The Office of Management and Budget (OMB) has updated Title 2 of the Code of Federal Regulations, also known as 2 CFR and Uniform Guidance. The Council on Federal Financial Assistance (COFFA) was established on August 9, 2023 by OMB Memorandum M-23-19 and consists of representatives from federal financial assistance agencies that provide strategic assistance and policy recommendations on federal financial assistance. This council, various legal teams, OMB, and the public worked together to make these revisions to the Uniform Guidance with the hope of reducing the burden for both recipients and subrecipients. Per OMB Memo M-24-1, these changes will go into effect for awards no later than those issued on or after October 1, 2024.
Revisions
There are some notable changes to specific wording throughout the rewrite, such as the term non-federal entity being updated with recipient and subrecipient. In addition, throughout the revisions the use of federal award was updated to federal financial assistance. Some of the more significant changes are outlined within the table below.
| Subject of Change | Section | Change |
|---|---|---|
| Modified Total Direct Cost | 200.1 | The definition of modified total direct cost was changed to increase the eligible value in the base from $25,000 to $50,000 per subaward. It now states: Modified Total Direct Cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC 2 CFR Revisions 2024: Unofficial Comparison Version excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward more than $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. |
| Mandatory Disclosures | 200.113 | Applicant, recipients, and subrecipients must promptly disclose whenever they have credible evidence of the commission of a violation of federal criminal laws involving fraud, conflict of interest, bribery, or gratuity violations under Title 18 or Civil False Claims Act (31 U.S.C. 3729-3733). Must be made in writing to the federal agency, the agency’s Office of Inspector General, and the pass-through entity if applicable. It also is required to report these matters to SAM (System for Award Management) and FAPIIS (Federal Awardee Performance and Integrity Information System). |
| Whistleblower Protections | 200.217 | An employee of a recipient or subrecipient must not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing information that the employee reasonably believes is: Evidence of gross mismanagement of a federal contract or grant; a gross waste of federal funds; an abuse of authority relating to a federal contract or grant; a substantial and specific danger to public health or safety; or a violation of law, rule, or regulation related to a federal contract (including the competition for or negotiation of a contract) or grant. The recipient and subrecipient must inform their employees in writing of whistleblower rights under 41 U.S.C. 4712. |
| Internal Controls | 200.303(a) 200.303(e) | The recipient and subrecipient must establish, document, and maintain internal controls. Originally, that statement did not include the word document. Take reasonable measures to safeguard protected personally identifiable information was updated to state: Take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. |
| Advance Payments | 200.305(b)(1) | The language throughout this section regarding advance payments now includes subrecipients. |
| Prior Approvals | 200.308(f)(6) | The language was updated to state: (f) A recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program budget-related reasons; (6) Subaward activities not proposed in the application and approved in the federal award. A change of subrecipient only requires prior approval if the federal agency or pass-through entity includes the requirement in the terms and conditions of the federal award. In general, a federal agency or pass-through entity should not require prior approval of a change of subrecipient unless the inclusion was a determining factor in the merit review or eligibility process. This requirement does not apply to procurement transactions for goods and services. |
| Program Income | 200.307 | The program income section was updated to include more clarifying language surrounding the use of program income. Some of that language states: The recipient or subrecipient is encouraged to earn income to defray program costs when appropriate. Program income must be used for the original purpose of the federal award. Program income earned during the period of performance may only be used for costs incurred during the period of performance or allowable closeout costs. See §200.472(b). Program income must be expended prior to requesting additional federal funds. Program income exceeding amounts specified in the federal award may be added to or deducted from the total allowable costs in accordance with the terms and conditions of the federal award. It goes on to clarify the methods of applying program income as well. |
| Supplies | 200.314(a) | Title to supplies acquired under the award will vest upon acquisition in the recipient or subrecipient. When there is a residual inventory of unused supplies exceeding $10,000 (was $5,000) in aggregate value at the end of the period of performance, and the supplies are not needed for any other federal award, the recipient or subrecipient may retain or sell the unused supplies. |
| Procurements by States & Indian Tribes | 200.317 | The permission to use their own procurement policies was extended to tribal governments. Both states and tribal governments must now comply with their own procurement policies, plus 200.321 (small, minority, and women-owned business preference), 200.322 (domestic preferences), 200.323 (recovered materials), and 200.327 (Appendix II contract provisions). |
| Subrecipient Monitoring | 200.332(e)(2) | Language enhanced to suggest that more robust subrecipient monitoring is expected. Revised the wording to monitor the activities of the subrecipient as necessary to ensure that the subrecipient complies with federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: 1. Review financial and performance reports 2. Ensure the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions that will impact their ability to meet milestones or the objectives of the subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. 3. Issue a management decision for audit findings pertaining only to the federal award provided to the subrecipient from the pass-through entity as required by 200.521.4. Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other federal awards or subawards. In addition, the section adds a list of monitoring tools that could be helpful to the pass-through entity. Those are: 1. Provide subrecipients with training and technical assistance on program matters. 2. Perform site visits to review the program operations. 3. Arrange for agreed-upon procedures engagements as described in 200.425. 4. Verify that a subrecipient is audited as required by Subpart F of this part. 5. Consider whether the results of a subrecipient’s audit, site visits, or other monitoring necessitate adjustments to the pass-through entity’s records. 6. Consider taking enforcement action against noncompliant subrecipients as described in 200.339 and in program regulations. |
| Fixed Amount Subawards | 200.333 | Fixed amount subaward cap was increased from the Simplified Acquisition Threshold amount of $250,000 to $500,000. Program income rules do not apply to fixed amount awards. |
| De Minimis Rate | 200.414(f) | The previous de minimis rate was 10%. Guidance was updated to state: Recipients and subrecipients that do not have a current federal negotiated indirect cost rate may elect to charge a de minimis rate of up to 15% of MTDC. |
| Certifications | 200.415 | Certification for payment requests was removed and now applies to financial reports only. Financial reports must include a certification, signed by an official who is authorized to legally bind the non-federal entity recipient, which reads as follows: “By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil, or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections 3729–-3730 and 3801–-3812).” Added that subrecipients under the federal award must certify to the pass-through entity whenever applying for funds, requesting payment, and submitting financial reports. Applies to all subrecipients. Subrecipients under the federal award must certify to the pass-through entity whenever applying for funds, requesting payment, and submitting financial reports: “I certify to the best of my knowledge and belief that the information provided herein is true, complete, and accurate. I am aware that the provision of false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil, or administrative consequences including, but not limited to violations of U.S. Code Title 18, Sections 2, 1001, 1343 and Title 31, Sections 3729-3730 and 3801-3812.” |
| Closeout Costs | 200.472(b) | Administrative costs associated with the closeout activities of a federal award are allowable. The recipient or subrecipient may charge the federal award during the closeout for the necessary administrative costs of that federal award, e.g., salaries of personnel preparing final reports, publication and printing costs, costs associated with the disposition of equipment and property, and related indirect costs. These costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the federal agency. |
| Audit | 200.501 | The Single Audit requirement threshold was increased from $750,000 to $1 million. A non-federal entity that expends $1 million or more during the non-federal entity’s fiscal year in federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part. |
Source: cfo.gov
Take Action Now
If your entity obtains federal financial assistance, it is imperative that you take the steps necessary to maintain compliance with your federal awards.
If you haven’t yet thought about how these updates will affect your entity, there is no better time than now to get this process started as it will take additional entity resources within various departments to implement these changes to policies and procedures, and train staff prior to October 1, 2024.
These are just a few brainstorming questions that could help get the conversation started:
- How many federal awards do you currently have and when will the period of performance end?
- Do you currently have awards that you want to implement new changes for?
- Does your entity use the de minimis rate currently? Does your entity have an indirect cost plan?
Next Steps
As you may be aware, the process to update an entity’s policies and procedures isn’t as quick as we might like. Making a timeline for the process could assist your entity in a successful update and implementation for these updates. We suggest entities first review their current policies and procedures that will be affected by these changes and identify those that will need updating based on the Uniform Guidance revisions. Secondly, we suggest that this process be done in collaboration with various departments affected and that any changes to policies or procedures be approved by the appropriate party. Lastly, the appropriate staff will need to be trained and then the processes should be monitored routinely to be sure that the policies and procedures are being implemented as they were intended.
Below you will find additional resources to utilize during this process:
- Your last Single Audit
- Your current Grants Management policies and procedures
- Latest OMB rewrite
- COFFA 2 CFR Revisions Crosswalk1
- Latest Compliance Supplement
- Green Book
COFFA plans to also provide more resources and information specific to the implementation of these revisions soon. Look for more FORsights™ from Forvis Mazars on this topic.
The Grants Management practice at Forvis Mazars is well versed with these revisions to Uniform Guidance and can assist you in this transition process or wherever your entity may be in the grant life cycle. For more information, reach out to a grants management services consultant at Forvis Mazars.
- 1https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.cfo.gov%2Fcoffa%2Fassets%2Ffiles%2F2-CFR-Crosswalk-2024.xlsx&wdOrigin=BROWSELINK.