Sweeping Revisions to OMB’s Federal Financial Assistance Guidance to Boost Accessibility and Transparency | Barnes Dennig

Sweeping Revisions to OMB’s Federal Financial Assistance Guidance to Boost Accessibility and Transparency

Published on by Kara Wysinski, Rachael Cruse, Patrick Frambes, in Not-for-Profit

Sweeping Revisions to OMB’s Federal Financial Assistance Guidance to Boost Accessibility and Transparency

New Office of Management and Budget (OMB) revisions are designed to make more than $1.2 trillion in annual federal financial assistance more accessible and transparent, allowing recipients to focus more on delivering results to their communities. The changes represent a significant step towards a more efficient and impactful federal financial assistance framework.

The backstory

The OMB’s federal framework, known as the Uniform Guidance, was originally introduced to streamline the administration of federal grant spending. Historically, organizations have grappled with a complex and confusing array of documents, which often resulted in conflicting requirements – a logistical nightmare that’s also impacted the effectiveness of the funded initiatives.

The revisions simplify the process further and make grant programs more user-friendly for recipients, including states, localities, non-profits, and others. Key updates encompass clarification of ambiguous terms, simplification of compliance requirements, and reduction of the need for additional approvals.

Specifically, the revisions affect critical areas like the definition of “federal financial assistance,” mandatory disclosures, audit requirements, the threshold for equipment and supplies disposition, prior approval requirements, and the treatment of indirect costs.

What do the changes mean for your organization?

  1. The single audit threshold has been increased from $750,000 to $1,000,000. This gives more flexibility in programmatic and budgetary decisions and could potentially reduce the audit burden for entities with federal funding below the new threshold.
  2. The increase in the de minimis indirect cost rate from 10% to 15% could enable a more realistic recovery of indirect costs, especially beneficial for new or inexperienced organizations.
  3. The removal of numerous prior written approval requirements for various costs means organizations can expect a decrease in administrative overhead. This will allow for more direct allocation of resources to project and service delivery.
  4. An increase in equipment and supplies disposition thresholds from $5,000 to $10,000, which reduces the administrative requirements on recipients.

When do the changes go into effect?

These changes will take effect on awards issued on or after October 1, 2024. Federal agencies may choose to apply the final guidance to Federal awards issued prior to this date but are not required to do so.

While this pre-publication draft does not constitute the final guidance, it gives a glimpse into the forthcoming changes. The official version, which might include technical and other revisions, will be published in the Federal Register and will also be available on the Government Printing Office’s website and Regulations.gov.

We Can Help

As these changes roll out, it’s essential for CFOs, controllers, and grant managers to stay informed and proactive. If you have a question about the revisions to the OMB’s Guidance for Federal Financial Assistance and how they may affect your audit, contact us to set up a free consultation with one of our dedicated non-profit accounting pros. We’re here to help.


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