An Expert’s Quick Look at the 2020 OMB Compliance Supplement

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The Office of Management and Budget (OMB) has issued the 2020 version of the Compliance Supplement (CS) to the Uniform Guidance codified in the Code of Federal Regulations (CFR) at 2 CFR 200. It replaces the 2019 version and like its predecessors, it is a massive 1,554-page tome. This guidance document is effective upon publication and applies to audits after June 30, 2019.

 

Like prior versions, this CS, in its own words, “adds, deletes and modifies prior editions in response to law, policy or practical issues based on operating experience, internal and external comments.” While editorial space precludes a detailed commentary on the CS in this article, some especially noteworthy items are briefly noted below.

 

Broadly speaking, the 2020 CS continues the implementation of the President’s Management Agenda, Cross Agency Priority, goal number 8, “Results-Oriented Accountability for Grants.” The stated objective is to have Federal agencies make a paradigm shift away from heavy compliance to a “balanced approach” that encompasses both compliance and a requirement for “measurable program and project goals” that will produce data to improve the results of grant-funded programs.

 

In support of this more balanced approach, the 2020 CS reduces the compliance areas for audit review from 12 to just 6. But this so-called balanced approach does not mean a less burdensome regulatory environment for recipients of Federal funding. How can it, considering that the CS itself is primarily for use by auditors and is north of 1,500 pages.

 

The operative words are “reduction of the compliance areas for auditor review.” But the other areas are hardly going to disappear or be ignored. Wherever they exist, agency program officials have full authority to enforce or not enforce them at their discretion.

 

The shifting emphasis to performance and results is not inherently bad. But you must be aware that the compliance burdens associated with this changing emphasis will increase and so will the risk of losing the project funding if you do not achieve the intended outcomes or the awarding agency concludes that your results are unsatisfactory despite your best efforts.

 

No longer is there give and take in the grantor-grantee relationship.  More than 40 years ago Richard B. Cappalli in his treatise Rights and Remedies Under Federal Grants (1979) wisely observed that the world of Federal grants is one of “grantor kings and grantee serfs.” We are contractors now clothed in a grant agreement shell. Discouraging, but still true in countless ways.

 

This is the first CS issued in the Covid-19 era and Covid compliance changes are noted throughout the CS guidance. If you want to know what has changed from the 2019 to the 2020 CS, consult Part 8, Appendix V. Cost reimbursement contracts under grants above the simplified acquisition threshold ($250,000) will be subject to the requirements of the Federal Acquisition Regulation (FAR) Part 48. Only very large recipients will be affected by this regulatory requirement. Block Grants and certain specified programs are not subject to the A-102 Common Rule and parts of 2 CFR 200 (see Part 8, Appendix I).

 

Finally, be alert to changes in the “Yes” and “No” audit coverages in Part 4 for all Federal Programs.

 

Henry Flood is Senior Advisor for Grant Administration at The Grantsmanship Center.

 

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