OMB proposes changes to Uniform Guidance

ARTICLE | October 30, 2023

Authored by RSM US LLP

In September 2023, the Office of Management and Budget (OMB) announced tentative changes to loosen the constraints and ease the administrative burden on federal agencies and award recipients for grants and agreements subject to Title 2, Part 200 of the Code of Federal Regulations (Uniform Guidance). Proposed changes largely affect the administrative requirements, cost principles, and audit requirements sections.

Recipients are often hampered when working with multiple agencies that have inconsistent interpretations of the guidance. Therefore, proposed changes to applicable sections were rewritten in “plain language, improving flow, and addressing inconsistent use of terms,” according to the OMB. To provide clarity and reduce misinterpretation among recipients and agencies, the OMB revised sections, simplified guidance text, avoided or reduced technical jargon, and made the text more succinct. For example, the OMB replaced the term “non-Federal entity” with “recipient,” “subrecipient” or both. In section 200.331, the OMB has proposed characteristics indicative of a subrecipient or contractor determination to expand beyond the examples currently provided in the guidance. To provide more context, the OMB will also mention the specific appropriate system—such as SAM.gov, Grants.gov, and so on—instead of using the general term “OMB designated governmentwide systems.”

One of the most significant changes to the guidance is the proposed increase of several monetary thresholds that have not been updated for many years. The OMB proposed increasing the single audit threshold from $750,000 to $1 million and increasing the threshold for determining items that are considered supplies or equipment from $5,000 to $10,000 (sections 200.501 and 200.314, respectively). The OMB also clarified that costs requiring prior approval are considered “approved” if included in the recipient’s proposal and therefore do not require subsequent approval prior to expenditure. Additionally, the OMB has proposed clearer guidance to better align financial reporting with progress reporting requirements (section 200.328).

The industry believes that updating the Uniform Guidance is long overdue. Many organizations are optimistic that the new guidance will provide direction and leadership to federal agencies on policies and requirements. This should make compliance less cumbersome for the public sector.

Establishing the intent for improving federal financial assistance management, transparency, and oversight through the alignment of statutory requirements and administrative priorities is key for the path forward. Agency implementation and auditor application of the revised language will be the real measuring stick to determine whether awards are truly administered with greater ease and whether the complexities and confusion that currently exist for many federal assistance awardees are sufficiently mitigated.