Potential Changes Coming to the Uniform Guidance

March 14, 2024
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Key Takeaways

  • The Office of Management and Budget has further revised Uniform Guidance standards.
  • These changes aim to streamline, clarify, and update the guidance.
  • Note that these are proposed changes, and there is not yet an effective date.

The Office of Management and Budget (OMB) has further revised 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance). These changes were necessary to streamline, clarify, and update the guidance. One of the most significant changes is the potential to raise certain thresholds when permissible under law.

What is in the new proposed language?

The OMB outlined four primary objectives for the changes:

  1. Incorporate statutory requirements and administration priorities.
  2. Reduce agency and recipient burden.
  3. Clarify sections that recipients or agencies have interpreted in different ways.
  4. Rewrite applicable sections in plain language, improving flow and addressing inconsistent use of terms.

Reducing Agency and Recipient Burden

To reduce agency and recipient burden, the OMB is proposing an increase in the single audit threshold from $750,000 to $1,000,000, with no proposed revision to the Type A threshold(s).

The proposed increase could benefit entities by reducing audit fees and personnel costs while preparing for and managing the audit process. Additionally, the OMB is proposing an increase in the threshold for determining what is considered equipment from $5,000 to $10,000.

Clarifying the Definition of Known Questioned Costs

The OMB has also proposed a change to clarify and revise the definition of known and likely questioned costs.

  • Known questioned costs are defined in the draft of proposed changes as questioned costs specifically identified by the auditor. Known questioned costs are a subset of likely questioned costs.
  • Likely questioned costs are defined in the draft of proposed changes as the auditor’s best estimate of total questioned costs, not just the known questioned costs. The auditor determines likely questioned costs by extrapolating from the audit evidence they obtain.

In evaluating the effect of questioned costs on the opinion on compliance, the auditor will consider both the likely and the known questioned costs.

Other Proposed Changes

Additionally, the OMB has proposed removing the following from the “prior written approval list”:

  • Real property.
  • Equipment.
  • Direct costs.
  • Entertainment costs.
  • Exchange rates.
  • Memberships.
  • Participant support costs.
  • Selling and marketing costs.
  • Taxes.

Other notable proposed changes include:

  • Increasing the exclusion threshold of subawards from $25,000 to $50,000 under modified total direct costs
  • Removing the existing requirement for all indirect cost rates to be publicly available on a government-wide website (this may be revisited when applicable systems are updated to allow for the posting of indirect cost rates)
  • Increasing the de minimis indirect cost from 10% to 15%.

Next Steps for the Proposed Changes to the Uniform Guidance

It is important to note that these changes are not yet final, and there is no proposed effective date or transition date.

Continue to actively monitor communications from the OMB for proposed changes and reach out if you have questions. Eide Bailly will continue to monitor these proposed changes and provide additional updates as information becomes available.

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About the Author(s)

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Kailey Holt, CPA

Kailey conducts initial audit planning procedures, assists clients with accounting questions and financial statement preparation, researches accounting issues and coordinates work with the audit team.