Here’s the big juicy news we’ve been waiting for! Hold on to your hat because the Office of Management and Budget is considering some major revisions that could truly shake up the traditional order of business for grants management and single audits.
We’re getting our first peeks now at the proposed guidance now so there is a lot to go into down the road, but the main thing is to spread the word because it will be you, the grants and audit stakeholders out there, who will help determine if these revisions will see the light of day. The revisions are now posted on the OMB website here, and are expected to be issued in the Federal Register early next week. And you can be assured that Thompson’s Federal Grants Management Handbook and Single Audit Information Service will have complete coverage of OMB’s proposed revisions.
One of the key revisions in the proposed guidance would establish a new three-tiered single audit threshold to replace the current $500,000 single audit threshold under OMB Circular A-133. Entities that spend less than $1 million in federal awards would not be required to conduct a single audit. Those that spend between $1 million and $3 million would be required to undergo a more focused version of the single audit in which auditors would review only two compliance requirements for those programs, with allowable and unallowable costs being one of the required compliance requirements. Entities that spend more than $3 million in federal awards would undergo a full single audit.
The proposed guidance also would consolidate the cost principles (Circular A-21 for institutions of higher education, Circular A-87 for state and local governments and Circular A-122 for nonprofits) into a single document, with limited variations by type of entity. For indirect (“facilities and administrative”) costs, the proposed revision would also required the use of flat rates instead of negotiated rates.
There are numerous other changes that the OMB is considering in this document. It is vital that everyone in the grants and audit community take a look at this and make their concerns known — whether they favor the changes or not. You will only have 30 days once it’s published in the Federal Register. After all the dust is settled, we will be very interested to see where this guidance ends up.
After you read the proposed guidance, let us know what you think. We’d like to get a dialog going on what these changes could mean to you!