This interview is taken from an episode of the Spend Culture Stories podcast. In this episode, Veronica Cook, the Audit Senior Manager at Peterson Sullivan shares all you need to know about the Uniform Guidance in a straightforward and engaging way.
About the Podcast:
Your company culture might attract talent, but your Spend Culture will make or break your company. Spend Culture Stories is a podcast that helps finops and procurement leaders learn the tactics, strategies, and processes to build a proactive Spend Culture. Learn how to pick the right tools, implement the most efficient processes, and how to develop the right people to transform the Spend Culture of your organization for the better.
Veronica Cook is an Audit Senior Manager at Peterson Sullivan, a Seattle-based CPA and advisory firm. She has worked for almost 10 years in public accounting and provides audit services to various not-for-profit clients with valuable expertise in financial statement audits and single audits. Veronica’s industry experience includes; benefit plan audits, internal control testing, and agreed-upon-procedure audits. Veronica leads the Single Audit niche and is a member of the firm’s Nonprofit team.
Veronica is passionate about helping organizations take the fear out of audits and explaining complicated concepts in a fun and simple way.
Speakers: Veronica Cook, Audit Senior Manager, Peterson Sullivan
Listen to the Full Podcast Episode:
In recent years, there has been an increasing level of scrutiny directed at the manner in which tax dollars are spent. As a result of this, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) has been published.
Organizations that receive federal funds need to comply with the Uniform Guidance requirements. These are a set of rules issued by the Office of Management and Budget (OMB), a division of the Executive Office of the President of the United States. The OMB administers the U.S. federal budget and is tasked with ensuring that tax dollars are effectively utilized.
Who is Affected Under the Uniform Guidance?
“So the Uniform Guidance is really applicable to anybody that is receiving federal funds. So that could be a nonprofit organization. It could also be a for-profit organization. I think typically there is a thought out there that you only have to you have an audit if you spend over seven hundred and fifty thousand dollars of federal funds. And that’s not true. So even if you get ten thousand dollars of federal funds this the Uniform Guidance would still be applicable to you.”
Specifically, the Uniform Guidance rules apply to:
- State and local governments
- American Indian tribes
- Higher education institutions such as universities and charter schools
- Not-for-profit organizations
What do organizations need to know about the procurement purchasing procedures under the Uniform Guidance?
I would say really the first thing is that if you don’t think that purchasing or procurement applies to you you are probably not correct about purchasing and procurement really does apply to everybody receiving federal funds or not even receiving federal funds that the main concept with procurement and purchasing is that Uncle Sam doesn’t want you to waste their money.
We want you to spend those dollars wisely. So you have more dollars to be spending on other things.
On Wasteful Expenditure – What Does This Look Like?
“You’re going to a conference for your program and you want to fly first class from San Francisco to New York. I really don’t think Uncle Sam would be on board with that but they would understand flying coach … they’re not going to expect you to drive a car or take a train or something that might be less cost effective with your time and everything else involved.”
Who is Responsible for Complying With the Uniform Guidance Policy?
“Everybody has some sort of responsibility with the grant process from originating a grant, to them making sure that you followed all of the different compliance pieces. The best thing that I can recommend is really having a designated person to oversee that grant process. So at larger organizations you might have a compliance manager.”
What do Auditors Look for Under the Uniform Guidance?
According to Veronica, auditors want to make sure primarily that that is a clear and recorded process in place for purchasing, and that spending is maintained under reasonable limits.
“Finance typically is going to be paying for it, maybe they’re working with the vendor. Or maybe it’s the executive director. Has everybody been made aware of what the procurement policy is? Do they have the tools at their disposal to go out and procure those services and then document it? If I’m talking to people and their like “procurement what? I have no idea what you’re saying.” That’s also a red flag to me – that someone made a great policy procedure put it on a shelf and it’s just collecting dust.”
Here are some additional questions auditors will ask, according to Veronica:
- Do you have written policies and procedures surrounding procurement?
- Has everybody been made aware of what the procurement policy is?
- Does the organization have tools at their disposal to go out and procure those services and then document it?
- Do you have proof that you obtained price quotes or rate quotes for specific services for the best rates?
- Is your finance team aware of the spending that happens?
What Kind of Documentation Do The Auditors Ask For?
So one of the things that are in the uniform guidance is that you must have written policies and procedures over procurement. That’s a piece of documentation to me that I look for. There is a lot of still pen and paper when it comes to the type of documentation. So it might be a purchase order or request form and expense reimbursement form – maybe a checklist. But I want to see that you’ve hit all of the key components.
I also want kind of a walkthrough of what your procurement policy is and then having all of that together in one place. I use the term packet a lot because it’s important to centralize the information.