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Higher Education: New Uniform Guidance from the Office of Management and Budget (OMB)

The OMB established the Council of Financial Assistance Reform (COFAR) in October of 2011 in order to help streamline guidance for federal awards while easing administrative burden and to strengthen oversight over the more than $500 billion expended annually in federal funds to reduce risks of waste, fraud, and abuse. The OMB and COFAR issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Grant Guidance or Guidance) in December of 2013. This new Uniform Grant Guidance supersedes and streamlines requirements from eight different grant circulars into one set of guidance contained in Title 2 of the Code of Federal Regulations (CFR), subparts A – F. You can access the CFR electronically at http://www.ecfr.gov.

It is important that this Uniform Grant Guidance be reviewed soon to determine what impact it will have on your organization in order to ensure compliance with these new requirements.

Below is a summary of the areas of focus in the Uniform Grant Guidance, by subpart:

  • Subpart A (Acronyms and Definitions) includes all of the definitions of terms used throughout the Guidance. For a thorough comparison of the text changes, see the Definitions Comparison Chart issued by the OMB.
  • Subpart B (General Provisions) discusses the purpose, applicability, exceptions, and effective date of the Guidance. Because the Uniform Grant Guidance applies to federal agencies, non-federal entities, and auditors, there are different effective dates to allow the federal agencies time to implement and adopt the guidance before non-federal entities are required to apply the guidance to new federal awards and incremental funding and then be audited under the new audit rules. Below is the timeline for when the guidance will become effective for each of the users of the guidance noted.
    • Federal Agencies are required to adopt the guidance and implement policies and procedures to be effective December 26, 2014.
    • Non-Federal Entities are defined as states, local governments, Indian tribes, institutions of higher education, or nonprofit organizations that receive federal awards as a recipient or subrecipient. The guidance will be effective for all new federal awards and to additional funding to existing federal awards made after December 26, 2014.
    • Single Audits will be effective for fiscal years beginning on or after December 26, 2014. Early implementation is not permitted.
  • Subpart C (Pre-Federal Award Requirements and Contents of Federal Awards) provides more streamlined guidance to federal agencies on information that is required to be provided to non-federal entities.
  • Subpart D (Post-Award Requirements for Financial and Program Management) covers the following areas:
    • Internal Controls
    • Procurement Standards
    • Subrecipient Monitoring and Management
  • Subpart E (Cost Principles) includes revisions to the Cost Principles that were previously found in Circulars A-21, A-87, and A-122. The goal in combining these circulars was to provide consistency across entities in policies and eliminate duplicative language. To learn more about the many changes that were made as a result of this section of the Guidance, refer to the Uniform Guidance Cost Principles Text Comparison.
  • Subpart F (Audit Requirements) includes detail related to the requirements for audit of federal awards under the Single Audit Act that were previously found in Circulars A-133 and A-50. The significant changes to note include:
    • Audit Threshold – the audit threshold has been changed from $500,000 up to $750,000.
    • Audit Findings – the threshold for reporting questioned costs has increased from $10,000 up to $25,000.
    • Major Program Determination – auditors must use a risk-based approach to determine which federal programs are major programs. This includes changes to how high/low risk Type A programs are determined, how high-risk Type B programs are determined, percentage of coverage rule, and low-risk auditee criteria.

On May 19, 2014, the OMB also released the 2014 OMB Circular A-133 Compliance Supplement.

If you have any questions, please contact your AHP team member directly.