Prepare for Significant Changes to OMB’s Uniform Guidance

  • Regulations
  • 4/22/2024
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Key insights

  • Office of Management and Budget (OMB) is updating and revising guidance for federal financial assistance to streamline interpretations and decrease administrative strain.
  • The revisions are not effective until October 1, 2024.
  • Understanding the updates to thresholds, procurements, readability, and others can help organizations comply with OMB requirements.

Streamline compliance with the changes to Uniform Guidance.

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The Office of Management and Budget (OMB) updated and revised guidance for federal financial assistance, including revisions to 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the federal regulations surrounding single audits).

The changes are intended to strengthen and streamline administration of federal financial assistance and to help recipients of federal funding “focus more on the people they serve and to deliver results for their communities.”

OMB released the pre-publication internet version on April 4, 2024 — however, revisions are not effective until October 1, 2024.

Recipient organizations should consider these to be generally helpful as they streamline interpretations and decrease administrative strain. There are a few key changes to prepare for in the intervening months.

Threshold updates may reduce workload

Expected updates include increased thresholds to ease administrative burden; this is where many recipients of federal funds will see the most immediate practical changes. These include:

  • Increasing the single audit threshold from $750,000 to $1,000,000 — Organizations expending less than $1,000,000 of federal financial assistance during their fiscal year will not be subject to a single audit.
  • Increasing the Type A program threshold from $750,000 to $1,000,000 — Programs with expenditures of over $1,000,000 will be considered a Type A for major program determination.
  • Raising the de minimis indirect cost rate from 10% to up to 15% — This rate change will be available to any organizations who currently use the de minimis rate. However, organizations may apply for rates lower than 15% at their own discretion.
  • Adjusting the dollar value of equipment from $5,000 to $10,000 — Organizations wishing to increase their equipment capitalization thresholds to match the federal increase should update their policies.
  • Allowing fixed amount subawards up to $500,000 — to be awarded without written approval from the federal agency.
  • Updating the definition of modified total direct costs — to include up to the first $50,000 of each subaward (formerly $25,000).

Review procurement updates to stay compliant

Procurement requirements and policies have always been particular under Uniform Guidance (UG). Organizations are encouraged to review and update their policies for the following changes to continue conformance with UG:

  • Include “veteran-owned businesses” in contract prisonizations (§ 200.321).
  • Updated “affirmative steps must be taken” to “when possible, the recipient or subrecipient should ensure” in relation to using small businesses, minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms (§ 200.321).
  • Change “small purchases” terminology to “simplified acquisitions” (§ 200.320(2)).
  • Remove restrictions related to geographic preference requirements and allow for scoring mechanisms to evaluate bidders committing to U.S. jobs and certain compensation and benefits (§ 200.319).
  • Prioritize environmentally sustainable products and services (§ 200.323(b)). This includes consideration of reused, refurbished, and recycled products; biobased or energy and water efficient acquisitions; and purchasing compostable items.

Removal of prior written approval requirements

To reduce federal agency and recipient burdens, OMB removed the following areas as requiring prior written approval:

  • (a) § 200.201 — Use of grant agreements (including fixed amount awards), cooperative agreements, and contracts, paragraph (b)(5)
  • (e) § 200.311 — Real property
  • (f) § 200.313 — Equipment
  • (h) § 200.413 — Direct costs, paragraph (c)
  • (k) § 200.438 — Entertainment costs
  • (r) § 200.454 — Memberships, subscriptions, and professional activity costs, paragraph (c)
  • (t) § 200.456 — Participant support costs
  • (w) § 200.467 — Selling and marketing costs
  • (x) § 200.470 — Taxes (including value added tax)

Guidance updates may improve readability

There will be multiple language-focused updates to UG to make it more readable and specific. Other updates are meant to better align UG with other federal regulations and standards. Some of these situations include:

  • Mandatory disclosures will now more closely align with Federal Acquisition Regulation (FAR) 48 CFR 52.203-13.
  • New definitions of commonly used terms will be added, including “continuation funding,” “for-profit organization,” “participant,” and “prior approval.”
  • Questioned costs definition will clarify what questioned costs represent in audit findings.
  • Specifically requiring pass-through entities to verify subrecipients are not excluded or disqualified (suspended or debarred) in accordance with 2 CFR § 180.300.
  • Added requirement for when recipients do not have a final indirect cost rate covering the period of performance. A final financial report must still be submitted, and the recipient must submit a revised final financial report when all applicable indirect cost rates are finalized.
  • Clarifying administrative closeout costs may be incurred until the final report due dates but must be liquidated prior to the due date and charged to the final budget period.

How we can help

We have a team of experienced professionals digging into the new changes and can help you navigate the complexities of federal grants. Whether you need assistance in understanding what funding opportunities exist, navigating the grant application process, help developing effective strategies to implement grant management policies and procedures, or need training on understanding compliance requirements, CLA can help you through the process. Visit our grant compliance services page for additional information.

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