What Key Updates on Uniform Grants Guidance Mean for You
Published on by Rob Ford in Assurance, Not-for-Profit
The Office of Management and Budget (OMB) has announced a landmark revision of the Uniform Guidance, which primarily governs how federal awards are administered. This move marks the most substantial amendment to the Uniform Guidance since its inception in December 2013.
The revision, officially known as the 2024 Revised Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, went into effect on October 1, 2024. While it is intended to streamline the process of managing federal funds, reduce administrative burdens, and bolster clarity for organizations receiving federal funding, there can be a lot to take in and process. Let’s break down what’s in the revision, and what it means for you.
What are the Key Changes?
- Increase in Single Audit Threshold – The threshold for a Single Audit has been increased from $750,000 to $1,000,000. Now, organizations annually expending $1 million or more of federal funds will be required to undertake a Single Audit. This change is a major relief for smaller entities, reducing their audit burden.
- Revisions in Terms and Terminologies – The term “non-federal entity” has been substituted with “recipient” or “subrecipient” throughout several sections of 2 CFR 200. This change is aimed at reducing confusion and improving clarity.
- Enhanced Cybersecurity Measures – Recipients and sub-recipients are now required to integrate cybersecurity measures to safeguard information in their internal controls. This new requirement underscores the importance of cybersecurity in today’s digital age.
- Adjustments to Indirect Costs – The de minimis rate for indirect costs, allowing entities to recover a part of their indirect costs without negotiating a rate, has been increased from 10% to 15%. This change is expected to provide additional financial relief to entities.
- Modifications in Major Program Determination – The threshold for determining Type A programs has been amplified to $1 million if the total annual expenditures of all federal programs for a non-federal entity are $34 million or less. This update is designed to focus resources on higher-risk programs.
Impact on Auditees and Auditors
The increase in the Single Audit threshold and Type A program threshold is anticipated to reduce the audit burden on smaller organizations, allowing them to redirect resources toward their core objectives. The new cybersecurity requirements emphasize the importance of robust cybersecurity controls to protect sensitive data related to federal programs.
The shift in audit thresholds also impacts auditors – the increase in the Type A program threshold reduces the number of programs considered Type A, thereby lessening the audit burden on smaller programs.
Additionally, the new Uniform Grants Guidance (UGG) has also brought changes to equipment and supply thresholds, raised from $5,000 to $10,000, simplifying procurement processes for entities. Also, the Federal Audit Clearinghouse has transitioned from the U.S. Census Bureau to the U.S. General Services Administration, introducing a new submission approach.
Implementation and Compliance
The revised guidance is effective for awards issued on or after October 1, 2024, except for the revisions to Subpart F – Audit requirements, whose effective date is for fiscal years beginning on or after October 1, 2024. However, federal agencies may choose to apply the final guidance to Federal awards issued prior to this date. Organizations must review these new guidelines, revise their policies, procedures, and internal controls accordingly to ensure compliance.
Next Steps
The 2024 Uniform Grants Guidance revisions bring important changes that aim to streamline the management of federal funds, reduce administrative burdens, and enhance accountability. Entities receiving federal funds should familiarize themselves with these updates and align their policies and procedures accordingly. As we move forward in this new landscape of federal grant management, it is essential for organizations to stay informed, adapt to changes, and maintain open communication with all involved stakeholders.
We Can Help
We’re here to help CFOs, controllers, and grant managers to stay informed and proactive as these changes take effect. If you have questions about any revisions to the OMB’s Guidance for Federal Financial Assistance and how they may affect your audit, contact us today for a free consultation with one of our dedicated non-profit accounting professionals.