2024 Proposed Update to Uniform Guidance

On April 4, 2024, the U.S. Office of Management and Budget (OMB) released a pre-publication version of the revised Uniform Guidance. In addition, OMB has issued a related memo to the federal agencies detailing their responsibilities in the implementation of the new regulation, which takes effect on Oct. 1, 2024. The memo instructs federal agencies that they must take appropriate steps to ensure that the new Uniform Guidance is effective for all federal awards issued on or after Oct. 1, 2024; it also states that federal agencies may elect to apply the new Uniform Guidance to federal awards issued prior to that date, but they are not required to do so.

Some of the proposed changes may impact your organization’s Uniform Guidance audit:

• The threshold for the requirement to have a Uniform Guidance audit completed has been increased from $750,000 to $1 million.
• The threshold for Type A classification has been increased to $1 million, and the amount of awards expended for which it applies has been increased from $25 million to $34 million.
• The questioned costs definition has been revised, and examples have been given to help provide further clarification. However, the OMB specifically noted that questioned costs are not considered improper until they are confirmed to be improper under OMB Circular A-123.
• Related to audit findings, when an amount of questioned costs is “undetermined” or “not reported,” the auditor will have to explain why. This is done in an effort to help prevent auditees from being at risk for speculative or unsubstantiated audit findings, which was a concern that has been raised with the OMB by multiple constituents.
• 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.

We do not anticipate that the final version of the revised Uniform Guidance will contain any significant changes from the pre-publication version. However, we do expect the OMB to issue further guidance in the coming weeks once the final regulation is published. Additionally, we would expect the OMB to provide transitional guidance regarding how the changes to the audit requirements will be implemented, including the potential impact from federal agencies that are willing to adopt the threshold changes early.