This program concentrates on the administrative, accounting, and reporting requirements for grants awarded by federal government agencies, as opposed to grants awarded by state and local governmental entities. The first chapter introduces the user to two U.S. Office of Management and Budget (OMB) Circulars that set forth the basic administrative requirements for federal grants: (1) OMB Circular A-102, Common Rule, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, that also covers grants to Indian tribal governments, and (2) OMB Circular A-110, Uniform Administrative Requirements for Grants and Cooperative Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations, for nongovernmental organizations.

The discussion proceeds to examine the various grant payment methods available for most recipients of federal grants, and the separate payment methods available to only state government recipients. Detailed coverage is given to the types of allowable costs that may be charged to federal grants. The authoritative guidance for allowable costs is found in three OMB cost principles Circulars: (1) Circular A-21, Cost Principles for Educational Institutions; (2) Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments; and (3) Circular A-122, Cost Principles for Nonprofit Organizations.

The program moves on to review the basic requirements of a grant accounting system; for example, the ability to track funds received from multiple grant sources, and the ability to properly allocate indirect costs in accordance with applicable federal cost principles. The user is then introduced to another OMB Circular, OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations, 1997 revision. This Circular establishes uniform audit requirements for non-federal entities that administer federal awards and implements the Single Audit Act Amendments of 1996. A Single Audit covers two major areas in one audit: (1) the entity's financial statements, and (2) the entity's compliance with applicable federal requirements for its major programs. An auditor reports on both internal control over financial reporting and internal control over federal compliance.

Chapter 4 of the program concentrates on internal control and compliance issues. In particular, OMB Circular A-133's Compliance Supplement is examined regarding its identification of the specific objectives of the various grant compliance requirements, and its practical examples of internal control characteristics that should be present to provide reasonable assurance of complying with grant requirements.

The program concludes, in Chapter 5, by reviewing requirements for those federal grants that are first disbursed to a pass-through entity, and then disbursed by that entity to a separate organization that actually renders the grant-related services. This latter entity is called a subrecipient. Detailed coverage is given to the elements that should be part of any agreement between a pass-through entity and its subrecipient. Additionally, a pass-through entity must monitor its subrecipient to satisfy one of the compliance requirements in OMB Circular A-133's Compliance Supplement. The text provides a pass-through entity with specific monitoring responsibilities that it must perform, depending on variables such as the dollar amount of the grant and whether the subrecipient is considered a high-risk entity.

Chapter 1 examines the significant federal grant administrative requirements found in OMB Circular A-102, Common Rule, for states, local governments, and Indian tribal governments, and in OMB Circular A-110, for nongovernmental organizations.

Chapter 2 discusses the various grant payment methods available for most recipients of federal grants; the separate payment methods available only to state government recipients; and the three OMB cost principles Circulars' provisions for determining allowable costs for grants received by: governmental entities; nonprofit organizations; and educational institutions.

Chapter 3 focuses on the required elements, requirements, and components of a basic grant accounting system, plus the significant audit requirements in OMB Circular A-133, as applicable to auditees, federal agencies, pass-through entities, and auditors.

Chapter 4 reviews grant compliance and internal control objectives as explained in Parts 2 through 7 of OMB Circular A-133's Compliance Supplement; the 14 generic compliance requirements that apply to most grants; and practical examples of control characteristics that would satisfy each of the fourteen generic grant compliance requirements.

Chapter 5 discusses the requirements and components of an agreement between a pass-through entities and its subrecipient; and explains the various types of monitoring procedures that a pass-through entity must perform regarding grant compliance by its subrecipient.

Appendix A summarizes the fraud risk factors that an auditor should consider when auditing a governmental entity's general-purpose financial statements (GPFS).

Appendix B summarizes the fraud risk factors that an auditor should consider when performing a Single Audit of a governmental entity recipient of Federal Financial Assistance (FFA).

• Be familiar with two OMB Circulars that provide uniform administrative requirements for federal grants to state, local, and Indian tribal governmental entities, and to nonprofit organizations, respectively

• Be able to define what recipient entity qualifies as a high-risk grantee, and what special conditions a federal awarding agency may apply to the grantee as a result of that classification

• Be aware of pre-award, post-award, and after-the-award requirements, as delineated in the two OMB Circulars for governmental entities and nonprofit organizations

• Be familiar with the relationship of an entity's budget to grants management

• Understand the three types of payment methods for federal grant recipients in general, and the separate payment procedures for states that receive federal grants

• Be aware of the cost principles that apply to: state, local, and Indian tribal governments; nonprofit organizations; and educational institutions

• Be familiar with the procedures occurring during the life cycle of a grant, starting with pre-award planning and ending with procedures to conclude the grant program

• Understand the required elements, requirements, and components of a basic grant accounting system

• Be aware of the significant audit requirements in the OMB Circular A-133, as applicable to auditees, federal agencies, pass-through entities, and auditors

• Have overview knowledge of the highlights of Parts 2 through 7 of the OMB Circular A-133 Compliance Supplement

• Be familiar with the 14 generic types of compliance requirements that potentially apply to all federal grant programs

• Be aware of actual examples of internal control characteristics that would satisfy the fourteen generic compliance requirements for federal grant programs

• Be familiar with the important provisions that a pass-through entity should include in its subaward agreement with a subrecipient

• Understand the various methods that a pass-through entity may use to monitor subrecipients that are not required to have a Single Audit

• Be aware of methods that a pass-through entity may use to monitor subrecipients that are required to have a single audit, or subrecipients that are for-profit entities

• Be familiar with characteristics of internal controls over subrecipients' compliance with applicable federal laws and regulations

• Have an understanding of fraud risk factors that an auditor should consider in an audit of a governmental entity's general-purpose financial statements (GPFS)

• Be aware of fraud risk factors that an auditor should consider when performing a Single Audit of a governmental entity recipient of Federal Financial Assistance (FFA)

Dennis F. Dycus, CPA, CFE, CGFM, is Director of the Division of Municipal Audit for the Office of the Comptroller of the Treasury, State of Tennessee. The Division is responsible for audits of all municipalities, utility districts, school activity and cafeteria funds, housing authorities, certain not-for-profit organizations, and other quasi-governmental entities in the State of Tennessee. In addition, numerous audits for fraud, waste and abuse are conducted by the Division's staff each year. Mr. Dycus started his career with a national accounting firm and has spent the last 25 years being involved with the audits of all forms of governmental entities, so he brings a wealth of practical experience to our audience. (Speaker)