COGR Letter to OMB Seeks Amendment to Payment Provision

November 1, 2017 | By Jerry Ashworth | Post a Comment

MoneyThe 2017 Office of Management and Budget (OMB) Compliance Supplement has been available for a couple of months now, but one group now is strongly urging OMB to make a change to it. For that matter, it also want to see a change to uniform grant guidance.

The Council on Governmental Relations (COGR) recently sent a letter to OMB requesting that the 2017 Compliance Supplement be amended, as well as the payment provisions in the uniform guidance under §200.305 to address policy inconsistencies.

COGR states that recent single audits have shown that grants and cooperative agreements are being subject to what it deems as “a new interpretation” of what constitutes an invoice being “paid” and/or “disbursed” to a vendor, adding that these new interpretations are inconsistent with policy guidance in §200.305. It said that auditors reviewing research institutions have taken the position that prior to billing a federal sponsor for reimbursement, the institution must have evidence or documentation that the institution’s payment to the vendor has been issued, and in some cases, that the payment has been cleared by the institution’s bank.

COGR contends this conflicts with §200.305(b), which states that “… payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the nonfederal entity.” It contends that “the new interpretation will make timely reimbursement unlikely, and in many cases, impossible. Furthermore, the new interpretation discards longstanding, effective and common-sense disbursement practices typically employed at research institutions where reimbursement is requested after an invoice from a vendor has been approved, identified for payment in the accounts payable system and posted in the institution’s official accounting records.”

COGR recommended that OMB:

  • provide instructional guidance to single auditors that disbursement practices used at research institutions be audited under historical standards; not under this interpretation;
  • revise the 2017 Compliance Supplement (followed by an update to the 2018 Compliance Supplement) so that it is made consistent with§200.305(b);
  • update §200.305 to codify and make consistent across all federal agencies the definitions of “paid” and/or “disbursed”, such that these definitions support longstanding, effective, and common-sense disbursement practices; and are consistent with the policy requirements in §200.305(b) that payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the nonfederal entity.

COGR called for a definition of “paid” be added to the Compliance Supplement, defined as “the placement of the costs into the nonfederal entity’s accounts payable system, which is [disbursed] in the normal course of business using the non-federal entity’s payment policies and procedures.” It said that this definition “will allow auditors to focus on internal controls and configuration of an institution’s general ledger, accounts payable and electronic billing systems.”

It’s not often that OMB makes changes to a current Compliance Supplement. Perhaps it may consider this a change to the 2018 supplement. We’ll see going forward what approach OMB takes in response to this letter.

Do you agree with COGR’s position here? Let us know. We’d love to hear from you.

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