Important Update for Nonprofit Organizations: Federal Uniform Guidance Single Audit Threshold Increases to $1 Million, and More

In April 2024, the Office of Management and Budget (OMB) released revisions to the Uniform Guidance (2 CFR 200), the government-wide policies for the award and administration of federal financial assistance.

According to a press release from the White House earlier this month, the updates to the Uniform Guidance will “streamline and clarify requirements for Federal funding. This will mean that recipients can invest in mission outcomes rather than in administrative overhead while ensuring Federal agencies can effectively safeguard taxpayer resources.” 

This is the most substantial revision to the Uniform Guidance since it went into effect ten years ago. Revisions are effective for fiscal years beginning on or after October 1, 2024.

Significant changes include the following:

• Single Audit Threshold: The federal single audit threshold will be increased from $750,000 to $1,000,000. Organizations receiving less than $1 million in federal funding will no longer be required to undergo a Single Audit.
• De Minimis Indirect Cost Rate: Increase the de minimis indirect cost rate from 10% to 15%. This allows organizations that do not have a negotiated indirect cost rate to use the increased rate to cover indirect costs.
• Capital Expenditures: The threshold for capital expenditures has been increased from $5,000 to $10,000, allowing for greater flexibility in managing capital assets.
• Procurement Standards: Changes have been made to procurement standards to streamline the procurement process. This includes adjustments to thresholds and policies to simplify procurement and reduce administrative burden.
• Prior Approvals: Removal of the requirement to obtain prior written approval for spending money on certain activities to reduce administrative burden.
• Allowable Costs: Clear instructions on allowable and unallowable costs have been provided to ensure better compliance with federal regulations and efficient use of funds.
• Subawards: More guidance on sub-awards clarifies the responsibilities of pass-through entities, including specific requirements for monitoring and managing sub-awards.
• Documentation and Recordkeeping: Increased focus on proper documentation and recordkeeping to ensure transparency and accountability in the use of federal funds.
• Remove Barriers to Entry: Notices of Funding Opportunities (NOFOs) will be updated to make it easier for organizations to apply for and receive funding.

Steps for Nonprofit Organizations:

• Stay informed: Become familiar with the new requirements and their impact on your organization.
• Assess Single Audit impact: Review your organization’s federal funding levels to determine whether you fall above or below the new audit threshold.
• Update policies: Ensure your financial policies and procedures conform to the new requirements.
• Consult experts: Reach out to your Whittlesey Advisor to learn more.