Applying OMB circulars to AmeriCorps grants
Abstract
All recipients of federal grants must follow Office of Management and Budget (OMB) guidelines in their administration. OMB circulars set standards for financial management, and are written procedures for determining the reasonableness and permissibility of costs with the condition of the award. There are several OMB circulars that are applicable to different types of organizations. For example, AmeriCorps is a type of federal grant; therefore, AmeriCorps programs must follow OMB grant requirements. Jonnie Jenkins of Walker & Company, LLP, submitted this effective practice that defines some of the most relevant OMB Circulars within the Code of Federal Regulations (CFR) in March 2007.
Issue
Following Office of Management and Budget (OMB) guidelines may seem complicated and overwhelming, but doing so is a requirement for of all federal grantees.
Action
OMB circulars set standards for financial management. These are written procedures for determining the reasonableness and permissibility of costs with the condition of the award.
The Code of Federal Regulations (CFR) is a codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the federal government. Each federal agency is charged with establishing a set of regulations that provide guidance to organizations working with the agency. CFR helps to define grant requirements more clearly.
Circulars that are relevant to educational institutions, nonprofit organizations, and state and local governments (as of March 2007) follow:
OMB Circular A-21 Cost Principles (applicable to educational institutions)
Establishes cost principles applicable to grants, contracts and other agreements with educational institutions, and is designed to ensure that the federal government gets its fair share of costs.
OMB Circular A-87
Establishes cost principles and standards for determining costs for federal grants, cost reimbursement contracts and other agreements with state, local and Indian tribal governments.
Establishes principles and standards to provide a uniform approach for determining costs and to promote effective program delivery, efficiency, and better relationships between governmental units and the federal government.
OMB Circular A-102 Administrative Requirements (applicable to state and local governments)
Establishes consistency and uniformity among federal agencies in the management of grants and cooperative agreements with state, local, and federally recognized Indian tribal governments in the following areas:
- Pre-award policies
- Post-award policies
- Post-grant policies
OMB Circular A-110 Uniform Administrative Requirements (applicable to educational, hospital, and other nonprofit organizations)
Establishes consistency and uniformity among federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other nonprofit organizations in the following areas:
- Pre-award requirements
- Post-award requirements
- Post-grant requirements
45 CFR 2541 Uniform Administrative Requirements (applicable to state and local governments)
Establishes consistency and uniformity among federal agencies in managing grants and cooperative agreements with state, local and Indian tribal governments. It describes activities through pre-award, post-award (operations) and close-out stages.
45 CFR 2543 Uniform Administrative Requirements (applicable to educational institutions and nonprofit organizations)
Sets standards for obtaining consistency and uniformity among federal agencies in managing grants and cooperative agreements with higher education institutions, hospitals, and other nonprofit organizations in the following areas:
- Pre-award requirements
- Post-award requirements for financial and program management
- Property standards
- Procurement standards
- Reports and records
- Close-outs
OMB Circular A-122 Cost Principles (applicable to nonprofit organizations)
Establishes cost principles applicable to grants, contracts, and other agreements with nonprofit organizations.
Establishes principles to determine the costs of work performed by nonprofit organizations under grants, cooperative agreements, cost reimbursement contracts, and other contracts in which costs are used in pricing, administration, or settlement.
OMB Circular A-122 includes:
- Composition of total costs
- Factors affecting permissibility of costs
- Reasonable costs
- Allocable costs
- Applicable credits
- Advance understandings
- Conditional exemptions
- Direct costs
- Indirect costs
- Allocation of indirect costs and determination of indirect cost rates
OMB Circular A-133 Audits (applicable to state and local governments and nonprofit organizations)
Sets standards for obtaining consistency and uniformity among federal agencies for the audit of states, local governments, and nonprofit organizations expending federal funds. Also known as the Single Audit Act of 1984.
Applicable to nonprofit organizations and state and local governments that expend $300,000 or more in a year in federal awards.
Applies to all non-federal entities that expend $500,000 or more in one year.
All A-133 audits shall be performed annually and must be performed by an independent certified public accountant.
| Educational Institutions | NonProfit Organizations | State and Local Governments | |
|---|---|---|---|
| Uniform Administrative Requirements | 45 CFR 2543 Circular No. A-110 | 45 CFR 2543 Circular No. A-110 | 45 CFR 2541 Circular No. A-102 |
| Cost Principles | Circular No A-21 | Circular No. A-122 | Circular No. A-102 |
| Audits | Circular No. A-133 | Circular No. A-133 | Circular No. A-133 |
Context
OMB is the acronym for the Office of Management and Budget. OMB does not award grants but works cooperatively with the grantmaking agencies and the grantee community, leading development of government-wide policy to assure that grants are managed properly and that federal dollars are spent in accordance with applicable laws and regulations. Programs are subject to the rules and regulations that encompass OMB, state requirement provisions, award letter, and the specific program.
All recipients of federal grants must follow OMB guidelines in their administration. Consequently, there are several OMB circulars that are applicable to different types of organizations.
In general, financial management systems must:
- Provide accurate, timely, and complete disclosure of financial information
- Provide accountability on behalf of the grantee to ensure grant funds are used solely for the authorized purposes
- Fulfill the expectation that the grantee will minimize the time elapsing between the draw down and actual spending of funds
There is also the expectation that accounting records are supported by source documentation. A grantee must be able to identify sources and uses of funds from the financial records.
Each of the specific OMB circulars can be downloaded from the White House website www.whitehouse.gov/omb/circulars/index.html.
The Code of Federal Regulations (CFR) can be found on the website of the Corporation for National and Community Service www.access.gpo.gov/nara/cfr/cfr-table-search.html#page1.
