written by Aaron Spencer
On December 26, 2014, the White House Office of Management & Budget (OMB) implemented new federal regulations: “Uniform Administrative Requirements, Cost Principles, & Audit Requirements for Federal Awards,” referred to as the Uniform Guidance or UG. These new regulations governing institutional compliance with Federal awards are designed to supersede the administrative, accounting, audit rules, and principles currently promulgated in the OMB Circulars A-21, A-87, A-122; Circulars A-89, A-102, A-110, and A-133 and the guidance in Circular A-50 on Single Audit Act follow up. Calendar year 2015 engagements will have completed a full year under the UG and will be subject to all rules and reporting requirements contained therein.
The Uniform Guidance streamlines and consolidates government requirements for receiving and using federal awards so as to reduce administrative burden and improve outcomes. Here are some key changes to consider:
- All cost principles are consolidated into a single document with limited variations by type of activity. This creates common accounting standards for all grant receipts, regardless of institutional type.
- The threshold for single audit increases from $500,000 to $750,000 in federal spending which still maintains Single Audit coverage for 99% of federal dollars.
- This reduces the pool of audited entities and focuses attention on the highest risk areas of program oversight.
- The major program determination process is revised and the minimum threshold for a Type A program is now $750,000 instead of $300,000.
- Universal compliance requirements in the Circular A-133 Compliance Supplement have been streamlined.
- Auditees must review and respond to and address all audit findings as quickly as possible instead of waiting until audit reports are submitted.
- Reduces burden on pass-through entities by ensuring cross-agency coordination and reducing duplicative audit follow-up
- Institutions have the option of using a flat rate of 10% rather than a negotiated rate for facilities and administrative costs.
- Clarifies when institutions can charge directly allocable administrative support as a direct cost of a federal award when it is appropriate and meets the conditions outlined in the UG; the burden for justifying direct costs as allocable to an award remains with the institution.
- Computing devices not considered a depreciable asset by an institution’s capitalization policy may be charged and treated as supplies.
- Award closeout process for addressing remaining inventory is simplified.
- Reduction in administrative burden associated with cost reasonableness studies, monitoring and accounting for depreciation or use allowances, and justification of incurrence and charging of lease interest costs (as direct or indirect) on federally sponsored programs
- Non-federal entities must take measures to ensure institutional controls are in line with previously defined frameworks. Institutions will also be accountable to the federal government to demonstrate responsible procurement and costing practices.
- Applicants will have additional time and information in preparing applications via the updated Catalog of Federal Financial Assistance. Guidelines standardize recipient requirements within funding opportunities. Institutions will receive a consistent set of information for each federal award received. Further standardization of funding opportunities is expected in the future.
Please contact us if you have any questions about the new guidelines 417-881-0145.