RubinBrown What Not-For-Profit Organizations Should Expect in 2015

UNIFORM GRANT GUIDANCE

On December 26, 2014, the Office of Management and Budget issued Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards , which is codified into Title 2, Part 200, of the Code of Federal Regulations. This pronouncement, generally referred to as the "Uniform Grant Guidance" (UGG), replaces or modifies existing circulars such as A-21 Cost Principles for Educational Institutions , A-50 Audit Follow-up , A-87 Cost Principles for State, Local, and Indian Tribal Governments , A-89 Catalog of Federal Domestic Assistance , A-102 Grants and Cooperative Agreements with State and Local Governments , A-110 Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals, and Other Nonprofit Organizations , A-122 Cost Principles for Non-Profit Organizations , and A-133 Audits of States, Local Governments, and Non-Profit Organizations . These modifications were designed to streamline the federal grant-making process, increase the efficiency and effectiveness of federal programs, ease the administrative burden for grant applicants, eliminate unnecessary and duplicative requirements, focus on areas that achieve better outcomes at a lower cost, and reduce the risk of waste, fraud and abuse. Highlights of the UGG include the following: Changes to streamline the single audit process , designed to reduce the number of single audits required, the number of programs audited, and the required audit procedures. These changes are effective for years ending on or after December 15, 2015. Key changes include: ∙ Expanding the requirements to be a low-risk auditee to also include the timely submission of the previous data collection form and that there is no substantial doubt about the entity's ability to continue as a going concern indicated within the previous auditor report. ∙ Modifying the major program determination including: – Increasing the Type A program threshold to the greater of $750,000 (from $300,000) OR 3% of the entity’s total federal expenditures – Changing the requirements determining what constitutes a high-risk Type A program – Increasing the Type B risk assessment threshold to 25% of the Type A threshold – Decreasing the percentage of federal dollars required to be audited as major programs to 40% (from 50%) for high-risk entities and 20% (from 25%) for low-risk entities Changes to indirect cost rates to allow all entities that receive less than $35 million in federal funding per year to request a minimum flat rate of 10%, if they have never had a previously negotiated indirect cost rate. Non-federal entities also have the option to extend their negotiated indirect cost rate for up to four years. These changes were effective December 26, 2014. Changes to time and effort reporting requirements to allow for greater flexibility. Personnel activity reports are encouraged but no longer required; rather, the emphasis will be on having internal controls in place to justify salaries and wages. These changes were effective December 26, 2014. ∙ Increasing the single audit threshold to $750,000 (effective for fiscal years beginning on or after December 31, 2014).

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