What is the new threshold for uniform guidance? 

If your organization receives federal funding, you’re likely aware of the buzz around the 2024 Uniform Guidance updates. But what do these changes mean for you? The Uniform Guidance, formally known as 2 CFR Part 200, is the federal rulebook for managing grants and cooperative agreements, covering everything from budgeting to audits. 

While the final version of the update was published in April 2024, the effective date of those changes can vary. Generally, for new awards, the effective date applies to those issued on or after Oct. 1, 2024. For existing awards, an amendment must have been issued on or after Oct. 1, 2024, and that amendment must include a reference to the new Uniform Guidance. If a federal agency amends your existing award, and you are a pass-through entity (you pass federal funds on to other entities), you must then amend any related subawards. However, you cannot revise subawards without the federal agency’s amendment. 

If the change doesn’t pertain to an individual award, but rather to all federal awards, then the changes go into effect for fiscal years beginning on or after Oct. 1, 2024. 

Key Changes in the 2024 Uniform Guidance 

Subpart A Changes: 

  • Equipment – the threshold for determining if items purchased are considered equipment has increased from $5,000 to $10,000. This means that, at the end of the grant period, anything beneath that threshold may be retained, sold or otherwise disposed of with no further responsibility to the federal agency. However, keep in mind that if your capitalization policy is less than the applicable threshold, you’ll still need to follow that policy.  
  • Modified Total Direct Costs – the threshold for excluding subawards when determining indirect costs increases from $25,000 to $50,000 (this applies over the full duration of the award period of performance). 
  • Unused Supplies – the threshold for what must be sold at the end of the grant award period increases from $5,000 to $10,000 (this is the aggregate value of unused supplies, not just like-item supplies). 

Subpart D Changes: 

  • Internal controls – the recipient or subrecipient must establish, document and maintain effective internal control over the federal award that provides reasonable assurance that the recipient/subrecipient is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award.  
    • This doesn’t change the actual controls or policies that recipients previously needed to have in place. It simply emphasizes that they must document the control occurring. Otherwise, you can’t prove that it happened as there is no documented control to verify.  
  • Recipients and subrecipients must take reasonable cybersecurity and other measures to safeguard information, including protected personally identifiable information (PII) and other sensitive types of information. However, a specific framework for cybersecurity is not required by the OMB. Entities are encouraged to use best practices and industry standards.  
  • The updated version of the Uniform Guidance removed the prohibition on using geographic preferences in procurement decisions. If procurement policies are consistent with federal statutes and the terms and conditions of the award, recipients can prioritize local businesses as a part of their scoring mechanism when evaluating bids.  
  • Recipients and subrecipients are no longer required to obtain prior written approval for real property, equipment, direct costs, entertainment costs, memberships, subscriptions, professional activity costs, participant support costs, selling and marketing costs and taxes. 
  • The Uniform Guidance update increased the de minimis indirect rate from 10% up to 15% of modified total direct costs. 

Subpart F Changes: 

  • The Single Audit/program-specific audit threshold was increased from $750,000 to $1,000,000 (not effective until audits of fiscal years beginning on or after Oct. 1, 2024). 
  • Cognizant agencies can now authorize an extension for reporting to the Federal Audit Clearinghouse when that nine-month deadline would place an undue burden on the auditee. However, receiving such an extension will likely be an uncommon occurrence, as cognizant agencies are meant to make that determination narrowly. If an entity could have avoided the delay through reasonable planning and diligence, then they are unlikely to be approved for an extension. The approval of an extension is more targeted towards things such as natural disasters or events that affect a specific geographic area or industry.   

Implications for your Organization 

These updates bring both opportunities and challenges: 

  • Simplified Compliance – Higher thresholds for equipment, supplies and audits reduce administrative tasks, allowing you to focus on program delivery. 
  • Increased Flexibility – Relaxed procurement rules and a higher de minimis rate offer more operational freedom, especially for smaller organizations. 
  • New Responsibilities – The emphasis on documenting internal controls and implementing cybersecurity measures requires updated policies and training. 
  • Audit Relief – The higher single audit threshold may exempt some organizations, but those still subject to audits must align with the updated guidance. 

Example Scenario: A mid-sized nonprofit managing a $1.2 million federal grant can now prioritize local vendors for supplies, claim a 15% de minimis rate for overhead and document its cybersecurity measures to protect client data. However, it must ensure robust internal controls to pass its single audit. 

Questions? 

If you have any questions about how any of these changes may affect your compliance efforts or your audit, please reach out to the Adams Brown Audit and Attestation team for additional guidance.