Are You Ready for the Updated Uniform Guidance?

In April 2024, the Office of Management and Budget (“OMB”) published its final revisions to the OMB Guidance for Grants and Agreements (“Uniform Guidance”) outlined in Title 2 of the Code of Federal Regulations, Part 200. This is the most substantial revision to the Uniform Guidance since it went into effect ten years ago. The revised guidance aims to incorporate recent OMB policy priorities related to federal financial assistance and certain statutory requirements and improve federal financial assistance management, transparency, and oversight through more accessible and readily comprehensible guidance. 

Uniform Guidance Effective Dates  

Federal agencies must adopt these finalized revisions by October 1, 2024. Federal agencies may elect to apply the final guidance to federal awards issued prior to October 1, 2024, but they are not required to do so. Since the guidance is only a model for federal agencies, the revised guidance will not apply to recipients or subrecipients of an agency until that agency has implemented the guidance. While there was clarification of the timeline for the adoption of the revised guidance by federal agencies, the effective date for implementation of the revisions to Subpart F, Audit Requirements, for use by auditors is uncertain. Until such clarification is made, auditors should not start using the revised single audit threshold.  

OMB Objectives 

OMB revised the guidance to add specific measures to reduce agency and recipient burden, ensure transparency and accountability, and identify specific opportunities for increased coordination throughout the lifecycle of federal financial assistance. Below is an overview of the more significant changes that will impact grantees and auditors: 

Reduce Agency and Recipient Barriers to Entry 

The OMB instructed agencies to make grant announcements as clear and concise as possible. Agencies will now be provided with a template when developing a Notice of Funding Opportunity to reduce the administrative burden and unnecessary obstacles to applying for federal financial assistance. This streamlined template instructs agencies to communicate in plain language and only request the essential information needed for applicants to understand program objectives and application requirements. The OMB also eliminated several prior written-approval requirements and increased multiple thresholds that trigger additional requirements. 

Increase Thresholds 

The OMB raised certain thresholds, where permissible under law, in recognition of inflation and other contributing factors including reducing the administrative burden of recipients. The de minimis indirect cost-rate threshold increased from 10% to 15% (while still permitting election of a lower rate) and the Modified Total Direct Costs exclusion base for subawards rose from $25,000 to $50,000. The per-unit threshold value of a capital expenditure (e.g., real property, equipment) increased from $5,000 to $10,000. The expenditures of federal funds threshold at which a recipient is required to conduct a single audit or a program-specific audit increased from $750,000 to $1,000,000. 

Add Internal Control Requirements  

OMB added a requirement that recipient and subrecipient internal controls include cybersecurity and other measures to safeguard information. Recipients and subrecipients can expect more specific guidance from OMB on the required framework.   

Use Plain Language Principles 

The OMB’s revisions use plain language principles and focus on using simple words and phrases, avoiding jargon, using terms consistently, and being concise. It replaced the term “non-federal entity” with “recipient” or “subrecipient.” It references appropriate systems of record (such as SAM.gov, Grants.gov and USASpending.gov) to replace the ambiguous “OMB designated government-wide systems.” 

Key Actions 

The updated Uniform Guidance brings welcome benefits to recipients and subrecipients of federal financial assistance. However, organizations that receive grants and audits or those that perform services on their behalf should proactively address these revisions. To ensure effective compliance and program execution, organizations should review the revisions and identify specific changes that may impact grant management, auditing processes, or compliance requirements. To align with the changes, organizations will also need to update policies and procedures.  

It will be crucial to enhance training and awareness for staff, auditors, and relevant stakeholders to ensure they understand the implications of the revisions. If you need help navigating complex federal guidance and remaining in compliance, reach out to us below.