A Year Later, OMB Issues Revision to Uniform Guidance FAQ

August 8, 2017 | By Jerry Ashworth | Post a Comment

question-icon-1147668-mYou would normally think August would be a good time to ease off on big news from the financial assistance front. Not so much, it seems. Still, we’re definitely not complaining.

This week, I’ve been attending the American Institute for Certified Public Accountants’ Government Accounting and Auditing Update Conference here in Washington, D.C., and have been knee-deep in writing articles on speakers giving presentations on the latest revisions to the Government Auditing Standards (aka the Yellow Book) and on financial information resulting from standards set under the DATA Act. Subscribers soon can look for those articles at grants.complianceexpert.com and in upcoming issues of Thompson grants publications.

As I was busily preparing my notes for one of these stories, we received word that the Office of Management and Budget (OMB) had finally, after about a year’s delay, issued the latest revision of the Frequently Asked Questions pertaining to the uniform grant guidance. This FAQ was last revised in September 2015, and an update was planned for last fall, but several OMB actions were put on hold when the Trump administration took office. The newest revision to the FAQ, dated July 2017, has 24 new questions (which are indicated by an *) and four revised questions (which are indicated by an **).

Without going into all 24 new questions here, I thought we’d present one of them. The question pertains to indirect costs (§200.311) and is listed as .311-9 relating to negotiating indirect costs with state agencies. It reads:

Q. If one department within a state government negotiates indirect costs with a subrecipient that does not have a federally approved rate, are all departments/agencies within that state government obligated to also negotiate an indirect cost rate with that subrecipient?

A. No. Each pass-through entity has a separate subaward arrangement with each subrecipient. For example, a state’s health department has negotiated and approved an indirect cost rate to pay indirect costs to a subrecipient. If the state’s transportation department subawards to the same subrecipient, and the state’s transportation department should consider the negotiated rate already provided by the state’s health department. Also, since this subrecipient has received a negotiated indirect cost from the state, it does not have the option of using the de minimis rate because this subrecipient has negotiated an indirect rate with another state department. In the case, where a subrecipient has no federal awards and there is no defined federal cognizance, the awarding of grants to the same subrecipient by other pass-through entities must consider consistency and fairness when reviewing indirect costs. Therefore, the state transportation department has two choices: (i) accept the state health department’s negotiated rate, or (ii) negotiate its own rate with the subrecipient. (See §200.331(a)(4)). Therefore, a subrecipient may not have a negotiated indirect cost rate with one state agency and the 10 percent de minimis rate with another state agency within the same state.

Indirect cost questions are consistently one of key areas of confusion among nonfederal entities. Continued clarification is always helpful. We are now planning to write an article on the FAQ for our subscribers that will provide more highlights from this new document. Make sure to look for it!

Let us know your reaction to the new FAQ. We’d love to hear from you.

 

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