July 16, 2014 – The Office of Management and Budget (OMG) recently issued final guidance entitled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, also known as Uniform Grant Guidance. This guidance serves to incorporate cost principles and other requirements related to Federal awards into one set of guidance. Therefore, this regulation supersedes requirements from various Circulars, including A-21, A-110, A-122 and A-133. Some of the significant changes include, but are not limited to:
- Revised rules related to administrative requirements and cost principles, including procurement, allocation of indirect costs, time and effort reporting and sub-recipient monitoring.
- Emphasis on internal control and compliance with the guidance in Standards for Internal Control in the Federal Government, also known as the Green Book, issued by the Comptroller General of the United States, and the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations (COSO).
- Changes to audit requirements, including:
- Raising the audit threshold of $500,000 in federal expenditures to $750,000
- The type A/B major program determination threshold increased from $300,000 to $750,000 (minimum)
- Increase in the questioned costs reporting threshold from $10,000 to $25,000
- Revisions to the steps taken in determination of major programs to be tested and the percentage of coverage for low and high risk auditees.
- The new administrative requirements and cost principles will be effective for new federal awards and additional funding to existing awards made after December 26, 2014 for non-federal entities.
- The audit requirements will be effective for fiscal years beginning on or after December 26, 2014. (12/31/2015 Calendar year audits, 2016 fiscal year audits)
To prepare for this change, we recommend management:
- Review their internal control structure and policies against the new requirements within the Uniform Grant Guidance, Green Book and Internal Control Integrated Framework. Focus on the areas with the most significant changes first.
- Establish a plan to work toward compliance, including staff training.
- Ensure that all levels are involved to ensure that the importance of these changes is effectively communicated throughout the organization.
You can refer to the final rule for the complete list of changes.
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