirements of Office of Management and Budget (OMB) Circular A-133, you’ve probably experienced the fact that independent auditors have been under pressure for several years to prove that they did the appropriate amount of testing to justify the conclusions in their audit reports. Federal inspectors general who criticized the quality of non-federal audits a few years ago have seen to that. And so, the extent of audit findings in Circular A-133 audits has ratcheted upward. Read more
October 5, 2011 - Pass-through entities (those that receive federal grants and cooperative agreements and subaward some portion of them to subrecipients) are required to check to see whether their subrecipients that expended more than $500,000 in federal awards during their fiscal year arranged to have an audit performed under Office of Management and Budget (OMB) Circular A-133. The requirement to do so appears in three different federal policy documents: Read more
