In April of 2024, the Office of Management and Budget (OMB) released new revisions to the OMB Guidance for Grants and Agreements, updating the name to OMB Guidance for Federal Financial Assistance. The overarching goal of these revisions is to simplify the process of receiving federal funding, expanding accessibility by reducing administrative burden and cost, and clarifying sections to address inconsistent use of terms within the guidance.

These changes will impact all organizations receiving federal funding but will have the most tangible effect on smaller organizations that have been unable to access federal funding due to difficult application processes and administrative overhead. Let’s take a look at some of the key changes that may impact your organization.

Threshold Increases

Updated Audit Thresholds

The threshold increases are likely the most important change for many organizations receiving federal assistance, and the new guidance may impact the type of audit you need.

• The threshold for a single audit has been increased from $750,000 to $1 million.
• The threshold for the determination of Type A programs has increased to $1 million and the amount of awards expended for which it applies has increased from $25 million to $34 million.

Please note: At this time, it is unclear when the change in audit thresholds will be applied, and we expect further guidance to be issued in the coming weeks. Keep an eye out for further communication on this topic.

Other Threshold Changes

There were several other additional threshold changes included in the guidance. This is the first time in years these thresholds have been increased, and these changes more closely reflect the current economic landscape. See below for a quick recap of other threshold changes:

• The de minimis indirect cost rate threshold has increased from 10% to 15%.
• The amount that pass through entities can recover from indirect costs on sub-awards increased from $25,000 to $50,000.
• The threshold for the amount of unused supplies that must be sold at the end of an award period has increased from $5,000 to $10,000.
• The threshold for determining items that are considered to be equipment increased from $5,000 to $10,000.

 

Clarifications and Terminology Changes

In an effort to simplify compliance and make the application process more accessible and less ambiguous, the OMB proposed revisions that updated and standardized language used. Some of these changes include:

• Simplified language in applicable sections, including Notice of Funding Opportunity (NOFOs), that is aimed at improving accessibility to diverse and underserved communities, and clarifying sections that recipients and/or agencies have interpreted in different ways.
• The questioned costs definition has been revised and examples have been provided to help provide further clarification.
• Throughout subparts A – E of the regulation the use of the term non-federal entity has been replaced with recipient and/or subrecipient. However, subpart F, Audit Requirements, retains the use of the non-federal entity term to maintain alignment with the statutory provisions of the Single Audit Act.

Simplified Processes

The administrative cost of compliance can be a limiting factor for many organizations, and the OMB included revisions aimed at reducing this burden for organizations applying for federal funding. The new guidance removes many prior written approval requirements for a multitude of costs. This will allow for more funds to be directly allocated to your organization’s core services and projects as opposed to administrative overhead.

Looking Ahead

The effective date for the final guidance is October 1, 2024. We will continue to provide updates on these and other changes affecting your audit. In the meantime, if you have any questions, reach out to your Single Audit Advisor for more information. Visit our Resources page to download the free Post Grant Award Checklist and Single Audit FAQ Guide.