Prepare for Significant Changes to OMB’s Uniform Guidance

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 ("Uniform Guidance", the federal regulations surrounding federal financial assistance, including single audit requirements).

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.”

Recipient organizations should consider these to be generally helpful, as they streamline interpretations and decrease administrative strain.

It is important to note that the revisions are effective for new federal awards issued on or after October 1, 2024, and in the case of audit revisions, for fiscal years beginning on or after October 1, 2024. Federal awards issued prior to October 1, 2024, should use the previous version of the Uniform Guidance unless an official amendment is issued stating otherwise.

Threshold updates may reduce workload

Updates include increased thresholds to ease administrative burden; this is where many recipients of federal funds could see 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 are not 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 are considered a Type A for major program determination.
• Raising the de minimis indirect cost rate from 10% to up to 15% — This rate change is 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:

• Update “Affirmative steps must be taken” to “When possible, the recipient or subrecipient should ensure” in relation to utilizing small businesses, minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms (§ 200.321).
• Include “veteran-owned businesses” in contract considerations of disadvantaged businesses (§ 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 are multiple language-focused updates to the Uniform Guidance to make it more readable and specific. Other updates are meant to better align the Uniform Guidance with other federal regulations and standards. Some of these situations include:

• Mandatory disclosures now more closely align with Federal Acquisition Regulation (FAR) 48 CFR 52.203-13.
• New definitions of commonly used terms have been added, including “continuation funding,” “for-profit organization,” “participant,” and “prior approval.”
• Questioned costs definition clarifies 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.

Uniform Guidance underwent significant revisions that went into effect October 1, 2024. The revisions largely seek to reduce overall administrative burden to recipients of federal funds, but the transition generated some implementation questions.

Supplementary guidance to 2024 Uniform Guidance revisions

The Council on Federal Financial Assistance (COFFA) issued a Memorandum for the Federal Financial Assistance Community addressing some implementation concerns. COFFA was established by OMB to aid with the effectiveness and transparency of federal financial assistance programs.

Most importantly from the memorandum:

• New federal awards issued on or after October 1, 2024, are assumed to follow the updated guidance.
• 2024 revisions do not automatically go into effect for existing awards. Federal awards issued prior to October 2024 should use previous version of the UG unless an amendment is issued stating otherwise.
• Subawards should follow the same version of the OMB guidance as the primary award. Pass-through entities are responsible for amending their subawards so they align with the 2024 revisions, when applicable.
• OMB is granting an exception allowing all recipients and subrecipients to use the revised equipment thresholds of $10,000, even for awards otherwise operating under previous OMB guidance, if permitted by the federal agency that made the award.

The memorandum provides additional guidance regarding procurement standards for Indian Tribes, effective dates of single audit requirements, and administering relief for emergencies and major disasters.

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.

If you’d like more information about the 2024 OMB revisions, watch our one-hour webinar. Additionally, review our grant compliance services page or reach out to discuss the specific grants management needs and questions of your organization.

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