Uniform Guidance Updates – What You Need to Know

The Office of Management and Budget (OMB) introduced substantial updates to the Uniform Guidance (2 CFR Part 200) in 2024, marking the most significant changes since 2013. These revisions, which took effect for federal awards issues on or after October 1, 2024, aim to simplify compliance, enhance financial transparency, and improve oversight of federal grant funds.

These updates will influence financial reporting, cost recovery, and cybersecurity requirements for organizations requiring a Uniform Guidance audit. Institutions relying on federal funding and business referrals, such as bankers and lawyers, must understand how these modifications affect compliance. Adaptability failure could lead to funding complications, audit challenges, or increased regulatory scrutiny.

These changes introduce new audit thresholds, modify cost reimbursement rules, and establish stricter cybersecurity requirements. Organizations should assess whether their current financial and operational policies align with the updated regulations. Strategic adjustments will ensure continued compliance and prevent any disruption in federal funding.

Key Changes Affecting Non-Profits and Federally Funded Entities

One of the most notable changes is the increase in the Single Audit threshold from $750,000 to $1,000,000 in federal expenditures. The Type A threshold has similarly increased from $750,000 to $1,000,000. These updates reduce the number of smaller organizations subject to an audit, allowing them to allocate resources to programmatic activities rather than compliance costs. However, entities receiving federal grants must monitor their funding levels to ensure they remain below the new threshold or prepare for an audit if they exceed it.

The de minimis indirect cost rate has also been raised from 10% to 15%, enabling more organizations to recover a larger portion of overhead expenses. This change provides greater financial flexibility for non-profits without negotiated indirect cost rates.

Furthermore, another significant update includes enhanced cybersecurity requirements, requiring recipients of federal grants to implement stricter data protection measures. These requirements align with national efforts to mitigate cyber threats against federally funded programs. The updates above encompass only some of the key changes effected by the OMB updates. For a full list of updates, please refer to Appendix V of the Compliance Supplement, which can be found on the Federal Audit Clearinghouse website here.

Action Steps for Compliance

Organizations should take proactive steps to ensure compliance, financial stability, and continued eligibility for federal funding to navigate the 2024 Uniform Guidance revisions.

• Review Internal Policies: Organizations should conduct a full compliance audit to align funding levels, financial reporting, cybersecurity measures, and subrecipient monitoring with the new regulations. Understanding and adherence to the new regulations will prevent compliance complications later on.
• Optimize Cost Recovery Strategies: With an increased de minimis indirect cost rate, non-profits and federally funded organizations should reassess cost allocation methodologies. Maximizing allowable reimbursements will enhance financial sustainability.
• Strengthen Cybersecurity Measures: Organizations should implement cybersecurity enhancements that meet federal standards. Training staff, updating software, and conducting regular security audits will help mitigate risks and ensure compliance with new data protection policies.
• Seek Expert Guidance: Consulting with audit and assurance professionals will ensure compliance with the latest Uniform Guidance updates. Experienced advisors can help organizations adjust financial practices, meet reporting obligations, and optimize funding strategies.

Addressing these action items can safeguard organizations’ funding, minimize compliance risks, and enhance financial management practices. Staying ahead of regulatory changes ensures long-term success and stability.

How Tonneson + Co Can Help

Staying ahead in the ever-evolving compliance landscape requires expert guidance. Tonneson + Co and Jennifer F. Louis, CPA, President of Emergent Solutions Group, invite you to a Uniform Guidance Training on June 12, 2025, from 8:30 AM – 6:30 PM at More Than Words Boston. This insightful and engaging session (that is CPE-eligible) will cover key updates on compliance supplement revisions, address common challenges, and provide answers to your most pressing questions. Expect a practical, interactive day where you’ll gain the tools to navigate new regulatory changes and have plenty of opportunities to connect with others in the non-profit sector! Sign up now to secure your spot.

With extensive experience in Uniform Guidance audits, Tonneson + Co helps organizations adapt to new reporting standards, cybersecurity requirements, and cost allocation strategies. Need expert support? Contact Tonneson + Co today to discuss how we can help your organization stay compliant and financially secure.