2 CFR Part 200, Subpart F
In order to ensure that federal grant awards are handled in a fiscally responsible manner, the Office of Management and Budget (OMB) issued 2 CFR 200 UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS.
2 CFR Part 200, Subpart F outlines the accounting requirements to a Uniform Guidance Audit, also known as a 2 CFR 200 Audit.
This regulation requires Companies with certain Grant awards (including NIH grants and DOE Grants and Cooperative Agreements) to be audited in accordance with the Uniform Guidance Audit rules, and includes for-profit Companies.
SBIR, STTR, BARDA, ARPA-E, and EERE Awards
Organizations with expenditures from SBIR. STTR, BARDA, ARPA-E and EERE awards that exceed $750,000 in federal funds (irrespective of amounts drawn) during their fiscal year must have an annual audit performed in accordance with UGA.
From the receipt of a Notice of Grant Award (NGA), policies and procedures that document direct and indirect grant expenditures will be tested to ensure that spending occurs in accordance with all applicable laws, rules, regulations, and terms and conditions governing your grant. The burden of proof rests with the grantee.
The level of accounting required by a small business subject to UGA is far greater than the acceptable accounting system needed for Phase 1 Grant and Contract awardees in several regards.
Some of the significant elements to be tested during the audit include:
1. Direct, indirect and unallowable costs should be properly identified and treated consistently. Costs which are clearly identifiable to a specific project should be treated as a direct expense. Costs which are common to a number of projects and cannot be clearly allocated to one project should be treated as an indirect expense.
2. All funds have been expended during the period of performance.
3. The generation of program income during the project has been credited to the government.
4. The grantee has properly managed cash and used the Payment Management System (PMS) correctly; and can demonstrate that funds have been drawn correctly as instructed on the quarterly filed form PSC 272.
5. The grantee has properly filed all Financial Status Reports (FSR).
6. Costs are consistently treated in accordance with the NIH Grants Policy Statement.
7. All sub recipients (subcontractors and consultants) have been properly monitored.
During the UGA audit, auditors will look for weaknesses in the grantee´s internal control system. Ultimately, all expenditures must be reasonable, prudent, allocable, and be of benefit to the government.
Each transaction should have a well-documented audit trail that includes authorization for expenditure, backup documentation and allocation of expenditure. Expenses on federal awards should be treated consistently with non-federal expenses.
The UGA audit must be performed by a CPA firm that has a solid understanding of the Federal Acquisition Regulation (FAR) and is well versed in the supplemental regulations issued by the specific funding agency awarding your project work.
FREE UGA READINESS ASSESSMENT
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To learn more, check out our Whitepaper – Understanding the Basic Accounting Requirements.