The Office of Management and Budget (OMB) released significant updated regulations for 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), now termed OMB’s Guidance for Federal Financial Assistance, effective October 1, 2024. The revisions to the regulations for the Uniform Guidance are intended to provide clarity, provide updated guidance to Federal agencies regarding consistent and efficient use of Federal financial assistance, and to reduce recipient burden.
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Organizations that expend federal funding over the current threshold of $750,000 are subject to a single audit, which is an audit of the organization’s financial statements performed under Government Auditing Standards, and a compliance audit based on regulations in the Uniform Guidance. The 2024 guidance includes numerous updates to subparts of this guidance, which should be reviewed in detail by any organization receiving federal assistance. The items denoted below reflect certain key changes included as part of the 2024 Uniform Guidance Revision.
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The revisions to the Uniform Guidance Regulations are aimed at trying to make federal assistance easier to access and understand. The revisions make it clear that federal agencies should make grant announcements as clear and concise as possible. The federal agencies must limit the length and complexity of the announcement and use plain language as per the guidance at plainlanguage.gov wherever possible. The guidance also includes a new “Notice of Funding Opportunity” template that requires an executive summary, a clear program description, information on submission requirements and deadlines, an explanation on the grant application review process, and details on the grant reporting requirements.
Some of the most notable changes to the Uniform Guidance are threshold changes that will reduce overall administrative burden. Since 2013, the threshold for a Uniform Guidance audit has been $750,000. In the 2024 updated guidance, the threshold is now increased to $1,000,000 and therefore organizations expending less than $1,000,000 of federal assistance will no longer be subjected to a Single Audit. This could provide overall cost savings to organizations and reduce the burden of having to undergo a rigorous Single Audit.
Other threshold changes include:
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- Increasing the de minimis indirect cost rate from 10% to 15%. In an effort to recognize the cost of doing business and increases in costs, organizations that elect to use the de minimis rate will be able to utilize this enhancement that will allow for additional recovery of indirect costs.
- Increasing the equipment purchase threshold from $5,000 to $10,000. If an organization follows the federal threshold amounts, the organization’s capitalization policy can be updated so that any equipment purchases less than $10,000 will qualify for expense rather than capitalization.
- Increasing the threshold for unused supplies from $5,000 to $10,0000. If unused supplies exceed $10,000 in total value and the supplies are not needed for another other federal award, the organization must retain the supplies for use on other activities or sell them, but in either case must reimburse the federal government for its share.
- Increasing the fixed amount of subawards from $250,000 to $500,000. This allows organizations to provide larger dollar value subawards without prior written approval from a federal agency.
- Increasing the subaward indirect rate from $25,000 to $50,000. This allows for an increase of the amount of subaward that organizations can apply to their indirect rate.
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Additionally, the revised Uniform Guidance regulations also include a slight change in the requirements of internal controls section to state that an organization’s internal controls must include cybersecurity and other measures to safeguard information. This change to the regulation clarifies this includes all information, and not just personally identifiable information.
The effective date for the final guidance is October 1, 2024. Federal agencies may elect to apply the guidance prior to October but are not required to do so. Citrin Cooperman’s Not-For-Profit Industry Practice can help your organization navigate and understand all these changes and the related impacts to your organization. If you have any questions or would like more information, please contact Amber Bichun at abichun@citrincooperman.com.
“Citrin Cooperman” is the brand name under which Citrin Cooperman Advisors LLC and Citrin Cooperman & Company, LLP, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards.
Amber Bichun is a partner in Citrin Cooperman’s Providence, Rhode Island office with over eleven years of experience. She has extensive experience providing audits to clients in the not-for-profit and healthcare communities.
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