Award-level revisions to Uniform Guidance (UG) have been in effect since Oct. 1, 2024. Now — beginning with fiscal years ending Sept. 30, 2025 — the increase to the single audit threshold from $750,000 to $1,000,000 is also in effect. Have you considered all the ways this could impact your organization?
In our previous article, “Navigating the 2024 Revisions to Uniform Guidance: Tips for seamless adoption,” we explore how to decipher which version of UG applies at the award level and offer tips to ensure policies are updated, evaluate the sufficiency of your cybersecurity protocols, and prepare for a single audit. As your organization continues implementing the revisions, here are a few additional tidbits you may not be aware of.
Single audit threshold increases from $750,000 to $1,000,000
The direct impact on your organization seems straightforward: If your annual federal expenditures fall below $1,000,000, your organization will no longer be required to have a single audit. However, if your annual federal activity hovers around $1,000,000, you may need to take a closer look at your Schedule of Expenditures of Federal Awards (SEFA) to avoid the risk of overlooking the single audit requirement. If you’re close to the threshold, your organization may want to perform additional procedures to ensure the SEFA is accurate and complete.
Is your organization passing money through to subrecipients who may not be required to have a single audit going forward?
If so, consider how the revisions can impact your organization. As a pass-through entity, you’re required to evaluate each subrecipient’s fraud risk and risk of noncompliance in order to determine the appropriate level of subrecipient monitoring. If you have historically relied upon obtaining and reviewing the subrecipient’s single audit report as part of your risk assessment and monitoring, you may now need to revise your risk assessment approach if the subrecipient no longer requires a single audit. Keep in mind that, if your subrecipient is subject to a single audit, you’re required to review the single audit report and issue management decisions for any findings pertaining to the funding provided by your organization.
Have you reviewed your agreements with subrecipients?
Be sure you have an adequate process in place to check your subrecipient agreements and to amend them as necessary. Bear in mind that when a federal agency amends an award issued prior to Oct. 1, 2024, in order to apply the 2024 revisions, pass-through entities must also amend any subrecipient agreements already issued under that award to reflect the changes. Additionally, if your subrecipient agreements refer to the $750,000 threshold, you’ll need to amend existing agreements and use the new threshold going forward.
Indirect costs
One of the federal government’s main goals in the 2024 revisions was to ease administrative burden and increase access to funding. The changes to the applicability of indirect costs reflect the intention of the Office of Management and Budget (OMB) with these revisions. The 2024 revisions allow recipients and subrecipients that don’t have a current negotiated rate — including provisional rates — to elect to charge the de minimis rate of up to 15% of modified total direct costs (MTDC). Although grantees aren’t required to use the de minimis rate, federal agencies and pass-through entities must recognize any federally approved negotiated indirect cost rate.
Have you read your grant agreement carefully?
Where some federal programs or grant agreements prohibit charging indirect costs altogether, there may be grant language that allows indirect costs but limits these to an amount that’s lower than your organization’s internally adopted de minimis rate or your federally negotiated indirect cost rate. If clarity is needed on which indirect cost rate would be appropriate, get written confirmation from the funding agency to avoid any confusion. Additionally, the Council of Federal Financial Assistance emphasized in its frequently asked questions regarding the 2024 revisions (FAQ No. 60) that grant recipients may notify the OMB of any disputes with federal agencies regarding the application of a federally negotiated indirect cost rate.
Which version of UG should you use if you have multiple active awards?
When there’s not a federally negotiated rate in place, awards not yet subject to the 2024 revisions can continue to use the 10% de minimis rate. However, if you have some awards that follow the 2024 UG revisions and some that don’t, you may be in a situation where you are charging different indirect rates to different awards. Stay organized to ensure that you’re in compliance for each award.
Are you maximizing the amount of subaward expenditures included within modified total direct cost (MTDC)?
Don’t miss out — ensure your calculation of MTDC for awards subject to the 2024 UG revisions has been updated to include up to $50,000 of subawards before applying the new de minimis rate of up to 15%.
More cost recovery
The OMB recognizes the significant administrative burden that comes with managing federally funded grant programs, and certain revisions to UG were made with that in mind. Although tracking grant performance remains a complex and resource-intensive task, the updates offer a silver lining: your organization can now recover some of the costs associated with its efforts.
Have you considered what organization costs may be allowable?
Grant recipients can now recover costs related to data and evaluation of their federal programs under 2 CFR 200.455. This means that any costs to gather, store, track, manage, analyze, disaggregate, secure, share, publish, or otherwise use data to administer or improve your federal program are allowable under these revisions.
Are you including termination and standard closeout costs that can be charged to an award?
Before the 2024 revisions to UG, grant recipients sometimes had to absorb the labor cost of final closeout reporting — including gathering data, writing reports, completing forms, and conducting reviews — without being able to recover these expenses through the grant. Under the 2024 revisions, such closeout costs are generally allowable under 2 CFR 200.472(b).
Act now and be prepared
The 2024 revisions to the UG mark a significant shift in how federal awards are managed, monitored, and audited. From the increased single audit threshold to expanded cost recovery opportunities, these changes are designed to reduce administrative burden while enhancing transparency and accountability. As your organization continues its implementation journey, now is the time to revisit your policies, reassess your subrecipient monitoring strategies, and be sure you’re maximizing allowable costs. Staying vigilant will keep you compliant — and we’re here to help.
