In Brief
Background
- In October 2023, the Office of Management and Budget (OMB) announced proposed revisions to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.
- Since then, OMB has received extensive public comments and contributions from federal agencies providing revisions to streamline, clarify, and update the guidance.
- These changes represent the most substantial revision to Uniform Guidance since its inception in 2014.
Objectives
OMB provided four objectives surrounding the final revisions:
- Incorporate statutory requirements and administrative priorities.
- Reduce agency and recipient burden.
- Clarify sections that recipients and/or agencies have interpreted in different ways.
- Rewrite applicable sections in plain language — improving flow and addressing inconsistent use of terms.
Next steps
The final guidance with key updates highlighted in the table below will be effective for awards made on or after October 1, 2024. Federal agencies may elect to apply the final guidance to awards issued prior to October 1, but the effective date of the final guidance must be no earlier than June 21, 2024. Any changes that the Institutions of Higher Education (IHE) wants to make that affect Modified Total Direct Costs (MTDC) and equipment capitalization threshold should be implemented in conjunction with the IHE’s next indirect cost rate (IDC) proposal. The final rule published in the U.S. Federal Register can be found in its entirety here.
Implementation considerations impacting your institution
As this new guidance is implemented, institutions should be focused on:
- Revising institutional policies and procedures i.e., allowable costs, procurement, capital equipment, IDC.
- Reviewing and analyzing the timing associated with IDC rate negotiation to implement updated thresholds for equipment and subaward inclusions in MTDC.
- Evaluating system-level configurations to financial systems/ERPs to account for threshold changes in cost categories (if applicable).
- Updating proposal budget guidelines and templates to align with direct cost and IDC-related changes.
- Watching for sponsor agency implementation plans and assessing for institutional readiness.
Highlights from final ruling
| Reference / subject | Change |
|---|---|
| § 200.1 | Subawards and MTDC | Redefine MTDC to include up to the first $50,000 (previously $25,000) of each subaward and exclude any amount in excess of $50,000.1 |
| § 200.414 | De Minimis Indirect Cost Rate | Increase de minimis rate from 10% to 15% over MTDC.2 |
| § 200.501, § 200.512 | Audit Requirements | Increase the single audit threshold from $750,000 to $1 million. Cognizant agency may authorize an extension for single audit submission. |
| § 200.419 | Cost Accounting Standards (CAS) and DS-2 | Remove requirement for Institutions of Higher Education (IHE) that receive an aggregate total of $50 million or more in Federal awards to file DS-2.3 |
| § 200.201, § 200.313, §200.439 | Equipment Capitalization | Increase threshold of equipment capitalization from $5,000 to $10,000.1,4 |
| § 200.333 | Fixed Amount Subawards | Increase limit on fixed amount subawards from $250,000 to $500,000. Clarifies entitlement of unexpended funds. |
| § 200.307 | Program Income | Remove reference of deductive program income. |
| § 200.1, §200.456 | Participant Costs | Revise definition of 'participant': "An individual who is benefitting from or is otherwise playing a role in the overall program activities". |
| § 200.407 | Prior Written Approval Requirements | Remove prior written approval requirement from the following categories: use of fixed amount award, real property, equipment, direct costing of administrative staff5, entertainment costs, memberships, participant costs, selling and marketing costs, and taxes. |
| § 200.403 (h), § 200.472 (b) | Closeout Costs | Allow applicable administrative closeout costs incurred until the due date of final report(s), instead of approved budget period, and charged to final budget period. |
1 Change only applicable in conjunction with IHE’s next indirect cost rate (IDC) proposal and effective with the new rates negotiated or negotiated as part of an indirect cost rate extension.
2 Recipient is authorized to determine the appropriate rate up to this limit.
3 Requirement remains for any IHE that has $50 million or more in CAS covered contracts.
4 Recipient may elect to use lower threshold than $10,000.
5 Removes requirement that administrative staff salaries be included in the budget and/or have prior written approval of sponsor agency.
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