In April 2024, the Office of Management and Budget (OMB) revised the OMB Guidance for Grants and Agreements, now called the OMB Guidance for Federal Financial Assistance. The OMB is revising and updating the guidance to reduce agency and recipient burden and incorporate certain statutory requirements along with incorporating recent OMB policy priorities related to federal financial assistance. The effective date of the final guidance is October 1, 2024. This article will address the changes contained in the new guidance.
Increasing Thresholds
- Single audit threshold – Prior to this revision, a single audit or program specific audit was required when a recipient of federal funds expended $750,000. This revision increased the single audit threshold to $1,000,000.
- Equipment – At a certain level, equipment may be retained, sold, or otherwise disposed of with no further responsibility to the federal agency. The new guidance increases this level from $5,000 to $10,000.
- Unused supplies – Recipients of federal awards are required to sell unused supplies once the value exceeds $10,000 (previously $5,000) at the end of the grant period.
Indirect Costs
- Indirect costs – The amount of the subawards that recipients can apply to their indirect rate increased to $50,000 from $25,000.
- De minimis indirect rate – Recipients of federal funds can use 15 percent (10 percent prior to this revision) for indirect costs without negotiating an alternative rate with the relevant federal agency.
- Allowable organization costs – Allowable organization costs were expanded to include evaluation costs (such as feasibility assessments, sharing evaluation results, evidence reviews, etc.) and data costs (including costs of building data dashboards, cyber security associated with using data to administer or improve the program, or building integrated data systems).
Clarity in Language
- Plain language – The new guidance encourages agencies to make grant announcements as clear and concise as possible by using plain language that is accessible to eligible applicants with a focus on reaching underserved communities.
- Ease of understanding - The OMB’s overall goal was to make the guidance easier to understand which will ensure more equitable access to federal funding opportunities and make the Uniform Guidance more accessible to the general public.
- Inconsistent use of terms – Certain sections of the prior guidance were able to be interpreted in different ways by recipients or agencies. By clarifying ambiguous terms, recipients of federal funds will comply with the same requirement in the same way, regardless of funding sources.
Simplifying Administrative Requirements
- Prior approvals – The modifications to the guidance also reduce the number of prior approvals that recipients must receive from federal agencies for spending money on specific activities.
- Notices of Funding Opportunities (NOFOs) – The guidance revises the NOFO requirements for federal agencies including stressing the importance of using plain language to allow non-experts and smaller organizations the ability to understand these notices and make it easier for them to apply for federal funding.
If you have any questions or would like to discuss how these revisions specifically impact your organization, please reach out to Katie Galaska, Director, Audit & Accounting, or any member of our Not-for-Profit Industry Group.