The Office of Management and Budget (OMB) last fall released the details on what it terms a “fundamental rewrite” of the Uniform Guidance, the rules and requirements for federal awards. Ringing in at nearly 500 pages, the proposed changes would affect numerous recipients and subrecipients of federal grants. Read on to learn about some wide-ranging areas that would be affected.

Revising language

Many of the revisions amend the existing guidance language to simplify it, avoid or reduce technical jargon, and provide greater consistency. For example, OMB would replace the general term “OMB designated governmentwide systems” with more specific terms, such as, or

OMB also proposes to adopt the terms “recipient,” “subrecipient,” or both in place of “non-Federal entity” in certain sections of the rules. It reasons that the current language makes it difficult to quickly understand which entity’s being addressed. These changes wouldn’t, however, change the scope of applicability of the guidance.

Changing thresholds

The proposal would change several crucial thresholds. For example, the updated guidance increases:

  • The exclusion threshold for subaward costs that are counted within the modified total direct costs base from $25,000 to $50,000,
  • The threshold for defining a capital expenditure (for example, real estate or equipment) from $5,000 to $10,000, and
  • The threshold for the disposition of equipment and supplies post-award so that equipment or residual supplies with a current fair market value of $10,000 or less may be retained, versus $5,000 under the old guidance.

It also would eliminate the simplified acquisition threshold cap for fixed-amount subawards. Another notable threshold change is the proposed boost to the single audit threshold, from $750,000 to $1 million. The proposal also would require the Schedule of Federal Awards to identify the recipient of the federal award for audits covering multiple recipients.

The scope of the audit would widen, though. The proposal requires that compliance testing include a test of transactions and other auditing procedures necessary to give an auditor sufficient evidence to support an opinion on the auditee’s compliance.

Reducing prior approvals

The proposal includes revisions that would reduce the number of additional prior approvals that recipients must receive from federal agencies. For example, it removes the prior approval requirement for real property, equipment, participant support costs, the cost of membership in any civic or community organization, and fluctuations in exchange rates.

In addition, OMB offers several clarifications related to prior approvals. Perhaps most important, it would make clear that federal agencies approve costs requiring prior approval when the award is issued, as long as the costs were included in the recipient’s proposal. Subsequent approval isn’t required prior to expenditure.

Dealing with indirect costs

OMB proposes several changes to the guidance on indirect costs. For instance, it would increase the de minimis indirect cost rate from 10% to 15%. Recipients and subrecipients would have discretion to apply a lower rate, but awarding agencies couldn’t require such a rate (unless mandated by statute).

The revisions would, however, allow an agency and a recipient to mutually agree on a final indirect cost rate for an individual award. And they would remove the requirement that all indirect rates be published on a government-wide website. Note that OMB cautions that this may be revisited when applicable systems are updated.

Staying up-to-date

The OMB proposal is likely to undergo some further revisions before becoming effective. Grantees and would-be grantees should monitor the situation to stay on top of the grant management and audit requirements, among other critical areas.

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