Cloud ERP requirements for non-profits and goverment contractors
The New Directive for Nonprofits and Government Contractors
“Starting October 1, 2010, government agencies will start enforcing a new President’s directive signed this month on April 9th, requiring sub-award reporting pursuant to P.L. 109-282 the Federal Funding Accountability and Transparency Act. This is a direct result of continuing efforts to achieve higher levels of accountability, transparency and compliance in the government contracting and non-profit communities.
Now, what exactly is this new sub-award reporting, and how is it going to impact recipients of Federal Grants and Contracts?
- All agencies shall implement the requirement to collect sub-award data by October 1, 2010. Recipients, sub-recipients, contractors, and sub-contractors should be prepared to report on applicable grants1 , contracts, and orders awarded, as soon as practicable after the sub-grant or sub-contract (or a subsequent change to the sub-grant or sub-contract) has been made, but no more than 30 days after that event.
- Sub-award reporting will apply to sub-grants and sub-contracts for the first-tier sub-awards. The following example illustrates a first-tier sub-grant. The Department of Energy awards a grant to the State of Arizona and the State of Arizona awards a sub-grant to the city of Phoenix. In this example, the Department of Energy currently submits information to USAspending.gov on the Federal award to the State of Arizona. The new requirement to collect information on sub-awards will now require the submission of information on the sub-grant from the State of Arizona to the city of Phoenix and subsequent posting of that data onto USAspending.gov. In the case of a federal contract, a first-tier subcontractor is any supplier, distributor, vendor, or firm that furnishes supplies or services directly to a federal government prime contractor.
ERP and Financial System Impacts
Government contractors and non-profit organizations should take steps to ensure compliance with this, and other, new requirements. While it is expected that most organizations have adequate Financial systems in place to track grant and contract expenditures at 2nd. and 3rd. tier level, this new deadline provides an opportunity to make improvements in financial systems and policies and procedures necessary to be ready for the October 1st. deadline.
Impact on your ERP and accounting system
Some popular accounting applications available through retail stores provide a cheap alternative to fund accounting, but they lack the features necessary to comply with the ever increasingly complex requirements of OMB circulars and FAR guidelines. Choosing the right software application is an strategic decision that should address all these issues. Modern cloud ERP systems offer powerful, easy to use, web-based accounting and financial solutions which allows government contractors and non-profit organization to automate with ease and efficiency many of the recurring tasks associated with cost allocations, government reporting and expense tracking. The benefit of a cloud system is that you can get started quickly without installing software or purchasing expensive hardware. Companies such as Acumatica deliver cloud solutions as a service but allow you to later migrate on premise if your requirements change.
Recommendation and how you can learn more
A system’s review can be performed to assess your organization’s current capabilities, and expose the areas that can be subject for changes, enhancements or improvements, including your accounting and financial software.
Contact a value added reseller (VAR) for additional questions and answers on this and other essential topics of compliance, accountability and transparency. If you need a VAR recommendation, email the editors of ERP Cloud News.