Ten Takeaways from OMB’s Proposed Guidance on Revisions to OMB Circular A-133
On February 1, the Office of Management and Budget (OMB) released their proposed guidance on Circular A-133, “Proposed OMB Uniform Guidance: Cost Principles, Audit, and Administrative Requirements for Federal Awards.”
The guidance was borne out of ongoing efforts to improve the efficiency and transparency of funding for government agencies and relates specifically to federal grants.
Here are 10 noteworthy takeaways from the OMB proposal:
Single Audit Threshold:
OMB proposed an increase to the single audit threshold from $500,000 to $750,000.
Type A/B Program Determination: OMB suggested revising the minimum threshold for Type A/B program determination from $300,000 to $500,000.
High-Risk Program Criteria
: In order for Type A programs to be considered “high-risk,” the agency would require programs to have recently: (a) failed to receive an unqualified opinion; (b) had a material weakness in internal control; or (c) had questioned costs exceeding 5 percent of the program’s expenditures.
High-Risk Type B Programs:
The agency will seek to reduce the number of high-risk Type B programs to be audited as major programs from at least one-half to at least one-fourth of the number of low-risk Type A programs.
OMB proposed a reduction to the percentage of coverage from 50 percent (normal) and 25 percent (low-risk auditees), to 40 percent (normal) and 20 percent (low-risk auditees).
Low-Risk Auditee Status:
The office offered potential revisions to the criteria used to determine low-risk auditee status that would more clearly include timely data-collection form submissions. In addition, OMB suggested adding other criteria around whether the auditors had included in their report that there was substantial doubt about the auditee’s ability to continue as a going concern.
OMB proposed reducing the number of compliance requirements to be tested from the current 14 types to 6 types in order to focus the auditor’s attention on the compliance requirements of greatest risk.
OMB may require increased detail to be reported in auditor findings.
The threshold for reporting questioned costs will increase from $10,000 to $25,000 under the proposed rules.
OMB will consolidate the eight existing OMB Circulars into one document, including OMB Circular A-133 and the various cost principles.
Read the proposed guidance in its entirety on OMB’s website
; the document will be open for public comment until early May. Remember to check back here for updates on the proposal and any outcomes that may affect your nonprofit organization.
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