Spring 2015 issue of Horizons

This is an important distinction, because it determines whether the grantee should follow procurement requirements or sub- award requirements when entering into and monitoring transactions with the other party. The guidance requires grantees to look to the substance of the relationship as opposed to the titles used in agreements with the other party. ∙ Requirements for pass-through entities are set forth. These include the specific types of information about the federal award the pass-through entity must provide to the sub-recipient, as well as the extent of sub-recipient monitoring the pass-through entity must perform. ∙ The UGG explicitly requires that entities establish and maintain effective internal controls, and strongly recommends that an entity’s internal controls be in compliance with GAO’s Standards for Internal Controls in the Federal Government (commonly referred to as the Green Book) and COSO’s Internal Control Integrated Framework . ∙ For equipment purchased with federal awards that has a market value of less than $5,000, items no longer needed may now be sold or disposed without further obligation to the federal awarding agency. For equipment with a market value greater than $5,000, the entity must request disposition instructions from the federal awarding agency, but may proceed with the disposition if no instructions are received within 120 days of making the request. In addition, computers are considered to be supplies (not equipment) if their acquisition cost is below the lesser of $5,000 or the client’s capitalization threshold. Computers meeting these criteria are no longer subject to the property management requirements associated with federal awards.

The requirements related to the single audit will not be effective until fiscal years ending December 31, 2015 or later.

Administrative Requirements As recipients of federal awards know well, federal dollars come with strings attached. OMB guidance governing the administration of federal awards contains regulations covering everything from the procurement of goods and services, to the manner in which equipment purchased with grant funds must be managed, to the responsibilities entities have when monitoring sub-grantees. Fortunately, the OMB realized that these administrative requirements have become steadily more burdensome, and the time has come to streamline them. The following represent the key changes in the UGG to administrative requirements:

∙ Procurement requirements have been reorganized into five basic categories:

– Micro purchases (under $3,000)

– Small purchases ($3,000 to $150,000)

– Sealed bid purchases (over $150,000, primarily for construction)

– Competitive proposal purchases (over $150,000, for other requests for a fixed- price proposal) – Noncompetitive purchases (for special circumstances where a limited number of acceptable providers exist) For each category, several easy-to-follow guidelines have been established for entities to observe when conducting that type of procurement. ∙ Guidance has been provided to help grantees distinguish between contractors (where a procurement relationship exists) and sub-recipients (where a sub-award relationship exists).

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