Blog
September 19, 2024
On April 22, 2024, the Office of Management and Budget officially published the major update to the Uniform Guidance 2 CFR 200, originally created in 2013. This update is massive and made substantive revisions to 69 out of 191 sections in the 6 subparts and 12 appendices, equaling 36 percent of the document—an Extreme Makeover.
The White House states that: “These updates to what is known as the Uniform Grants Guidance will streamline and clarify requirements for Federal funding…These changes will allow agencies and recipients of Federal funds to focus more time and money on delivering meaningful results for the American people.”
The Four Effective Dates
While OMB announces that the effective date is October 1, 2024, for all federal awards starting or after that date, only the Federal agencies can make the revisions applicable by updating their own regulations. The following discussion assumes that the agencies have successfully adopted the OMB revisions prior to 10/01/2024.
In practice, from a grantee’s perspective, there is not just a single effective date for all changes but four different effective dates depending on the nature of the changes: (a) administrative and some cost changes, (b) financial and cost changes, (c) indirect cost rate and reimbursement changes, and (d) clarification of current policies.
(a) Administrative and Some Cost Changes
October 1, 2024, is the effective date for all administrative changes—such as prior approval requirements, new procurement standards, mandatory disclosure (with credible evidence), and fixed amount award. This date also applies to some of the new cost items such as the 15% De-minimus rate, the conference costs and the closeout costs. These administrative and cost revisions are effective for all federal awards that start on or after October 1, 2024.
Be careful to realize that this means these revisions are not available to current awards, even for awards with period of performance beyond 10/01/24. For example, a grantee with an NSF award that starts on July 1, 2024, cannot use the fixed amount subaward threshold of $500,000 for a subaward starting on January 1, 2025. For this award, the grantee is still limited to the current $250,000 threshold when granting a fixed amount subaward. Similarly, the grantee cannot automatically apply the 15% de-minimus indirect cost rate to direct grant expenditures on October 1, 2024, for existing awards.
On August 15, 2024, the Council on Federal Financial Assistance (COFFA) issued an implementation guidance to the Federal agencies, which strongly encouraged Federal agencies to allow the use of revisions on amendments of existing awards. For example, on the use of the 15 percent de-minimus rate, federal agencies may allow the use of the higher rate on existing awards if the agency determines that there are sufficient funds.
FY-2024-Revisions-to-2-CFR-Supplementary-Information-for-Federal-Agency-Implementation 08 15 24.pdf
(b) Financial and Cost Changes
Upcoming Fiscal Year is the effective date for any financial and cost changes that require a change in the institution policies—such as the new threshold for equipment and supplies (see exception below if grantee has negotiated rates for multiple future years), the new Single Audit threshold, and new internal controls for cyber security. The changes are effective for the first fiscal year starting October 1, 2024. If your institution’s fiscal year runs from July 1 through June 30, the effective date is July 1, 2025 (or FY 2026). Remember that the grantee must make internal decision regarding the threshold levels and change its policy documents before they become effective. For example, a grantee—with a fiscal year ending 12/31/24 and federal expenditures of $900,000 for FY 2024—is still required to perform a Single Audit. However, the single audit requirement is lifted for FY 2025 if the grantee’s federal expenditures remain at the same level (and therefore under the $1 million threshold).
(c) Indirect Cost Rate and Reimbursement Changes
Next Indirect Cost Proposal is the effective date for the revisions that have impact on the calculation of the indirect cost rates and indirect cost reimbursement. The two major revisions with such impact are the changes in the equipment and subaward thresholds. In addition, the allowability of the data management and program evaluation will also have an impact on the rate, if they are charged as indirect costs. The threshold changes will naturally cause a decrease in the rate (as the base is larger and the equipment depreciation costs are smaller) but the overall indirect recovery should be the same (as the lower rate would apply to a larger base). No changes in the rate due to the threshold change and additional costs for data management and program evaluation are allowed until the next submission of the indirect cost proposal. Section 200.110 (b) clearly states that “existing negotiated indirect cost rates will remain in place until they expire.” The existing negotiated rates are to be used on the current modified total direct cost bases (without the threshold increases) until new rates are established.
As an example, if your institution has a predetermined rate of 50% for fiscal year 2025 (July 1, 2024, through June 30, 2025), you will continue to apply the 50% to the first $25,000 of the subawards and the supplies of $5,000 in fiscal year 2025. In the case that your institution has a predetermined rate through fiscal year 2028, you cannot implement the threshold changes for equipment and subawards until fiscal year 2029. As an option to take advantage of the burden relief with a higher threshold for equipment at $10,000 in the next fiscal year, you must create and maintain two separate record systems. One is to comply with the property record requirements (at the higher threshold) and the other to use for indirect cost application (at the lower threshold). The two record systems can be complicated and confusing for the auditors to review and therefore, we do not recommend it. One more thing to remember is that the equipment threshold must be the same level used for financial statement reporting and State requirements.
There are exceptions that allow you to implement the higher thresholds starting with the next fiscal year (starting on or after October 1, 2024): (1) if you have submitted an indirect cost proposal to the Federal government and it is currently under review, (2) if you are submitting a proposal with the FY 2024 as your base year, or (3) if you are requesting an extension of your current rate. In these cases, the federal cognizant agencies for indirect costs may ask you to prepare an impact statement to establish future rates with the new thresholds.
The same effective date applies to the new treatment of unused leave as a general administrative cost. This new restriction requires the removal of unused leave costs as direct or fringe benefit costs with the next fringe benefit proposal submission to the Federal Government.
(d) Clarification of Current Policies
Currently Allowable – There are two major cost items that appear to be new cost items in the updated Uniform Guidance but are actually currently allowable in accordance with OMB. OMB provided additional information in the pre-amble that the data management and program evaluation costs (200.455 (c)) and the prizes costs (200.438) are currently allowable on all existing and future Federal awards and the final revisions are only meant to clarify the current policies. As agencies may not be aware of the allowability of these two cost items on their existing programs, we recommend that you check and clear with the federal program officers before charging to the existing programs. Note that the data management and program evaluation costs can be charged either directly or indirectly. In the case that they are charged indirectly, the effective date is the next indirect cost proposal.
OMB provided four other clarifications for policies that already exist and therefore are applicable to all existing programs: (1) the use of prohibited telecommunication equipment and surveillance services, (2) the requirements for use of negotiated rates, (3) the treatment of voluntary uncommitted cost sharing and (4) the authority of Federal cognizant agencies for single audits to grant extension for single audit report submissions.
Effective Dates by Major Revisions
In our April presentation of The Final Reveal – Extreme Makeover: Uniform Guidance 2 CFR Edition, we list out the major revisions by subparts. To help you develop an implementation plan with the correct timeframe, we have prepared a summary table that lists these major revisions by their true effective date for implementation (remember that this list does not include ALL the revisions). We also identify the revisions that will require an update of the institution’s written policies.
We stand by to assist you with any questions or needs for a successful implementation. Happy Implementation but don’t cancel all your Fall festivities for this!
Table: Summary of Applicable Effective Date by Revisions
Fill out the form below to download the PDF.
2024-09 RES: Uniform Guidance Blog Content Downloads
About the Author
Gil Tran is Senior Specialist Leader, Grants Management at Attain Partners. Previously, he served as a Senior Policy Analyst with the Office of Management and Budget (OMB), Office of Federal Financial Management (OFFM).
A 27-year veteran of OMB, Gil has often served as a go-to field expert and is a sought-after presenter who has earned a reputation as a source of knowledge and an engaging industry speaker. Among his contributions in shaping the financial assistance landscape for future generations are: helping reduce the audit burden for both auditees and federal government oversight agencies; playing an integral role in the development of the Uniform Grant Guidance (UGG) and consolidating cost principles in the guidance; and, in 2005, leading the development of the first-ever government-wide waiver to provide relief to grantees caused by natural disasters.
Gil’s professional contributions have been recognized with several awards including the OMB Robert Damus Award, the National Grants Management Association (NGMA) Newton Award, and the Association of Government Accountants (AGA) Frank Greathouse Distinguished Leadership Award all in 2022 as well as the National College and University Research Administrators Association (NCURA) Joseph F. Carrabino Award in 2015. He is widely recognized as an outstanding leader in the grants management field. Gil received a Bachelor of Science degree in accounting from George Mason University, Virginia. He is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. Additionally, he chaired the Diversity Committee for the U.S. Tennis Association (Mid–Atlantic Section).
