In 2014, the Council on Financial Assistance Reform (COFAR) implemented the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, or “Uniform Guidance” to replace the guidance of eight earlier OMB circulars. While the intent of Uniform Guidance was to streamline administration and improve “performance, transparency, and oversight for Federal awards”, three areas remain challenging for many organizations receiving federal funding.

Incremental Funding

Two years later, some agencies have fully-adopted Uniform Guidance while others are still referencing the old circulars for cost principals and administrative requirements. To understand which rules to follow, grant officers should review the terms of the award agreement and the agency’s implementation plan for Uniform Guidance (if available). For non-Federal entities receiving incremental funding on existing awards or where additional clarity may be needed, grantees should contact the program officer at the funding agency.

The Administrative Burden

Although the reforms were introduced to mitigate waste and mishandling of government funding, it has done little to reduce the administrative burden placed on award recipients. For many, the amount of time, effort and documentation required to comply with the new standards have put a strain on already limited finances and administrative resources. Award recipients should review the current structure of their administrative support, seek out best practices to maximize existing staff resources, and build in the necessary flexibility to avoid hiring additional full-time employees when practical.

Contractor vs. Sub-Recipient Relationship

Understanding the nature of the relationship is the key to properly defining a contractor vs. a sub-recipient under an award. Despite how non-Federal entities refer to the subordinate relationship in writing (e.g. contractor, sub-recipient, etc.), the underlying activities being performed are the ultimate driver in defining the relationship status.  Accordingly, how it is defined directly impacts the allocation of responsibilities and influences the application of indirect cost rates. For additional clarification, (AGA) and others provide resources to help organizations determine if the sub-entity receiving funds through the prime entity is a contractor or sub-recipient.

A Fourth Challenge for Some – Determining the Portion of Federal Funding

Organizations receiving Federal awards co-mingled with state funding face an additional hurdle in understanding which portion of the funding is Federal and therefore subject to the requirements of Uniform Guidance. Further complicating matters, the Federal portion may be issued by multiple agencies. Award recipients under these scenarios should take great care to understand the funding sources and work with their funding agency to distinctly segregate the funding amounts by source. Again, if not clear it’s always best to contact the grant officer in writing.

Although sometimes challenging, receiving Federal funding following the implementation of Uniform Guidance doesn’t have to be mystifying or burdensome. Successful organizations have taken proactive steps to understand Uniform Guidance, follow the updates and consult grant and financial professionals who can provide clarification and guidance.  For questions on Uniform Guidance, please contact Jennifer Arminger at 301-664-7675 or You can also visit Gelman, Rosenberg & Freedman’s website at for additional information.

Jennifer Arminger, CPA

Nonprofit Audit Partner