You may have heard the term Uniform Guidance Audit, aka UGA, tossed around and you’re wondering if you need one, how it works, and if you should be worried.
Our 7-part UGA blog series should give you the information and tips you need to avoid trouble. Let’s start at the beginning:
45 CFR Part 75 – WHAT IS THE UNIFORM GUIDANCE AUDIT (UGA)
Basically, the UGA is a compliance audit under Generally Accepted Government Auditing Standards, (GAGAS). It is a mandatory, annual audit that is designed to test whether your company complies with your grant’s terms and conditions. If you had an NIH grant in the past, you would know it by its former name, the OMB A-133.
DOES YOUR GRANT REQUIRE A UGA?
Question 1: What type of grant award did you receive?
If you have a firm, fixed price award, you don’t need to worry about the UGA and you’re probably done with this blog and blog series. However, fixed price grants with the Federal government are rare.
If you have a cost-reimbursable award, the Uniform Guidance Audit reference will be incorporated into your grant.
A cost-reimbursable award means that the government will reimburse you for the monies you spend on your innovation. Of course, those monies have to be in agreement with your proposal, and you have to be able to prove the expenditures are compliant with the Federal Acquisition Regulations (FAR) and the funding agency’s supplemental policies and regulations.
Question 2: Which type of funding vehicle do you have?
Not sure if you have a fixed price or cost reimbursable award? There are numerous funding agencies and funding vehicles subject to the Uniform Guidance Act. If you see your funding agency or award below, your award is probably subject to a UGA.
DOE grants and cooperative agreements, including
- Phase I SBIR
- Phase II SBIR
NIH grants, including
- Phase I SBIR
- Phase II SBIR
Army Medical Research Office grants
Any grant with the Uniform Guidance Audit embedded in its terms and conditions
Question 3. Did you spend $750,000 on awards subject to UGA?
If you expended $750,000 during your fiscal year on a grant(s) that is subject to the UGA, you must have a UGA. If you expended less than $750,000, you are off the hook. This year.
A couple very important caveats:
- That $750,000 can come from a single award or numerous awards. For example, if you have spent $600,000 on an NIH Phase II grant and 225,000 on an NIH Phase I grant, the cumulative spending is over $750,000 and you are required to have a Uniform Guidance Audit.
- The $750,000 threshold is calculated in accordance with Generally Accepted Accounting Principles (GAAP) which is accrual-based accounting. It is NOT based on how much you draw from the Payment Management System or from the ASAP system. It’s based on all of your direct costs and the proportional share of indirect costs.
- Accrual based accounting means you need to pay attention to when the services were performed and when the products were received. This is important because subcontractors, especially hospitals and universities, can be notoriously slow when it comes to invoicing you. If you get an invoice from a subcontractor in February of 2019, and it was for 12 months of services for the year ending December 31, 2018, then that invoice should be accrued and included in your 2018 fiscal accounting calculations—and your $750,000 threshold.
IF YOU ARE GOING TO BE AUDITED, AVOID UGA FINDINGS.
This is the first of our seven-part series about the Uniform Guidance Audit:
- Is Your Grant Subject To a Uniform Guidance Audit?
- What Happens During a Uniform Guidance Audit?
- How a UGA Auditor Tests Your Company’s Internal Controls
- How To Avoid Uniform Guidance Audit Findings on SF-425 Reporting
- How To Avoid UGA Findings: Direct Subcontractors
- How To Avoid UGA Findings: Direct Consultants
- What Happens To NIH and DOE Grant Audit Findings?
If you want to go deeper into the Uniform Guidance Audit, check out our webinar.
The appearance of U.S. Department of Defense (DoD) visual information does not imply or constitute DoD endorsement.
Ed Jameson, CPA, Managing Member
I’ve been in practice for over 40 years helping our small business clients procure, manage, and survive audits on more than $6 billion in federal government contract and grant funding. We’ve been featured presenters and panel moderators at Tech Connect’s National SBIR/STTR conferences since 2011, and I’ve presented at the DOD’s Mentor Protégé Summit and present regularly for several state and local organizations.