Uniform Guidance is a framework introduced by the Office of Management and Budget (OMB) and used across various government agencies and departments for grant management. It's formalized under Title 2 of the Code of Federal Regulations (or 2 CFR), and Part 200 specifically deals with federal financial assistance. It's relevant to any individual or entity that receives federal financial assistance. The original draft of the Uniform Guidance was prepared in 2013. Now, the federal government has made a comprehensive overhaul of 2 CFR Part 200, and some of the changes may affect you.

The overarching theme of the updates

Accessibility and consistency are the two most significant themes in the updates. The goal is to make Uniform Guidance more accessible to a broader range of entities and individuals who qualify for federal grants and other forms of financial assistance. The updates also seek to "reduce agency and recipient burden" by cutting through unnecessary red tape associated with grant management and spending, while also remaining compliant. Many of the terms and elements of 2 CFR Part 200 will also be simplified. More clarity will prevent them from being misinterpreted by recipients and government agencies.

Relevant proposed updates to 2 CFR Part 200

• One change in the updates (Subpart F) is related to the threshold at which the Single Audit Act becomes applicable from $750,000 to $1,000,000, a move more in line with the current financial realities. There is a much clearer definition of what constitutes an "Entity" as per the document, and it has explicitly excluded individual recipients and federal employees from this list.
• Another change in the updates is the replacement, or more accurately, expansion of the current paradigm of “grants” with federal financial assistance. It may make federal funding available to a wider range of entities and organizations than the previous interaction of 2 CFR Part 200 did.
• The cost threshold for capital expenditures on special purpose equipment was also increased from $5,000 to $10,000. When it comes to written approval, the definition of capital expenditure now simply states federal agency instead of federal awarding agency, broadening the scope of what may qualify as equipment
• The de minimis rate, which applies to all costs that are not placed under a specific category, has been raised from 10% to 15% based on the feedback from the Federal financial assistance community.
• The exclusion threshold of sub-awards (in indirect cost identifications and assignments) has also been doubled - from $25,000 to $50,000.
• The list of the prior written approval items defined under 200.407 has been significantly shortened with the reduction of elements like real property and exchange rate.

For more information, OMB has issued a blog post to accompany the full text of the updates.

Next steps for auditees

The updates will be effective for awards made on or after October 1, 2024, except for the revisions to Subpart F-Audit Requirements, whose effective date is for fiscal years beginning on or after October 1, 2024.

Based on how much federal financial assistance you receive and the auditable aspects of your operations, you may need to take a deeper look at the proposed changes to 2 CFR Part 200 with your CPA. SEK can help you navigate what the changes would mean for your organization. Use the form below or contact your Client Relationship Manager today.