Dec. 26, 2019, marked the completion of the fifth year of the implementation of Title 2 of the Code of Federal Regulation (CFR)’s Uniform Guidance. Codified within Title 2 is a requirement for it to be reviewed every five years, so, concurrent with an initiative to support implementation objectives of the President’s Management Agenda (PMA), on Jan. 22, 2020, the Office of Management and Budget (OMB) released a Proposed Guidance Federal Register notice titled Guidance for Grants and Agreements. The Proposed Guidance is noted to have three primary objectives:
1. Support the implementation of the President’s Management Agenda and other Administration priorities
2. Meet statutory requirements and align Title 2 with other authoritative source requirements
3. Clarify areas of misinterpretation in current requirements
The revisions affect the following Parts of Title 2:
- 25 – Universal Identifier and System for Award Management
- 170 – Reporting Subaward and Executive Compensation Information
- 183 – Never Contract with the Enemy (proposed new Part to Title 2)
- 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
Following is a selection of the proposed revisions that we thought non-federal entities subject to Title 2 would be most interested in.
- Revisions and clarifications to various definitions, including changing the long-standing reference to the federal program identifier of the “Catalog of Federal Domestic Assistance (CFDA)” to “Assistance Listing”
- New requirement that “all rate agreements from non-federal entities must be available publicly on an OMB-designated federal website”
- New provision allowing that “no documentation is required to provide proof of costs that are covered under the de minimus indirect cost rate”
- Removal of a prohibition so that a non-federal entity that had previously received a negotiated indirect cost rate can now be eligible for the de minimus indirect cost rate
- An implementation of Sec. 852 of the National Defense Authorization Act (NDAA) for 2013 to Parts 25 and 200 of Title 2, to require that financial assistance applicants provide information in the System for Award Management (SAM) on their immediate owner and subsidiaries, “as well as on all predecessors that been awarded a federal contract, grant, or cooperative agreement, within the last three years”
- Clarification that a pass-through entity is only responsible for resolving audit findings specifically related to its subaward(s), and not for other findings of its subrecipients
- An increase in the micro-purchase threshold from $3,500 to $10,000 and the simplified acquisition threshold from $100,000 to $250,000, as well as a provision to allow for non-federal entities to request a higher micro-purchase threshold
There are also some cost principles clarifications made within fringe benefits, leases, and depreciation that do not appear to be significant. However, these clarifications should aid accountants and auditors alike in helping determine whether certain costs are allowable.
What does CohnReznick think?
Aligning various sources of authoritative guidance with Title 2 should serve to alleviate confusion that had arisen over the past few years regarding which rules governed administration of federal awards. Proposed provisions to allow for relieving the restrictions on access to the de minimis indirect cost rate should be welcome news to many non-federal entities. The proposed requirement that cost rate agreements be made publicly accessible could come as an unanticipated surprise, as it relates to ongoing goals to facilitate increased transparency.
The OMB has specific rules regarding participation in the comment period, and all comments must be submitted electronically, so interested stakeholders should be sure to review the comment guidelines to ensure that their contributions are available to be evaluated. The comment guidelines can be found in the Proposed Guidance.
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