OMB updates the Uniform Guidance

The Office of Management and Budget (OMB) released revisions to the Guidance for Federal Financial Assistance located in title 2 of the Code of Federal Regulations (CFR). Commonly referred to as 2 CFR.

The effective date is 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. For agencies applying the final guidance before October 1, 2024, the effective date of the final guidance must be no earlier than June 21, 2024.

The revisions to 2 CFR 200, Subpart F, including the audit threshold increase to $1 million, are applied to fiscal years beginning on or after October 1, 2024.

The following is a summary of the revision to 2 CFR 200 (Uniform Guidance). Please note that this does not include all the revisions and should not be used as a substitute for reading the CFR. 

• Changes terms from “non-Federal entity” to “recipient”, “subrecipient” or both. This did not change the existing scope or applicability of the guidance.
• Subpart A – Acronyms and Definitions
  • For-profit organization defined – generally means an organization or entity organized for the purpose of earning a profit. The term includes but is not limited to:
    • An “S corporation” incorporated under subchapter S of the Internal Revenue Code;
    • A corporation incorporated under another authority;
    • A partnership;
    • A limited liability company or partnership; and
    • A sole proprietorship.
  • Modified total direct cost – threshold for the portion of each subaward that may be included from $25,000 to $50,000. Under the revised definition, only the first $50,000 of each subaward may be included—regardless of the period of performance of that subaward. OMB does not include subcontracts in the revised definition.
  • Supply – increased threshold to $10,000.
• Subpart B – General Provisions
  • § 200.101—Applicability – additional clarity provided. Federal agencies must apply subparts A though F of this part to non-Federal entities unless a particular section of this part or Federal statute provides otherwise. Federal agencies may apply subparts A through E of this part to Federal agencies, for-profit organizations, foreign public entities, or foreign organizations as permitted in agency regulations or program statutes, except when a Federal agency determines that the application of these subparts would be inconsistent with the international responsibilities of the United States or the laws of a foreign government. Subpart F only applies to non-Federal entities as defined in the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-7507). Federal agencies should apply the requirements to all recipients in a consistent and equitable manner to the extent permitted within applicable statutes, regulations, and policies.
  • § 200.113—Mandatory Disclosures – “violations of Federal criminal law” change to “credible evidence of the commission of a violation of Federal criminal law”.
• Subpart C – Pre-Federal award Requirements
  • § 200.201—Use of Grants, Cooperative Agreements, Fixed Amount Awards, and Contracts – additional guidance and requirements relating to fixed amount awards.
  • § 200.216—Prohibition on Certain Telecommunications and Video Surveillance Equipment or Services – Expanded guidance and clarification on when a recipient or subrecipient must certify that it will comply.
  • §  200.217—Whistleblower Protections – New section to expand on the whistleblower protections and requirements recognized in part 200 for recipients of Federal financial assistance, which had previously been referenced in section 200.300. Added a requirement that recipients and subrecipients must inform their employees in writing of Federal whistleblower protections provided by law.
• Subpart D – Post Award Requirements
  • .303—Internal Controls
    • Must have documented internal controls. OMB doesn’t require a specific level of documentation. The guidance suggests that internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), but adoption of these internal control frameworks is not required.
    • New requirement to “Take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.” OMB doesn’t not require a specific framework. Presumably this must be documented too.
  • • Raised threshold for disposition of equipment from $5k to $10k. “Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity.”
    • Added paragraph f – Equipment retention. When included in the terms and conditions of the Federal award, the Federal agency may permit the recipient to retain equipment, or authorize a pass-through entity to permit the subrecipient to retain equipment, with no further obligation to the Federal Government unless prohibited by Federal statute or regulation.
  • § 200.314—Supplies – Raise threshold from $5k to $10k. “When there is a residual inventory of unused supplies exceeding $10,000 in aggregate value at the end of the period of performance, and the supplies are not needed for any other Federal award, the recipient or subrecipient may retain or sell the unused supplies.”
  • § 200.332—Requirements for Pass-Through Entities
    • Adds requirement to verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov.
    • Clarifies that a pass-through entity must provide the unavailable information required by paragraph (b) when it is obtained.
    • Clarifies that pass-through entities must evaluate a subrecipient’s fraud risk in addition to its risk of noncompliance with a subaward.
  • § 200.333—Fixed Amount Subawards – doubled the prior threshold to $500,000 for fixed amount subawards without Federal agency approval.
  • § 200.344—Closeout – Additional language to paragraph (b) When the recipient does not have a final indirect cost rate covering the period of performance, a final financial report must still be submitted to fulfill the requirements of this section. The recipient must submit a revised final financial report when all applicable indirect cost rates have been finalized.
• Subpart E – Cost Principles
  • 200.401—Application
    • clarified that the cost principles in subpart E do not apply to grants and cooperative agreements for food commodities.

• § 200.403—Factors Affecting Allowability of Costs – added additional guidance to paragraph (h), “Administrative closeout costs may be incurred until the due date of the final report(s).”
  • § 200.414—Indirect Costs – De minimis rate increased from 10% to 15% and OMB also clarified that the de minimis rate may not be applied to cost reimbursement contract issued directly by the Federal Government in accordance with the FAR.
  • § 200.419—Cost Accounting Standards – removed the requirement for an IHE that receives an aggregate total of $50 million or more in Federal awards and instruments subject to subpart E to submit a disclosure statement form (DS-2) containing information on cost accounting standards.
  • § 200.431—Compensation—Fringe Benefits– clarifications and revision to pension plan costs and post-retirement health benefits.
  • § 200.432—Conferences – allowed for dependent-care costs associated with participants’ attending or partaking in program-related conferences.
  • § 200.438—Entertainment and Prizes – Prizes added “Costs of prizes or challenges are allowable if they have a specific and direct programmatic purpose and are included in the Federal award.”
  • § 200.439—Equipment and Other Capital Expenditures – Increased dollar value for special purpose equipment requiring prior approval from $5,000 to $10,000.
  • § 200.454—Memberships, Subscriptions, and Professional Activity Costs – removed prior year approval requirements for cost of membership in any civic or community organization.
  • § 200.456—Participant Support Costs – removed the requirement to obtain prior written approval.
  • § 200.472—Termination and Standard Closeout Costs – OMB added clarifications and guidance on closeout costs.
• Subpart F – Audit Requirements
  • § 200.501—Audit Requirements –
    • OMB increased the single audit threshold from $750,000 to $1,000,000.

If you have questions about the revisions or how to apply them at your organization, contact Mark Robins, Nonprofit Audit Partner for Aprio, at Mark.Robins@aprio.com.