You may have heard changes are coming to the Uniform Guidance, which affects how federal awards are managed. Organizations need to understand how these changes could affect future requirements for a federal single audit.

These revisions, proposed by the Office of Management and Budget (OMB), are set to take effect on October 1, 2024. The OMB has released a pre-publication version along with a related memo, offering additional insights. The memo elaborates on the effective date, stipulating that federal agencies must take necessary measures to ensure the new Uniform Guidance applies to all federal awards issued on or after October 1, 2024. Additionally, it allows federal agencies the option to implement the new guidance for awards issued before this date, although it's not a requirement. Here's a closer look at what’s changing:

1. Increased Thresholds: Audits will now be required for awards exceeding $1 million, up from the previous threshold of $750,000. Similarly, the Type A threshold has been raised to $1 million, and the limit for applicable awards expended has been adjusted to $34 million, up from $25 million.
2. Clarified Definitions: The definition of questioned costs has been refined, and practical examples have been incorporated to provide clearer understanding and guidance.
3. Enhanced Reporting: Auditors will now be expected to provide explanations when questioned costs are categorized as "undetermined" or "not reported," ensuring transparency and accountability in the auditing process.
4. Terminology Update: To streamline terminology, the term "non-federal entity" has been replaced with "recipient" and/or "subrecipient" throughout Subparts A-E of the regulation. However, "non-federal entity" remains in Subpart F to maintain alignment with the Single Audit Act provisions.

We anticipate further guidance from OMB in the coming weeks, including the final regulation and transitional guidance on implementation.