Regulation Roundup – New Updates from the OMB

Below, we’ve outlined two recent announcements coming from the Office of Management and Budget (OMB). These updates contain important changes all nonprofits should be aware of: news about an extension of the deadline for procurement policy changes and the anticipated release of the OMB’s Compliance Supplement (CS) for recipients of federal assistance and grants programs.

OMB Issues a Uniform Guidance Procurement Grace Period Extension

On May 17, 2017, the OMB issued a correcting amendment to the Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) in the Federal Register that permits an extension of the grace period for non-federal entities to implement changes to their procurement policies and procedures in accordance with the procurement standards in 2 CFR 200.317 through 200.326 for one additional fiscal year. With this extension, the implementation date for the procurement standards will start for fiscal years beginning on or after Dec. 26, 2017, for those entities that opt to take advantage of it. Thus, an entity with a fiscal year ending Dec. 31, 2018, should be ready to implement the Uniform Guidance procurement standards at the beginning of that fiscal year, i.e., Jan. 1, 2018. 

The OMB has stated that this will be the final grace period for non-federal entities who have not yet implemented the Uniform Guidance procurement standards. Entities would be well-advised to proactively prepare for the implementation in advance of the extended implementation date.

If an entity opts for this extension of the grace period, it is important that they document their decision to choose to use the previous procurement standards during the extension period. This is specifically required by 2 CFR 200.110.

Release of the Draft 2017 OMB Compliance Supplement

The clearance process on the 2017 OMB Compliance Supplement is taking longer than expected. As a result, the OMB has released a final draft of the CS to the AICPA Governmental Audit Quality Center (GAQC) for purposes of 2017 single audit planning. 

The draft 2017 CS can be accessed on the GAQC website. OMB has requested that this final draft version be used for planning purposes only since there could be changes during the clearance process. However, the OMB is not expecting any significant changes since the draft CS has been reviewed by various federal agencies and other stakeholders.

Key Changes to the Compliance Supplement
The draft CS includes several new pieces of guidance, as well as the normal types of changes made by the OMB each year such as the addition, deletion and modification of various federal programs. All organizations should review Appendix V, List of Changes for the 2017 Compliance Supplement, for more information about the changes made and the programmatic changes for specific CFDA numbers.

A few highlighted changes:
  • Part 2, Matrix of Compliance Requirements, has been updated to add and remove programs that were changed in Part IV of the CS. The matrix has also been updated to reflect changes to the applicability of compliance requirements for several programs.
  • Part 3, Compliance Requirements, contains only one substantive change. Part 3.2 was revised to recognize the extension of the procurement grace period by one additional fiscal year. Because of this extension, the implementation date for the procurement standards will start for fiscal years beginning on or after Dec. 26, 2017, for those entities choosing to take advantage of the extension. 
  • Part 4 has been updated for the addition, deletion and updates to programs due to regulatory and other changes. Refer to Appendix V and the Table of Contents to see which programs are affected. 
  • Part 5, Clusters of Programs, includes several regulatory and other updates to the Student Financial Aid (SFA) cluster which includes removing the applicability of the Period of Performance compliance requirement from the Department of Education programs included in the cluster. There were only minimal changes to the Research & Development (R&D) cluster. The listing of “Other Clusters” has been updated to reflect the removal of a cluster, program name changes, addition of a new program to an existing cluster and an addition of a new cluster.
  • Appendix VII, Other Audit Advisories, should be reviewed by all entities as there were several changes to this section. One significant change relates to the removal of the description of agency exceptions to the UG. The appendix instructs entities to review the program supplement and, as necessary, agency regulations that adopted or implemented the OMB UG to determine if there is any exception related to the compliance requirements that apply to the program included in the 2017 CS. 
What’s Next? Expected Timing for Release of Final 2017 CS
There currently isn’t an estimated date for the issuance of the final 2017 CS. Once it is issued, we will update you here on the Nonprofit Standard and on the @BDONonprofit Twitter account.