You have most likely heard something about the new OMB guidance that is applicable in fiscal years 2015 – 2016. Sometimes referred to as the “Super Circular”, its official name is the Uniform Guidance (2 CFR 200). The term Super Circular is appropriate however because in the Uniform Guidance, OMB has consolidated 8 previously separate circulars into one set of comprehensive guidance, with 6 Subparts – A through F. The intent was to eliminate duplicative and conflicting guidance that had been applicable to different entities – state and local governments, not-for-profits, hospitals and universities. The OMB Circulars replaced by the Uniform Guidance are A-21, A-50, A-87, A-89, A-102, A-110, A-122 and A-133. Uniform Guidance Subpart F replaces Circular A-133, which in turn modifies the criteria under which a Single Audit is performed.


Effective Dates
Uniform Guidance Subparts A – E, which include those related to general cost principles are applicable to new Federal grants awarded on or after December 26, 2014 and to incremental funding of existing awards made on or after that date when the funding increment is an opportunity to modify the terms or conditions of the original award (i.e. establishing a new grant period). Consequently, these new cost principles could be applicable to June 30, 2015 year end audits.
Uniform Guidance Subpart F – Audit Requirements applies to non-Federal entities for fiscal years beginning on or after 12/31/14 (calendar year 2015 or June 30, 2016 year-ends).


Be Prepared 

While most of the rules governing things like allowable costs, cash management and reporting did not change substantively, there is much more emphasis on a grantee’s internal control policies and procedures. For instance, Federal grant recipients will be required to have written policies and procedures, at a minimum, over:

  • Determining allowable costs
  • Cash management
  • Procurement *
  • Sub-recipient monitoring
  • Travel reimbursement
Your auditors will be required to review these documents as part of their Single Audit testing. Since Uniform Guidance cost principles were first applicable to grants awarded after December 2014, it is most likely your auditors will begin requesting this documentation during their calendar year 2015 / fiscal year June 30, 2016 audits. If you do not already have written policies and procedures over these areas, compiling and adopting them as soon as possible should be a priority.


Procurement *
One of the most significant changes under the new guidance relates to procurement. The grantee must have documented policies and procedures over procurement that meet the new requirements, which are summarized in OMB’s “procurement claw” below:

























While many governments rely on compliance with State laws (i.e. Massachusetts MGL Chapter 30B) to evidence compliance with Federal requirements, simply referencing the State law will no longer suffice; the local entity must have its own procurement policy that addresses all the criteria outlined in the “claw” above.

It should be noted that OMB allowed non-Federal entities to defer implementation of the new procurement requirements for one year, making them effective for calendar year 2015 / fiscal year end June 30, 2016. There is no formal mechanism to document the deferment election – a simple acknowledgment by the grant administrator / chief financial officer would be sufficient.


Implications related to independent auditors 
As noted above, Subpart F – Audit Requirements will be applicable to fiscal years beginning on or after 12/31/14 (calendar year 2015 or June 30, 2016 year-ends). The changes contained in Subpart F are significant in terms of the criteria used by independent auditors in determining which grants to audit under the Single Audit Act:
  • The Single Audit threshold (total Federal expenses that trigger the Single Audit requirement) will increase from $500,000 to $750,000
  • Criteria for determining what are called A and B programs will increase greatly
  • High versus low risk program determination have been modified
  • The percentage coverage (percent of Federal expenses that must be audited) have decreased All of these changes will most likely result in your auditor having to test fewer Federal grants in order to comply with the Single Audit Act beginning with your calendar year 2015 / fiscal year June 30, 2016 audits.
Access all the various Uniform Guidance related documents at:
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By: Pat Squillante, CPA
Shareholder with Melanson Heath