Uniform Guidance: Changes on the Horizon
The clock is ticking on implementation of revisions to 2 CFR 200, commonly known as Uniform Guidance. Uniform Guidance has undergone its first significant revisions since its creation in 2018 through the consolidation of various compliance supplements. These changes improve the comprehensibility of the guidance by using plain language, reducing ambiguity, lessening administrative burden, and incorporating certain statutory requirements.
Although each federal grant’s terms and conditions contain agency-specific requirements, regulations and guidance, where these terms are silent, Uniform Guidance governs the use of funds. A cornerstone for compliant grant administration and a successful Single Audit, government entities should prepare for changes as they accept new federal grant awards beginning on October 1, 2025, the start of federal fiscal year 2025.
Significant Changes to Reduce Administrative Burden
Increasing the de minimis indirect cost rate from 10% to 15%
Require federal agencies to accept negotiated indirect cost rates where they exist
Increasing the Modified Total Director Cost base from $25,000 to $50,000
Increasing the equipment unit cost threshold from $5,000 to $10,000
Increasing the unused supplies threshold from $5,000 to $10,000
Increasing the fixed amount subaward threshold from $250,000 to $500,000
Increasing the Single Audit threshold from $750,000 to $1 million
No prior approval required for substituting a contractor or sub-recipients, unless integral to the award
These changes will benefit recipients of federal awards and allow recipients to focus more on their beneficiaries. However, governments and non-profits need to ensure that program staff as well as those in procurement, budgeting, finance, accounting and compliance roles are well versed in these changes and their impact on program design and administration. Additionally, these changes may require revision to existing policy and procedures, grant management and program manuals. Notably, in the revised Uniform Guidance, internal controls must not only be established, but also documented; failure to have documented control over federal funded grant activities could yield a Single Audit finding.
The changes to Uniform Guidance also allow for more expansive evaluation activities, permitting stakeholder engagement, data collection and analysis to be integrated as direct costs into the program design and allowing use of previous evidence and evaluation results. In contrast, funding agencies may require recipients to participate in federally designed and administered program evaluations. However, funding agencies now have the ability to request exceptions to Uniform Guidance for specific programs where innovative program designs may yield novel, successful approaches.
BRONNER has over 30 years’ experience providing advisory and assurance services for federal grants. Click here to learn how BRONNER can support your entity with training, policy and procedure review, and controls testing to ensure minimized risk and maximum benefit from these changes.