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2 CFR 200 Implementation Guidance

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Subject: Action:2 CFR 200 Implementation Guidance Date: December 4, 2014
From: Elissa K. Konove [Signed]
Chief Financial Officer
In Reply Refer To: HCFB-31
To: Associate Administrators
Chief Counsel
Director, Innovative Program Delivery
Director, Technical Services
Directors of Field Services
Division Administrators
Division Directors

The Office of Management and Budget (OMB) has published 2 CFR Part 200 (referred to as the “Supercircular”) to streamline the Government-wide guidance on Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards. The Supercircular consolidates and eliminates the duplicative guidance found in 8 OMB circulars which includes A-50, Audit Follow-Up, A-87, Cost Principles for State, Local, and Indian Tribal Governments; A-102, Grants and Cooperative Agreements with States and Local Governments; and A-133, Audits of States, Local Governments, and Non-Profit Organizations. The new Supercircular expands requirements in several areas.

The consolidation of the circulars is a key component of a larger effort to more effectively focus Federal resources on improving performance and outcomes, while ensuring the integrity of Federal funds in partnership with State, local, and tribal stakeholders. The Department of Transportation (DOT) will adopt OMB’s revised Government-wide Supercircular with an anticipated effective date on or before December 26, 2014. DOT submitted to OMB an Interim Final Rule (IFR) to adopt the Supercircular regulation under 2 CFR Part 1201. The implementation of the Supercircular will cancel 49 CFR Parts 18 and 19.

The administrative requirements and cost principles will apply to new awards authorized on or after the effective date unless an OMB approved deviation exists. Project modifications made on or after the effective date may be subject to the Supercircular requirements if the Federal agency’s modification also amends the terms and conditions of the Federal award. Existing Federal awards that do not receive incremental funding with new terms and conditions will continue to be governed by the terms and conditions of the Federal award in effect prior to the effective date. Subpart F, Audit requirements, will apply to audits of non-Federal entity fiscal years beginning on or after the effective date. The revised audit requirements are not applicable to fiscal years beginning prior to that date.

The policy implications are wide-ranging across many Federal Highway Administration (FHWA) programs. FHWA will develop and update regulations, policies, guidance and training. The process of developing or updating regulations, policies, guidance and training will take place subsequent to the effective date of the Supercircular. A listing of frequently asked questions and answers is included as Attachment A.

Key Changes Affecting FHWA: Following are some of the key changes in the various subparts of the Supercircular affecting FHWA business processes.

Pre-Federal Award Requirements (2 CFR 200 Subpart C) – The new Supercircular seeks to increase competition for Federal funds awarded under discretionary grant programs. The goal is to improve transparency and make more information available to interested parties:

In addition, the Office of Acquisition and Grants Management will publish general terms on the FHWA website and reference the site in all FHWA agreements.

Post Federal Award Requirements(2 CFR 200 Subpart D) – The Supercircular includes significant reforms to current administrative requirements (formerly circular A-102). Some of the additional reforms include the following:

Cost principles (2 CFR 200 Subpart E and Appendix VII) – The Supercircular is generally consistent with previous cost principles requirements (formerly circular A-87). The Department is seeking clarification from OMB regarding applicability of 2 CFR 200 Subpart E to for-profit organizations. The following are some of the changes affecting FHWA:

Audit Requirements (2 CFR 200 Subpart F) – The Supercircular is generally consistent with previous single audit and other audit requirements (formerly circular A-133). The primary changes affecting how FHWA awards are audited are as follows:

FHWA Implementation: The following are key activities FHWA will complete to implement the requirements of the Supercircular:

Coordination - The implementation of 2 CFR 200 will require the coordination of many FHWA offices. The initial step to this coordinated effort was the development of the Supercircular implementation plan, which includes a listing of the required activities to comply with the requirements in the Supercircular. The implementation plan will be used to track the status of each activity to completion.

A task force has been selected to coordinate and facilitate the completion of each activity. Task force members include the following:

Communication – Communicating the Supercircular to units within FHWA is imperative to its implementation. Briefings and web conferences designed to communicate the impact of the Supercircular to FHWA units have already occurred. Several briefings have been prepared and delivered to FHWA leadership to keep them abreast of the implementation schedule and impacts to their office. The information has also been communicated via monthly webinars and conference calls. The Resource Center Finance Services Team is developing a webinar on the Supercircular implementation that will be presented to all offices within FHWA prior to the effective date.

Training Development and Updates – The cancellation of 49 CFR Parts 18 and 19, and combining other administrative requirements, cost principles and single audit requirements into the Supercircular will require the development of new training courses and updates to existing training. The National Highway Institute will be working with the different program offices to modify and update existing training impacted by the Supercircular. The Resource Center will also be updating webinars, videos, and other training modules to address the Supercircular requirements. A listing of the training which will be developed or updated is included as Attachment B.

Regulations, Policy and Guidance Updates – FHWA regulations, policies and guidance documents referencing grants administration, cost principles and single audit requirements superseded by the Supercircular must be modified. Once the Supercircular is effective, FHWA will begin developing and revising the impacted documents. Some of the key regulations policies and guidance to be updated include the following:

A complete list of the regulations, policies and guidance to be developed or updated is included as Attachment C.

Other Requirements – A list of FHWA deviations will be published in the Final Rule in 2 CFR 1201. The following FHWA statutory exceptions apply under the authority of 2 CFR 200.101(b)(3):

If you have any questions concerning this memorandum, please contact Mr. Danial Parker in the Office of Financial and Management Programs (HCFB-31) at 720-963-3216.


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Page posted on December 4, 2014
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