The Federal Funding Accountability and Transparency Act (FFATA) directs federal agencies to collect data regarding the spending of federal awards and contracts. As a result, new reporting requirements are now in effect for governmental units receiving direct federal grants and contracts. Following are some steps to review to determine applicability to your organization and a brief description of the reporting requirements.
Step 1 – Determine if the FFATA reporting requirements apply to you.
The new reporting requirements apply to direct recipients of federal grant awards and contracts that are not funded through the American Recovery and Reinvestment Act (ARRA). These requirements do not apply to recipients of federal loan awards, subrecipients of federal awards, or subcontractors to a prime contractor.
The data accumulated under these requirements will be reported on the usaspending.gov website and will show details on subawards made with federal funding. Subawards include grants and cooperative agreements awarded to subrecipients, as well as subcontracts awarded by a prime contractor to furnish supplies, services, and construction under a federal contract. Subawards do not include procurement of property and services needed to carry out the federal project or program.
Only new grants and contracts awarded after Oct. 1, 2010, are subject to FFATA. Grants and cooperative agreements should include a new Federal Assistance Identification Number (FAIN), which is a unique number assigned to a specific grant or cooperative agreement. The presence of this number is usually a good indicator that FFATA reporting applies to the grant.
Step 2 – Determine what information needs to be reported.
If you are subject to the FFATA reporting requirements as a recipient of direct federal grants and cooperative agreements, the following information needs to be reported on a monthly basis:
- Individual payments of $25,000 or more to a first-tier subrecipient under a grant or cooperative agreement
If you are subject to the FFATA reporting requirements as a recipient of direct federal contracts, the following information needs to be reported on a monthly basis:
- Effective Oct. 1, 2010, until Feb. 28, 2011, new contract awards of $25,000 or more to first-tier subcontractors if the prime contract awarded was $550,000 or more
- Effective March 1, 2011, new contract awards of $25,000 or more to first-tier subcontractors if the prime contract awarded was $25,000 or more
- For all contracts awarded to first-tier subcontractors, any modifications made to the contract amount previously reported in (2) or (3) above, regardless of the amount of the modification
Note that the requirement is different for subgrants and subcontracts. Reporting for grant subawards is based on individual payments. It is possible that some subrecipient payments will not be reported since some of the individual payments may fall under the $25,000 threshold. Reporting for contract subawards is based on the total amount of the initial awarded subcontract, and subsequent reporting of contract subaward modifications is required regardless of the amount of the change.
Reporting of first-tier subgrant, subcontracts, or subcontract modifications must be done in the calendar month following the month of the subaward payment, obligation, or modification.
Step 3 – Be ready for single audit compliance and control testing.
The 2011 OMB Compliance Supplement, which is effective for audits with years ending June 30, 2011, and beyond, has included additional steps that auditors must complete in relation to an organization’s single audit. As a result, auditors will be required to test the information submitted on the FFATA reports, as well as test the internal controls over the submission process.
Auditees can prepare for the new audit requirements by keeping adequate documentation that supports the information reported on the FFATA reports and maintaining evidence of the timeliness of the report submission. Supporting information for subcontract awards will generally take the form of subcontract agreements.
Supporting information for subrecipient awards generally takes the form of general ledger reports; however, not all auditees currently segregate subrecipient payments within the general ledger. For auditees with a large number of subrecipients, it may make sense to review the account structure for the affected grants to ensure that subrecipient payments are easily identifiable from other grant expenditures reported in the general ledger. The ability to easily identify subrecipient payments will make the audit and reporting process less complex.
In addition to timely and accurate reporting under the FFATA requirements, auditors will also be reviewing internal controls over the reporting process. All auditees should ensure that the reports are reviewed and approved by someone other than the report preparer prior to submission. This two-step preparation and review process should be evidenced in some form for the auditor’s review.
All federal agencies are required to follow the FFATA reporting requirements in their grant and cooperative agreements with recipients, however, each agency may be handling the requirements differently and may have phased in the appropriate agreement language at different times. Therefore, it is important that federal award and contract recipients are diligent in reviewing their grants and contracts to determine the applicability and ensure compliance with the new requirements.