Author: Matthew O. McDonald
On February 29, 2012, the Office of Management and Budget issued proposed rules which may reform the cost principles, administrative requirements, and Single Audit rules that apply to exempt organizations. The proposed changes are an effort to “reduce ‘red-tape’ that is attached to the more than $600 billion the Federal government spends annually in the form of grants and cooperative agreements.” The following is a summary of the significant items in the proposed rules:
1. Reforms to Audit Requirements
a. Concentrating audit resolution and oversight resources on higher dollar, higher risk awards with the “goal to focus on the most efficient and effective way for targeting improper payments, waste, fraud, and abuse.” This might also revise the audit thresholds in which organizations are currently subject to, revising them to potentially the following:
i. Entities that expend less than $1 million in Federal awards would not be required to conduct a Single Audit.
ii. Entities that expend between $1 and $3 million in federal awards would be required to undergo a more focused version of the Single Audit.
iii. Entities that expend greater than $3 million would undergo a full Single Audit.
b. Streamlining the universal compliance requirements in the Circular A-133 Compliance Supplement by emphasizing elements noted above while streamlining other areas.
c. Strengthening audit follow-up and pass-through and sub recipient monitoring.
2. Reforms to Cost Principals which are proposed to consolidate under one, comprehensive document and address some of the heavier administrative rules under these principals.
3. Reforms to the Administrative Requirements which would also consolidate all of the rules into a uniform set of requirements.
The ultimate result of these proposed changes are uncertain, it is a hopeful relief to some exempt organizations that receive a couple of moderate grants that collectively trigger audits under the Single Audit provisions. Keiter plans to continue monitor the progress of these proposed rules, and will provide updates as necessary.