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Proposed updates to 2 CFR Part 200 – Uniform Guidance: What auditees need to know now

OMB comment period for proposed updates to OMB Guidance for Grants and Agreements

Oct. 3, 2023 · Authored by Blaine Jasper

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The United States Office of Management and Budget (OMB) has issued a request for comment on proposed updates to revise sections of OMB Guidance for Grants and Agreements, which includes 2 Code of Federal Regulations (CFR) Part 200 (Uniform Guidance). The proposal is almost 500 pages long and is intended to reduce agency and recipient burden and has been marketed as including plain language revisions.

OMB’s objectives for the proposed revisions include:

  1. Incorporating statutory requirements and administration priorities;
  2. Reducing agency and recipient burden;
  3. Clarifying sections that recipients or agencies have interpreted in different ways; and
  4. Rewriting applicable sections in plain language, improving flow, and addressing inconsistent use of terms.

The most significant and impactful proposed changes that will impact auditees and their auditors, include:

  1. An increase to the Single Audit threshold from $750,000 to $1,000,000 (no proposed change to the Type A threshold(s)).
  2. Modifications to the definition of questioned costs to provide additional explanatory information and expand upon the definition.
  3. Use of the term recipient or subrecipient in lieu of non-federal entity throughout Subpart A – Subpart E.
  4. An increase to the de minimus indirect cost rate percentage from 10% to 15%.
  5. An increase to the threshold used to define a capital expenditure (e.g., real property or equipment) from $5,000 to $10,000.
  6. An increase to the exclusion threshold of subawards from $25,000 to $50,000 under modified total direct costs.
  7. The removal of the existing requirement in paragraph (h) of section 200.414 for all indirect cost rates to be publicly available on a government-wide website — but this may be revisited when applicable systems are updated to allow for the posting of indirect cost rates. OMB seeks comments that include analysis on the advantages and disadvantages of raising the de minimis rate in the way proposed.
  8. In section 200.407, OMB has removed ten items from the prior written approval requirements to reduce Federal agency and recipient burden.
Blaine Jasper

Blaine Jasper

Principal

Related sections

  • Government Contractors
  • Healthcare
  • Higher Education
  • Not-for-Profit
  • Government Services
  • Assurance
  • Behavioral Health
  • Hospitals & Health Systems
  • Life Sciences
  • Senior Living

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The list referenced herein is non exhaustive and only includes a select few of the proposed changes to the Uniform Guidance. For more information, OMB has issued a blog post to accompany the full text of the updates.

As a reminder, this guidance is not yet final and there is no definitive effective or transition date.

What do auditees need to do now?

Individuals should be aware of the existence of the proposed updates and the potential impact on both the auditee and auditor. Baker Tilly’s Professional Practice Group will be reviewing the detailed changes and participating in a comment letter with the AICPA’s Governmental Audit Quality Center.

The comment period begins when the notice is published in the federal register and extends for 60 days. Interested parties can submit their comment electronically through regulations.gov or by sharing your feedback with Baker Tilly to be incorporated in our comments.

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