| Dear Center Members: |
The U.S. Office of Management and Budget (OMB) has proposed revisions to Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). This GAQC Alert provides you with the following:
- Background and information on how to access the proposed revisions;
- A summary of the proposed revisions; and
- Comment instructions.
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Background
OMB is required to review the Uniform Guidance every 5 years. In accordance with that responsibility, OMB has issued a Federal Register (FR) notice of Proposed Guidance titled, Guidance for Grants and Agreements, which proposes changes in three main areas as follows:
- Addressing President's Management Agenda (PMA) implementation areas impacting the Uniform Guidance;
- Aligning the Uniform Guidance with other authoritative source requirements; and
- Clarifying requirements regarding areas of misinterpretation.
You have several options for accessing the proposal. The first is a PDF version which is in the normal 3-column format of the FR. Access the PDF version. OMB has also made available a mark-up of the current Uniform Guidance that identifies the proposed revisions. Access the mark-up version. Before deciding whether to print the mark-up, you should be aware that it is 257 pages long.
Finally, OMB held a Webcast on January 23, 2020, to introduce the proposal. The PowerPoint deck used for that event has been posted for the public to review. Access the slide deck. The OMB is also holding a public hearing in Washington, DC, on February 4, 2020, from 3:30 PM – 4:30 PM (Eastern Time), for those wishing to share feedback on the proposed revisions. If you are interested, access the in-person registration information. OMB is also offering a call-in opportunity for the February 4th meeting. Access the call-in registration information.
Summary of Proposed Revisions
The GAQC is in the beginning stages of reviewing the proposal. The following is intended to provide a summary of a few of the changes that we believe will be of interest to auditors. However, we are likely to note additional items of interest as we further review the document.
Timing of Audit Quality Project. OMB is proposing changes to Section 200.513 of the Uniform Guidance to modify the specifics of the required government-wide audit quality project. The proposal would revise the date of the audits to be reviewed as part of the project to audits submitted in 2021. Currently, the Uniform Guidance requires audits submitted in 2018 to be reviewed; but the government-wide audit quality project has yet to be performed. The proposal also adds that the government-wide project can rely on the current and ongoing quality control review work performed by agencies. However, the proposal would leave the requirement for the project to provide a statistically reliable estimate of the extent that single audits conform to applicable requirements and also that the results of the project be made public.
Procurement Revisions. As we have discussed in many GAQC Web events over the last several years, there have been practice issues relating to the dollar amount of the micro-purchase and simplified acquisition thresholds that can be adopted, the types of entities able to take advantage of higher thresholds, and the appropriate timing for adopting higher thresholds. These issues have previously resulted in OMB adding guidance to the OMB Compliance Supplement stating that auditors need not write findings relating to these areas in certain circumstances. The proposed changes attempt to address these practice issues by removing specific threshold dollar amounts from the Uniform Guidance and aligning it with the Federal Acquisition Regulation (FAR), the 2017 and 2018 National Defense Acquisition Authorization Acts (NDAA), and OMB Memorandum M-18-18, Implementing Statutory Changes to the Micro-Purchase and the Simplified Acquisition Thresholds for Financial Assistance. If the changes in this area move forward, the micro-purchase threshold would increase to $10,000 (from $3,500) and the simplified acquisition threshold would increase to $250,000 (from $150,000) for all nonfederal entities. Additionally, the proposal would extend the flexibility to request a higher micro-purchase threshold to all nonfederal entities.
De Minimus Indirect Cost Rate. Currently the 10% de minimus indirect cost rate can only be used by nonfederal entities that have never received a negotiated rate. The proposal would revise the Uniform Guidance to allow the use of the 10% de minimus indirect cost rate by all nonfederal entities (except for those described in Appendix VII to Part 200, "State and Local Government and Indian Tribe Cost Proposals," paragraph D(1)(b)). Clarification has also been made that no documentation is required to provide proof of costs that are covered under the de minimus indirect cost rate. Finally, a change is proposed that would require all rate agreements from nonfederal entities to be made publicly available on a federal Web site designated by OMB.
Definition and Terminology Changes. There are a number of proposed terminology changes throughout the document which OMB states are intended to standardize terms to support efforts under the PMA Results-Oriented Accountability for Grants Cross-Agency Priority Goal (i.e., the Grants CAP goal). For example, the proposal would remove definitions for the Catalog of Federal Domestic Assistance (CFDA) and CFDA Program Title and replace them with Assistance Listing and Assistance Listing Program Title. Revisions are also made to various definitions for clarity. Additionally, clarifications are proposed to certain terms associated with time periods to correct current inconsistencies. For example, the definition of period of performance has been revised to reflect that the term is the anticipated time interval between the start and end date of an initial federal award or subsequent renewal. This change is intended to clarify that the recipient may not incur obligations during the entire period of performance in instances where a federal awarding agency incrementally funds the federal award and funding has not been received for a subsequent budget period within the period of performance.
Alignment with Statutory and Other Requirements. The proposal would also make revisions to the Uniform Guidance to address newer statutory and other types of requirements. For example, revisions are made relating to the NDAA, Never Contract with the Enemy, and the Federal Funding Accountability and Transparency Act (as amended by the Digital Accountability and Transparency Act). Additionally, changes are proposed in certain areas to focus in on PMA initiatives and other Administration priorities.
Comment Instructions
Comments on the proposal are due to OMB on or before March 23, 2020. Members are encouraged to review and comment on the proposal using the comment submission instructions in the FR notice. Since so many of the proposed changes will have more of an effect on your clients, you should consider making your clients aware of the proposal.
The GAQC will be commenting on the proposal. If you have comments that you would like for us to consider as we develop our letter, please send them to gaqc@aicpa.org no later than Tuesday, March 10, 2020.
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Sincerely,
AICPA Governmental Audit Quality Center
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