Revisions from the Office of Management and Budget (OMB) to the Uniform Guidance, or Title 2 Part 200 of the Code of Federal Regulations (2 CFR 200) went into effect Oct. 1, 2024, to streamline and clarify requirements for federal funding and make grant announcements as clear as possible. (Continue reading for specific effective dates for new awards, existing awards, and subawards.)

Recommendations to adapt to 2 CFR 200 changes

Organizations participating in federal award programs need to remain vigilant with regard to adapting to these changes. It is important that all organizations confirm that their staff is implementing the changes. To make sure this happens, we recommend you consider the following steps. 

1. Continuously stay informed. Regularly remind employees of the changes and provide frequent updates and links to make sure everyone has access to the most current information. 
2. Enhance training and update training materials. In addition to providing independent reading materials, conduct live trainings to allow employees to ask questions and have an open dialogue regarding the 2 CFR 200 revisions. This will further ensure that employees are well informed and aware of the implications the changes may have for your organization.
3. Update SOPs and policies. Organizations should work expeditiously to confirm that their policies and procedures align with the revised guidance. 
4. Maintain communication. Stay in contact with federal agencies, pass-through entities, auditors, subrecipients, and other stakeholders; know who to contact in the case of questions or concerns, as well as establish who within your organization should address any questions you receive.

General 2 CFR 200 changes that will impact all organizations

While organizations operate differently depending on their entity types, demographics served, and varying guidelines set for them, the below changes will apply to recipients of federal funding.

Below are our key takeaways from the 2024 Uniform Guidance changes.

• Evaluate federal awards. Review the entire population of federal awards, amendments to existing awards, and subawards to determine if they are subject to the new Uniform Guidance changes. The following information about effective dates is based on the Council on Federal Financial Assistance (COFFA) publication FY 2024 Revisions to 2 CFR: Federal Agency Implementation dated Aug. 15, 2024.

• New awards. The new Uniform Guidance revisions are effective for all federal awards entered into on or after Oct. 1, 2024. For Notices of Funding Opportunities (NOFOs) issued prior to Oct. 1, 2024, that will result in awards issued on or after Oct. 1, 2024, federal agencies should deliver clear communication to applicants that the new Uniform Guidance changes will be in effect for awards issued under that NOFO.
• Existing awards. The expectation is that amendments to existing awards issued prior to Oct. 1, 2024 should explicitly state the new Uniform Guidance revisions that apply and be executed by the agency and recipient. The new Uniform Guidance revisions will generally apply prospectively to activities on or after the date of the amendment.
• Subawards. When a federal agency amends an existing award issued prior to Oct. 1, 2024 to apply the new Uniform Guidance changes, the pass-through entity must also amend any subawards already issued under that award. Pass-through entities must not apply the new Uniform Guidance revisions to a subaward if the federal agency has not applied the new Uniform Guidance revisions to an existing award, even if the subaward is executed on or after Oct. 1, 2024.

• Remove prior written approval requirements. The purpose of this change is to simplify and reduce the number of approvals needed before recipients can spend award funds on, or perform, certain activities. These include costs associated with acquisition of real property or equipment, entertainment, memberships, subscriptions, marketing, and participant support costs. 

• Remove barriers to entry. These changes aim to remedy high administrative costs that prevent smaller organizations from seeking funding. Guidance changes now require Notices of Funding Opportunities (NOFOs) to use plain language, making it easier for non-experts and less-experienced organizations to apply for federal funding. Awarding agencies are further instructed to reduce word counts in NOFOs and to incorporate visuals, colors, and other sensory tools to enhance readability and bring attention to important provisions.
• Make sure assistance serves intended communities. These changes give awarding agencies the flexibility to use languages other than English for notices, applications, and reporting to increase applicant pools and promote more equitable access across communities.
• Review cybersecurity measures. Recipients and subrecipients must implement “reasonable” cybersecurity measures to protect data and other forms of sensitive information.
• Single Audit Threshold changes.
  • An increase in the threshold for the disposition of equipment and remitting unused supplies from $5,000 to $10,000
  • An increase in the de minimis rate from 10% to 15%
  • An increase in the modified total direct costs exclusion threshold for subawards from $25,000 to $50,000
  • An increase in the Single Audit threshold from $750,000 to $1 million
  • An increase in the Type A threshold from $750,000 to $1 million and the amount of awards expended for which it applies has been increased from $25 million to $34 million

• Relax procurement regulation. Recognizing the administrative burdens and enforcement challenges associated with the mandatory “affirmative steps” for contracting with small businesses, minority businesses, women’s business enterprises, and labor surplus area firms, these changes instead require that “when possible,” recipients and subrecipients “should” consider contracting with such firms. Veteran-owned businesses are also added to this group of entities for procurement preference.

These changes were designed to support federal agencies in implementing award programs through enhanced clarity, flexibility, and transparency. Most importantly, they are poised to help federal funding become more accessible to recipients and subrecipients. Staying informed and proactively adapting policies will help ensure your organization stays in compliance.

What does CohnReznick think?

Not-for-profits, higher education institutions, and other organizations participating in federal awards need to remain alert and adapt to the Uniform Guidance revisions, while also keeping in mind the consequences of not implementing the changes timely and appropriately. We recommend reviewing your inventory of federal awards and subawards, policies and procedures, and communicating with various stakeholders, including federal agencies and auditors, to remain updated on the latest guidance. Staying informed and proactively adapting to the new Uniform Guidance revisions is critical to helping ensure your organization stays in compliance. 

Additional information on the changes can be found here: Guidance for Federal Financial Assistance(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)