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Government Contractor

January 2011

INSIDER
L L L L L

U H Y LLP C e r t i f i e d P u b l i c A c c o u n t a n t s
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Columbia, MD 21045

The Price of Federal Funding: More Reporting
by Nelly Gizdova, Manager

f you had just become used to hearing the term ARRA without having a panic attack, now there’s a potential new source of anxiety: FFATA! FFATA, or the Federal Funding Accountability and Transparency Act, is not new legislation, per se; it was signed into law on September 26, 2006, by President George W. Bush. The reason FFATA is starting to make headlines again is that many of its provisions become effective on October 1, 2010. FFATA is similar to ARRA (the American Recovery and Reinvestment Act) in its intent to make the government transparent and accountable for its spending decisions by using the newest information technology resources, but it goes beyond the ARRA reporting in several aspects. To begin, the provisions of FFATA affect all entities that receive federal awards (direct and first tier subrecipients) regardless of the type or amount of federal funding received, and are applicable for all new awards effective October 1, 2010. The other major difference is that FFATA reporting is going to be monthly (not quarterly as with ARRA). The first reporting was due November 30, 2010, for the month

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etorships, any other legal business entities and states or localities. Entities with gross income less than $300,000 for the previous tax year (from any source) are exempted from reporting. All recipients of federal awards (grants and/or contracts) are required to register in the Central Contractor Registration system at https://www.bpn.gov/ccr/. Additionally, prior to submitting FFATA reports, prime awardees must register in the new FFATA Sub-award Reporting System (FSRS) at http://www.fsrs.gov/. FSRS was created to collect the required data from the federal awardees for reportable sub-awards (grants or contracts greater than $25,000) and executive compensation. In a memo to federal agencies, the Office of Management and Budget (OMB) clarified that awardees would be required to submit data only on first-tier sub-grants and sub-contracts. continued on page 2

ending October 31, 2010. The collected information on federal awards is then published and accessible on a searchable website: www.USASpending.gov. The term federal awards used in FFATA is quite broad and includes grants, sub-grants, loans, awards, cooperative agreements and other forms of financial assistance as well as contracts, sub-contracts, purchase orders, task orders and delivery orders. Federal awards that involve classified information are excluded from reporting under FFATA.

Who is affected?
FFATA affects a spectrum of entities: for-profit and nonprofit corporations, associations, partnerships, limited liability companies, limited liability partnerships, sole propri-

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January 2011

Reporting requirements
According to OMB FFATA Memorandum dated April 6, 2010, all federal prime contractors and sub-contractors should be prepared to report on applicable contracts (greater than $25,000) as soon as practicable after the sub-contract (or subsequent changes thereto) has been made, but no more than 30 days after that event. FFATA requires prime recipients to report in FSRS by the end of the month following the month the applicable contract was awarded or modified, which, in effect, gives prime contractors at least 30 days to report. The prime contractor has a responsibility to inform the sub-contractor as part of the contractual agreement of all reportable data elements and to monitor the completion of those requirements on a monthly basis. It is the sub-contractor’s responsibility to report to the prime contractor all information required by FSRS. Sub-contractors cannot report in FSRS. Only the prime contractor is required (and able) to report subcontract actions in the FSRS reporting module. The FSRS reporting requirements are phased-in for federal contracts and sub-contracts and are effective as follows: • For contracts greater than or equal to $20,000,000, reporting started July 1, 2010, • For contracts greater than or equal to $550,000, reporting started October 1, 2010, and • For contracts greater than or equal to $25,000, reporting starts March 1, 2011.

Sub-award reporting
The sub-contract information reported in FSRS is very similar to what is being reported under ARRA at http://www.FederalReporting.gov: • Name of entity receiving award • Amount of award • Funding agency • NAICS code • Program source • Award title • Location of the entity (including congressional district) • Place of performance (including congressional district) • Unique identifier of the entity and its parent (if owned by another entity) Compensation and names of the top five executives (prime and/or subcontractor), are limited to entities that have met all three of the following requirements: • More than 80% of annual gross revenues are funded by the Federal government, • Annual gross revenues are greater than $25 million in the previous fiscal year, and • Compensation information is not already available through reporting to the SEC or some other public source. For ARRA-funded contracts subject to FFATA reporting, the prime recipient will be required to report the contracts to both FederalReporting.gov and FSRS, if required by the contract. Some prime and sub-contract information will be pre-populated in FSRS with data from the Federal Procurement Data System (FPDS) and the Central Contractor Registration System (CCR) to ensure quality data and to minimize unintended data entry errors by award recipients. FSRS interfaces with the above two systems (FPDS and CCR) to make the information available to the general public in USASpending.gov. FSRS allows the prime contractors to manage and report against multiple contracts awarded to their registered DUNS number. The awardees can sort and filter their worklist by type, by awarding agency, and by other filter terms. They will be able to see, by contract number, the FFATA sub-contract reports filed against that particular contract. ••• Please contact Nelly Gizdova, 410423-4800 or ngizdova@uhy-us.com for more information.

The statements contained herein are provided for informational purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. Furthermore, such statements are not presented or intended as, and should not be taken or assumed to constitute legal advice of any nature, for which advice it is recommended that you consult your own legal counselors or professionals. UHY Advisors, Inc., provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors.” UHY Advisors, Inc., and its subsidiary entities offer services from offices across the United States. UHY Advisors, Inc., and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent CPA firm that performs attest services. UHY Advisors, Inc., and UHY LLP are independent U.S. members of Urbach Hacker Young International Limited.