Not-for-Profit Enews Update: Office of Management and Budget (OMB) Circular Updates

by Samantha R. Dudley, CPA, MBA - Manager

May 9, 2014

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One source of funding that many not-for-profits (NFP) receive is in the form of grants from the Federal government, either through direct awards to the NFP or indirect awards that are passed through other governmental and non-governmental agencies to the NFP. There are specific requirements that must be adhered to relating to grants that are outlined in various Office of Management and Budget (OMB) Circulars.

On December 26, 2013, the OMB issued final guidance on the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards found in Title 2 of the Code of Federal Regulations in an effort to reduce administrative burden and risk of waste, fraud, and abuse. The guidance supersedes and streamlines requirements of the following OMB Circulars:

- A-21 Cost Principles for Educational Institutions
- A-50 Audit Follow-up
- A-87 Cost Principles for State, Local, and Indian Tribal Governments
- A-89 Catalog of Federal Domestic Assistance
- A-102 Grants and Cooperative Agreements with State and Local Governments
- A-110 Uniform Administrative Requirements for Grants and Other Agreements with Institution of Higher Education, Hospitals, and Other Non-Profit Organizations
- A-102 Grants and Cooperative Agreements with State and Local Governments
- A-122 Cost Principles for Non-Profit Organizations
- A-133 Audits of States, Local Governments and Non-Profit Organizations

The consolidated guidance is broken down into the following subparts:

Subpart A – Acronyms and definitions used in the guidance
Subpart B – General provisions outlining the purpose of the guidance
Subpart C – Pre-federal award requirements and contents of federal awards which will primarily impact federal agencies
Subpart D – Post federal award requirements with an emphasis on procurement, internal control, and subrecipient monitoring.
Subpart E –Cost principles reforms
Subpart F – Audit requirements reforms

Due to the consolidation of the various circulars into this guidance and the focus on reducing administrative burden, non-federal entities receiving federal awards will need to review the administrative requirements and cost principles with a specific emphasis on subpart D and E to determine any changes to internal controls as well as policies and procedures that will need to be implemented to comply with the new consolidated requirements. The administrative section of the guidance will apply to any new federal awards or additional funding received under amendments to existing federal awards made after December 26, 2014. ssist you!


Non-federal entities will also want to review the reforms to the audit requirements, as one of the key reforms noted is an increase in the single audit threshold from $500,000 to $750,000 or more for federal awards. This change in the audit requirement is expected to reduce the number of non-federal entities subject to single audits by approximately 5,000 NFPs. The audit requirements will be effective for fiscal years beginning on or after December 26, 2014.

If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at or call us at 800-717-BLUE.