The OMB has recently published updated regulations under 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), and now known as the OMB’s Guidance for Federal Financial Assistance. The revised and updated Uniform Guidance, which provides guidance for thousands of federal financial assistance programs, incorporate recent federal policy priorities, aiming to reduce the burden on both federal agencies and recipients. The updates include new statutory requirements, clarified sections to address varying interpretations, and language improvements for better clarity and consistency. Additionally, the OMB made revisions to enhance federal financial assistance management, transparency, and oversight through more accessible and readily comprehensive guidance. The new guidance is effective for all Federal awards issued on or after October 1, 2024. Federal agencies may elect to apply these the final guidance to Federal awards granted prior to October 1, 2024.
Significant Updates to the Uniform Guidance:
Changes affecting Non-Federal Entities
- Internal Controls (2 CFR 200.303): Updated to require that internal controls of recipients and sub-recipients to include cybersecurity and other measures to safeguard information.
- Program Income (2 CFR 200.307): Clarified to allow the use of program income for specific closeout costs.
- Period of Performance Modifications (2 CFR 200.309): Additional guidance on amending the performance period when a federal agency decides not to continue an award with multiple budget periods, the period of performance should be amended to end at the completion of the currently authorized budget period.
- Equipment (2 CFR 200.313): The threshold for expensing equipment (rather than capitalizing it) is raised from $5,000 to $10,000.
- Supplies (2 CFR 200.314): The threshold for unused supplies has been raised from $5,000 to $10,000, with provisions on how to handle these supplies at the end of a project or program.
- Procurement Methods (2 CFR 200.320): Revised to clarify that a recipient or subrecipient must maintain documents to support its conclusion when awarding micro-purchase awards without soliciting competitive price or rate quotations. Also, removed the requirement that local and tribal governments open sealed bids in public. In addition, proposed changing “small purchases” to “simplified acquisitions” to further align with standard terminology.
- Contracting with Small Businesses, Minority Businesses, Women’s Business Enterprises, and Labor Surplus Area Firms (2 CFR 200.321): Expanded to include “veteran-owned businesses” to the types of businesses that recipients and subrecipients are encouraged to consider for procurement contracts under a federal award.
- Pass-Through Entities (2 CFR 200.332): New requirements for these entities to ensure subrecipients are not suspended or debarred from receiving federal funds.
- Indirect Costs (2 CFR 200.414): The maximum de minimis rate for indirect costs has increased from 10% to 15% without negotiating an alternative rate with the relevant Federal agency.
Changes Affecting Auditors of Non-Federal Entities
- Audit Requirements (2 CFR 200.501): The threshold for requiring a Single Audit has increased from $750,000 to $1,000,000.
- Major Program Determination (2 CFR 200.518): Adjustments to the thresholds for Type A to $1 million if the total annual expenditures for all federal programs for a non-federal entity are $34 million or less (previously $25 million or less).
Organizations subject to Single Audit should carefully review the updated guidelines and adjust their policies, procedures, and internal controls as necessary to comply with the new requirements.