The Council on Governmental Relations (COGR), representing 190 member institutions, wrote to the Office of Federal Financial Management to address policy inconsistencies between the 2017 Compliance Supplement’s guidance on cash management and the existing federal regulation 2 CFR Part 200.305 regarding payments under federal grants and cooperative agreements. COGR highlights recent audit practices that require evidence that vendor payments have not only been issued but also cleared by an institution’s bank before institutions may request federal reimbursement. COGR contends this new auditor interpretation is inconsistent with both the letter and the intent of 2 CFR Part 200.305(b), which requires that payment methods minimize the time between federal fund transfers and disbursement, and undermines established, practical disbursement procedures long used by research institutions.
COGR recommends clarifying guidance to auditors to use existing, historically accepted standards rather than this new, burdensome interpretation; revising the Compliance Supplement to align with 2 CFR Part 200.305; and updating federal regulations to consistently define what constitutes a payment or disbursement. Specifically, COGR proposes defining “paid” as the placement of costs in the accounts payable system and proceeding with normal institutional payment processes, rather than requiring proof of bank clearance. The letter argues that requiring monitoring of check clearance and similar manual processes would introduce inefficiency, increased cost, and administrative burden, with no added value. COGR underscores the importance of an open, transparent process as these financial management policies are implemented and offers to collaborate further with federal officials and auditors.
*As Sent to COGR Listserv 10/20:
COGR has
to Gilbert Tran at OMB.
Some of your institutions have been challenged in recent single audits. Specifically, a new auditor position is that prior to billing a federal sponsor for reimbursement, the institution must have evidence that the institution’s payment to the vendor has been cleared by the institution’s bank. This is in conflict with existing policy per 2 CFR Part 200.305(b): … payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity.
Public Comments are due October 31, 2017. The COGR letter to OMB and Mr. Tran is attached. We encourage you to submit a letter if this issue is a concern at your institution. A letter in support of the COGR letter, with any examples specific to your institution, is appropriate.
DIRECTIONS FOR SUBMITTING LETTERS: As specified in an August 14th Federal Register Notice, comments should be submitted to Gilbert Tran at hai_m._tran@omb.eop.gov. Include “2 CFR Part 200.305, Subpart F-Audit Requirements, Appendix XI-Compliance Supplement-2017” in the subject line and the full body of your comments in the text of the email and as an attachment. Include your name, title, organization, postal address, telephone number, and email address in the text of the message. Comments may also be sent through regulations.gov.
This is an important issue to a number of institutions and comment letters from your institution, in addition to the COGR letter, will elevate the unease around this issue. Contact David Kennedy at dkennedy@cogr.edu if you have questions on how to best craft your concerns to OMB.
