Filed under: Advisory, Not-for-Profits

By Victoria Kitts, CPA, CFE

If your not-for-profit entity receives federal funding, much of the focus in recent months has been on preparing for implementation of the new Uniform Guidance. But are you aware of another effort to streamline standards relating to federal funds?

The Digital Accountability and Transparency Act (or DATA Act) was signed in May 2014, and is designed to make data related to federal spending more accessible and meaningful to users. In May 2015, the Treasury and the Office of Management and Budget (OMB) issued standards under the Act that will apply to all federal spending reports.

These government-wide standards include data elements and definitions that will replace the diverse and varied definitions used by different departments in the federal government. By having consistent terms and meanings across departments, the federal government can aggregate and analyze spending data much more easily. The DATA Act also includes improvements to the submission process, such as machine-readable uploads that eliminate the need for separate data entry.

Over the next two years, the OMB will be working on a pilot program to test out the new standards. In May 2017, federal agencies will be required to report their spending information using the new standards. In May 2018, the Treasury and the OMB will begin publishing data reports using the new definitions on USASpending.gov. In August 2018, all other federal grantees and contractors, including not-for-profit organizations that receive federal funding, must begin reporting their spending information using the new data standards.

While still in the early stages, grant recipients are expected to reap some of the benefits, too. With consistent terminology and reporting metrics, the Act lays down the foundation for streamlined reporting by recipients.

The Treasury and OMB recommend the following 8 steps for implementation of the DATA Act requirements:

1. Organize Your Team

Determine which groups will be most impacted by the changes and find a champion to lead the implementation. Which team members are best to involve in the project, including accounting/finance, program staff, and upper management?

2. Review Elements

Gain an understanding of the new definitions and how they will change your current policies and procedures. Will you experience mainly name changes, or are there elements that are not currently tracked in your system?

3. Inventory Data

Perform an inventory of your systems and reporting capabilities. What do you have in place already?

4. Design and Strategize

Plan the necessary changes to your systems and processes to capture financial, procurement, and financial assistance data. What will you need to have in place to meet the new reporting standards?

5. Execute Broker

Implement a “broker,” which is the process by which your data is translated into the consistent format required under the new standards. How will you map the data being collected through your systems, with the data format needing to be reported back to the granting agencies?

6. Test Broker Implementation

Ensure the outputs are accurate, reliable, and in compliance with the new standards. Is your system capturing and reporting all relevant data, or is there a breakdown along the way?

7. Update Systems

If your current systems and/or processes are not capable of handling the needed changes, consider upgrades or changes to your reporting procedures.

8. Submit Data

Once you are up and running, repeat #5 – #7 as needed.

The DATA Act is not designed to change how NFPs spend federal dollars or how they run their programs. Rather, the change is in how data is captured and reported back to the granting agencies. With early preparation and a long runway to implementation, your organization can be ready for the next wave of efficiency and streamlining measures from the federal government.

Information about the DATA Act, including the data elements and their definitions, can be found at: https://www.usaspending.gov.

© Clark Nuber PS, 2015.  All Rights Reserved

This article or blog contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.