April 10, 2024
In its most substantial update to the guidance since December 2014, the Office of Management and Budget (OMB) has submitted final guidance on Federal Financial Assistance for publication in the Federal Register. Recipients of federal funding through grants, contracts, and cooperative agreements should review the new guidance and reexamine their internal policies and procedures to ensure alignment with the new requirements.
OMB Guidance for Federal Financial Assistance
The new guidance incorporates recent OMB policy priorities and certain statutory requirements. It also provides clarification of certain sections that recipients and agencies have interpreted differently, and it rewrites some sections in plain language to improve the flow and address inconsistencies in the use of certain terms. Now called the OMB Guidance for Federal Financial Assistance, the new guidance is effective October 1, 2024. Federal agencies have the option to apply the final guidance to awards prior to the effective date, but no earlier than 60 days after the date of publication in the Federal Register. While helpful to begin evaluating internal policies and procedures, and not expected to change significantly, the 648-page pre-publication is not the official version of the guidance that will be published in the Federal Register.
New and Revised Requirements Included in OMB Guidance for Federal Financial Assistance
Below is a list of the most significant changes to the OMB guidance based on the pre-publication.
1. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR 200 will now be referred to as the OMB Guidance for Federal Financial Assistance.
2. The OMB Guidance for Federal Financial Assistance raises the threshold to $1,000,000 in Section 200.501―Audit Requirements (page 210). OMB increased the threshold to $1,000,000 for non-Federal entities with total Federal awards expended that are equal to or exceed $1,000,000 but less than $34 million. See page 222.
3. In Section 200.313 relating to equipment (beginning on page 443), OMB increased the threshold value for equipment from $5,000 to $10,000 and offers additional guidance on the meaning of a “conditional title.”
4. In Section 200.101―Applicability, OMB now uses the terms “recipient,” “subrecipient,” or both in place of “non-Federal entity.” See page 7 for further explanation.
5. Under 200.1 Definitions (page 378), the threshold for subawards to be included in modified total direct costs (MTDC) was increased from $25k to $50k. This includes all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award).
6. OMB revised paragraph (a)(1)(ii) of section 200.320 (page 152) to clarify that a recipient or subrecipient must maintain documents to support its conclusion when awarding micro-purchase awards without soliciting competitive price or rate quotations.
7. In Section 200.414 Indirect costs (page 504), the de minimis rate is increased to 15 percent. Recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 15 percent of MTDC.
Next Steps
Federal award recipients should review the revised requirements described above and prepare for the new guidance as soon as possible. While the effective date is October 1, 2024, agencies have the option of early adoption. Begin by reviewing your current policies and procedures for alignment with the requirements of the OMB Guidance for Federal Financial Assistance. Consult an auditor with experience in federal funding to help your organization with clarifications and/or updating any policies and procedures not currently in compliance with the new guidance.
