The Office of Management and Budget (OMB) has recently released substantial updates to its guidance for Federal Financial Assistance, which affects organizations receiving federal funds. This revision will have various grant accounting implications, including an increase in the threshold for needing a single audit, an increase in the de minimis indirect cost rate, and changes in allowable costs/activities.  The significant changes are summarized below:

Burden Reduction

The Uniform Guidance 2024 Revision introduces measures for burden reduction, aiming to lessen administrative complexities for recipients. This includes increasing thresholds for various financial management aspects, recognizing recipient costs of doing business, simplifying language and program requirements, eliminating burdensome requirements, and clarifying costs and responsibilities.

Key changes include:

  • Single Audit Requirement: For recipients of federal funds, the threshold for conducting a single or program-specific audit is raised from $750,000 to $1,000,000. It’s important to note that the State of Florida’s requirements for state financial assistance have not changed.
  • Recognizing Recipient Costs: The revision increases the de minimis indirect rate from 10% to 15% for allowable indirect costs without negotiating an alternative rate with the relevant Federal agency. It also raises the threshold for applying subawards to the indirect rate from $25,000 to $50,000.
  • Increasing Thresholds: The revision raises thresholds for managing federal funds. Notably, it doubles the threshold for equipment value that recipients can retain, sell, or dispose of without further responsibility to the Federal agency from $5,000 to $10,000. Similarly, the threshold for unused supplies that recipients must sell at the end of the grant period is increased from $5,000 to $10,000.
  • Fixed-Amount Awards Subawards: The maximum amount of fixed-amount subawards that recipients may provide with prior written approval from the federal agency has been increased from $250,000 to $500,000.
  • Eliminating Burdensome Requirements: The revision removes the requirement to submit a DS-2 disclosure statement in support of the indirect rate. Additionally, certain prior approval requirements, including those related to entertainment, memberships, subscriptions, professional activity costs, and participant support costs, are reduced.
  • Clarifying Costs and Requirements: Certain administrative costs associated with closeout can be charged to the final budget period. Moreover, the revision clarifies that certain costs related to data and evaluation are allowable.

Evaluation-Related Activities

The Uniform Guidance 2024 Revision emphasizes the importance of evaluation in understanding the effectiveness and impact of grant programs. Recipients are encouraged to allocate a portion of their funding towards evaluation activities to gain insights into program implementation, strategy effectiveness, and outcomes across different demographic groups. The guidance allows for the use of Federal funds to support various evaluation-related costs, including evidence reviews, planning, conducting evaluations, and sharing results.

Data-Related Activities

Data utilization is another crucial aspect addressed in the revision. Recognizing the significance of data in program management and assessment, the guidance permits recipients to allocate funds towards data gathering, analysis, and management activities. This includes expenses related to data systems, personnel, cybersecurity, and building integrated data systems to enhance program administration and improvement.

Community Engagement-Related Activities

Community engagement and public participation receive heightened attention in the Uniform Guidance 2024 Revision. It encourages Federal agencies and recipients to engage with communities to ensure equitable access to grant opportunities and services. Funds can be utilized for community engagement activities to integrate community perspectives into program design, implementation, and evaluation, fostering trust in government and enhancing program effectiveness.

Grant Announcements

Moreover, the Uniform Guidance 2024 Revision emphasizes simplification and accessibility in grant announcements. Federal agencies are directed to use plain language, streamline announcements, and include only essential information to increase accessibility, particularly for underserved communities. The guidance provides an updated Notices of Funding Opportunity (NOFO) template, emphasizing clarity, simplicity, and concise communication of program objectives and requirements.

Labor Standards

The revision addresses labor standards for Federal grant awards, highlighting the importance of engaging organized labor and responsible contractors. It also outlines permissible labor and employment practices, including the use of Project Labor Agreements, hiring preferences, and community benefit agreements, aiming to promote fair labor practices and workforce inclusion.

Transition Timeline

Agencies are directed to implement the revisions by October 1, 2024. However, specific implementation dates may vary by grant (a federal agency will decide the exact date). These new rules apply to all awards issued on or after October 1, 2024. Recipients are advised to consult with their relevant federal agency regarding the implementation timeline. 

Nonprofit and Government CPAs

The needs of not-for-profit and government organizations are unique. For more than 40 years, Rivero, Gordimer & Company has been a non-profit industry leader serving more than 150 local and national not-for-profits annually, including civic and social organizations; health and welfare agencies; schools and educational institutions; arts, cultural, and religious organizations; trade and professional associations; and private foundations.  We are the exclusive Tampa Bay Member of Nonprofit CPAs, a nationwide affiliation of independently owned accounting firms committed to delivering exceptional financial and consulting services to nonprofit organizations. 

Our experience in government audits and consulting also spans more than 40 years and has been a significant segment of our firm’s practice, leading us to become a trusted name in these accounting services. 

Our team has the expertise, including ensuring compliance with Government Auditing Standards (Yellow Book) and the Uniform Guidance, to give you peace of mind and let you focus on your mission rather than your financials.

About the Author

Julie A. Davis, CPA

Julie Davis joined Rivero, Gordimer & Company in 2018 and became Shareholder in 2022. Ms. Davis has over 13 years of experience providing audit, attest and consulting services to governments, not-for-profits, religious institutions, healthcare entities, pension and benefit plans, manufacturing and small businesses. Ms. Davis currently leads our Government Committee and participates in our Not-for-profit Committee. Ms. Davis is also an active member of the FGFOA serving on the annual conference host committee.

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