Key Takeaways
- The Office of Management and Budget has released an update to Uniform Guidance, effective October 1, 2024.
- The update is intended to create greater clarity, increase accessibility, and reduce inconsistent interpretations.
- The OMB has also published revisions to improve Federal financial assistance management and reduce administrative burden.
The Office of Management and Budget (OMB) released a significant update to Uniform Guidance with the primary goal of providing clarity regarding the consistent and efficient use of Federal financial assistance, as well as reducing administrative burden. A substantial portion of the update consists of improved wording and clarification to increase accessibility and reduce inconsistent interpretations.
The final rule was published on April 22, 2024, with an effective date of October 1, 2024. We’ve outlined the updates we expect to have the most significant impact on award recipients.
Notice of Funding Opportunities (NOFOs)
In an effort to increase community engagement and public participation, the update encourages Federal agencies to effectively communicate program requirements in plain language. This includes an Executive Summary requirement in NOFOs to reduce the barrier for applicants, especially in underserved communities and among organizations with little experience applying for Federal financial assistance. In addition, the OMB expanded on language encouraging federal agencies to develop programs in consultation with the communities that will be impacted. Federal agencies may offer technical assistance to applicants during this phase.
Reduction in Administrative Burden
- Thresholds for both equipment and supplies were increased from $5,000 to $10,000. For any residual equipment or supplies remaining upon completion of the program, the recipient may retain or dispose of the assets with no remaining obligation to the grantor. (CFR 200.313 & 200.314)
- The update reduced the programmatic reports required by the recipient that are not necessary in operating or monitoring of the award. Federal agencies may not require these reports more frequently than quarterly. (CFR 200.329)
- The de minimus rate was raised from 10% to 15% to allow for a more realistic recoverability of indirect costs. This increase was primarily aimed to help organizations that do not have the experience or resources required for a formal rate negotiation. (CFR 200.414)
- The number of prior written approvals required from the federal agency was reduced. The threshold for fixed amount subawards increased from $250,000 to $500,000, allowing the pass-through entity increased flexibility. This reduction in prior written approvals also included various requirements of expenditures related to real property, equipment, direct costs, entertainment costs, memberships, participant support costs, selling and marketing costs, and taxes. However, the OMB advised that recipients must follow applicable cost principles in order to reduce the risk of subsequent disallowance of the related expenditures. (CFR 200.333 & 200.407)
- The Single Audit threshold was increased from $750,000 to $1 million in total federal expenditures during the recipient’s fiscal year. This is a significant increase that will greatly reduce the audit burden and related costs on smaller organizations. (CFR 200.501)
Additional Considerations
The OMB clarified the expectation that internal controls are properly documented by recipients and subrecipients. This included language over cybersecurity to safeguard information. (CFR 200.303)
Next Steps for Recipients
The language and requirements under Uniform Guidance are complex, and the application of the updated guidance above may change based on the program. Eide Bailly’s team of professionals are here to help you eliminate guesswork and ensure compliance. We will continue to monitor communications from the OMB and provide additional updates as information becomes available.
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