DATE: May 1, 2000

FROM: Barry McVay, CPCM

SUBJECT: Office of Management and Budget Circular A-110, Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations

SOURCE: Federal Register, May 1, 2000, Vol. 65, No. 84, page 25396

AGENCIES: Office of Management and Budget (OMB), Executive Office of the President

ACTION: Advance Notice of Proposed Revision

SYNOPSIS: This advance notice seeks comments on a proposal by the Chief Financial Officers Council to amend Circular A-110 to require federal awarding agencies to offer recipients the option to request cash advances on a "pooled" basis. Before making this recommendation, the Council is seeking comments from recipients and federal agencies on the merits of pooled payment systems and grant-by-grant payment systems.

EDITOR'S NOTE: OMB Circular A-110 is available at the OMB Internet site http://www.whitehouse.gov/OMB/circulars.

The position of Chief Financial Officer (CFO) was initiated by the Chief Financial Officers Act of 1990 (Public Law 101-576), which requires each agency to improve its systems of accounting, financial management, and internal controls. The Chief Financial Officers Council is made up of all the agencies' (CFOs) for the purpose of discussing common problems and seeking solutions.

DATES: Submit comments on or before June 30, 2000.

ADDRESSES: Submit comments to F. James Charney, Policy Analyst, Office of Management and Budget, Room 6025, New Executive Office Building, Washington, DC 20503. Comments may be submitted by e-mail to grants@omb.eop.gov, but the comments must be in the text of the message and not as an attachment.

FOR FURTHER INFORMATION CONTACT: Gary Maupin, Chief Financial Officer, Food and Nutrition Service, United States Department of Agriculture, at 703-305-2046.

SUPPLEMENTAL INFORMATION: Paragraph (c) of Section ___.22, Payment, of OMB Circular A-110 states that "whenever possible, advances shall be consolidated to cover anticipated cash needs for all awards made by the federal awarding agency to the recipient."

Most agencies currently use the "grant-by-grant payments system" in which recipients request funds on a grant-by-grant basis. Some of these agencies approve the requests on a grant-by-grant basis, pool the individual amounts, and issue payments in the aggregate. Agencies that use grant-by-grant payment systems believe that agency grant officers have more timely information on payments and can provide more immediate technical assistance to a recipient experiencing problems with a particular grant.

However, the Chief Financial Officers Council is considering whether to recommend an amendment to OMB Circular A-110 that would require agencies to offer a pooled payment procedure (where cash advances are requested from a "pool" of grants rather than on a grant-by-grant basis) as an option for recipients in requesting cash advances under federal awards.

Under a pooled payment process, the recipient estimates the aggregate amount of cash that it will need for all its federal awards from each awarding agency and requests a draw in that amount. The draw is then allocated among all the awards based on a formula. When recipients report expenditures, the allocation is adjusted to the actual reported expenditures. However, some agencies maintain that quarterly reports under pooled payment systems come too late for the agencies to help recipients take corrective actions on specific grants, so they believe that a transition from grant-by-grant to pooled payments for their awards must be accompanied by monthly reporting of actual expenditures in an electronic format.

OMB and the Council are interested in receiving comments from both grants recipients and federal agencies on the merits of pooled payment systems and grant-by-grant payment systems, what specific problems or benefits are created for recipients under the two systems, and whether recipients should have this option at all. Specifically, commenters are asked to respond to the following questions:

  1. Would it be worth it to recipients if they are allowed to make pooled payment requests in exchange for a requirement to electronically report their actual costs on a monthly basis? (Paragraph (a)(2)(iv) of Section ___.52, Financial Reporting, already authorizes federal agencies to require monthly submissions of the Standard Form 272, Report of Federal Cash Transactions, from recipients that receive advances of $1 million or more per year.)

  2. Should OMB Circular A-110 include a minimum number of awards and/or dollars below which the pooled payment option is not be offered? That is, recipients that receive few awards, or awards for small amounts, would not be offered the option to make pooled payment requests.

  3. How might a pool payment system affect the federal agencies' abilities to monitor the financial performance of recipients and determine program compliance?

  4. Should recipients be permitted to determine whether they receive advances on a pooled or grant-by-grant basis, or should federal agencies continue to make that determination?

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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