People crowd on a busy city street and crosswalk

Grant reform and new single audit rules

The Office of Management and Budget (OMB) has released comprehensive new federal grant reform guidelines intended to consolidate guidance on administrative requirements, cost principles and audit requirements for federal awards.

Known as the “Super Circular” or “Omni Circular,” these changes became effective for grant recipients as of December 26, 2014. Single audit changes are effective for years ending December 31, 2015, and after. The grant reform guidelines can be broken into three main categories:

1. Administrative requirements — Changes are intended to minimize the time spent complying with administrative requirements and focus on performance over compliance to provide accountability for federal funds.

2. Cost principles — Reforms include several changes related to the treatment of direct and indirect costs, including changes to compensation, interest costs, conference expenses and the management of indirect cost rates.

3. Audit requirements — The Super Circular raises the single audit (previously also known as the A-133 audit) threshold from $500,000 to $750,000 in federal expenditures. Auditors will be required to report their findings in greater detail, and the threshold for reporting findings has been increased from $10,000 to $25,000. Note that non-federal entities that expend less than $750,000 in federal funds must have records available upon request for review by the federal funding agency or pass- through entity.

4) Indirect cost rate — Grant reform provides an opportunity for first-time award recipients to receive a de minimis indirect cost rate of 10 percent of modified total direct costs if the entity never had a negotiated indirect cost rate.

For more information on this topic or to learn how Baker Tilly specialists can help, contact our team.

Related sections

Next up

Assessing the President’s Year of Action: What Contractors Need to Know