Update - 2024 Uniform Guidance

CHRISTIAN FUELLGRAF: Welcome, and thanks for listening to Cherry Bekaert's Government and Public Sector Podcast Series. In each episode, we hear from the best in the business on the latest challenges, trends, and opportunities affecting the government and public sector. I'm Christian Fuellgraf, leader of Cherry Bekaert's Government and Public Sector Industry Team. I hope you enjoy.

KAT KIZIOR: And thank you for joining. Welcome, everyone, to the 2024 Uniform Guidance Updates with Robert Shea. This is episode three in our Grants Management Podcast series. This show will focus on 2 CFR 200 Uniform Guidance updates and how these changes will affect governments in general, as well as nonprofits and public entities.

KAT KIZIOR: Most of the folks listening to this podcast are grant and accounting professionals, and we live in a very dynamic environment. If you are new to grants, these changes with the Uniform Guidance may seem daunting, especially if you don't have a handle on previous or ongoing regulations. More experienced grant professionals are used to constant change in the grant world, but even so, this is a significant update.

KAT KIZIOR: It was time for a change, and we were ready for the updates. Today, I have just the right guest to break it all down so it makes sense. I am Kat Kizior. I'm a Grant Management and Compliance Senior Associate at Cherry Bekaert. I'm also a Certified Grants Management Specialist, and I have over 25 years in grants management and grants accounting. I am extremely excited to introduce our guest today, Robert Shea.

KAT KIZIOR: Robert is a government management and policy expert with GovNavigators. He hosted his own podcast, The GovNavigators Show, which I have listened to and found informative and entertaining. Robert and his partner discuss government and management issues on their podcast. Robert, thank you so much for coming to talk with us today and give us the down low on the new Uniform Guidance. Would you fill us in a little on your background in government, regulation, and policy?

ROBERT SHEA: After hearing yours, I'm totally intimidated. I started my career with the U.S. House and Senate Oversight Committees, reviewing government operations, including grant spending. We tried to measure and reduce improper payments, improve performance management reporting, and generally make government work more efficiently.

ROBERT SHEA: I then joined the Office of Management and Budget (OMB), where I led the Office of Performance and Personnel Management. Among other things, we built and oversaw the government's performance management and reporting framework and oversaw personnel practices. We also developed USAspending.gov, a website that reports all of the government's financial transactions, including grants. I've spent a lot of time examining the data we collect, need to collect, and the practices we use to oversee grant spending.

ROBERT SHEA: I left OMB in 2008 and joined Grant Thornton's public sector consulting practice, where I led their strategy practice. My focus has been on improving government performance and efficiency at every level.

KAT KIZIOR: Thank you. Let's jump into the Uniform Guidance updates. The Office of Management and Budget released its revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements on April 4 of this year. These updates were implemented into the Code of Federal Regulations (CFR) on April 22. Robert, can you review the major changes to the Uniform Guidance that will affect non-federal entities receiving grant funding?

ROBERT SHEA: Sure. There's a lot of information available online. I applaud OMB for using an open process: it published draft guidance in the fall, solicited extensive comments, and the Federal Register shows how they addressed those comments. There's also a 446-page addendum showing redlines to the previous Uniform Guidance for those who want to review changes in detail.

ROBERT SHEA: At a high level, the guidance focuses on tribal nations, reflecting the administration's emphasis on diversity, equity, and inclusion, ensuring funding opportunities are clear and accessible to tribal nations. There is also a federal program inventory requirement, which should list all government programs through which people can apply for grants. This inventory aims to make it easier for applicants to find programs, improve oversight, and increase government transparency.

ROBERT SHEA: Notice of funding opportunities, or NOFOs, are a major focus. OMB intends to improve the accessibility, readability, clarity, and design of NOFOs to reduce barriers for applicants with fewer resources. The supply chain is another focus; agencies are instructed to ascertain the extent to which grant funding supports American-made products, goods, and services and to identify gaps where recipients have difficulty accessing American-made goods.

ROBERT SHEA: Subrecipient reporting will receive more rigorous data standards and reporting requirements. Core data elements will be continually revised to meet evolving guidance, and Treasury has an obligation to update those elements. For single audits, the threshold increased from $750,000 to $1 million, so entities receiving less than $1 million will not be required to undergo a single audit. That change does not absolve agencies of oversight responsibilities, but it raises the audit threshold.

ROBERT SHEA: The guidance also includes reference guides on evaluation, data, community and public engagement, NOFOs, labor, and burden reduction. The overarching emphasis is on making it easier to access, use, and oversee grants.

KAT KIZIOR: That's very helpful. We have many questions from clients about when they must follow the updated cost principles and concerns about their 2024 audits. How does the 2024 Compliance Supplement tie into the revisions, and will single audits be affected by these changes?

ROBERT SHEA: The single audit threshold applies to awards made on or after October 1, so that part is straightforward; we don't need to wait for the Compliance Supplement for that requirement. I empathize with concerns about applying this guidance in the absence of a Compliance Supplement or updates to various cost allocation guidelines.

ROBERT SHEA: NASACT—the National Association of State Auditors, Comptrollers, and Treasurers—recently sent a strong letter to HHS about delays in approving statewide cost allocation plans (SWICAPs). There's a four-year backlog in SWICAP approvals, and agencies, especially HHS, have limited resources to process them. While I support the changes to the Uniform Guidance, the government faces limitations in how quickly it can implement flow-down requirements and bring auditors on board.

ROBERT SHEA: I recently spoke with the head of the Office of Federal Procurement Policy, who indicated that fixes to the backlog are not weeks or months away but will take longer. We'll have to wait to see when the specific downstream guidances and updates are released.

KAT KIZIOR: That helps clarify when changes take effect. I was watching the April 4 OMB release, and you mentioned federal entities are now instructed to use plain, clear language. Beyond clarity, are there other significant benefits to this requirement for grant recipients?

ROBERT SHEA: OMB's memo includes design principles that read like guidance from a graphic artist. They call for enhancing readability and aligning NOFOs with visual and user-experience design principles, including typographic hierarchy, optimal line lengths, supporting imagery, icons, use of color, bullets, tables, checklists, and digital bookmarks and jump links for navigation. These principles aim to make NOFOs accessible to diverse audiences using many platforms, simplify application processes, and make instructions easy to follow.

ROBERT SHEA: The goal is to transform the grant applicant experience so a broader pool of applicants finds the process more navigable and engaging.

KAT KIZIOR: Great information. For grant accounting professionals, what are the key points to share with peers?

ROBERT SHEA: First, grants should become simpler. Applications and reporting should be easier, and relationships with grant overseers should be more engaging. Second, statewide cost allocation plan approvals will continue to be a challenge, so stakeholders should advocate for policymakers to prioritize resolving backlogs. Third, there's a strong focus on evidence and data.

ROBERT SHEA: The guidance specifies that costs related to data and evaluation are allowable. Data costs include expenditures needed to gather, store, track, manage, analyze, disaggregate, secure, share, publish, or otherwise use data to administer or improve a program, such as data systems, personnel, data dashboards, cybersecurity, and related items. Data costs may include direct or indirect costs of building integrated data systems for data collection, reporting, and evaluation.

ROBERT SHEA: The evidence-based policymaking community worked to ensure that language was clear. Several practitioners have developed guidance on leveraging multiple grant funding streams to invest in central data systems, enabling jurisdictions to report more easily, assess programs, and conduct rigorous evaluations. That group is producing a field guide with working groups at federal, state, and local levels to help jurisdictions build data and evidence infrastructure.

KAT KIZIOR: That's important to know. Since 2020 we've seen a large influx of grant funding and many new grant professionals who are unfamiliar with grants language and processes. I hope these changes reduce the burden and help new professionals comply.

KAT KIZIOR: Thank you, Robert, for sharing your insight. Is there anything else you'd like to add before we wrap up?

ROBERT SHEA: Thank you for nerding out with me. I admire the work you do. I'll be back at Cherry Bekaert's virtual conference on August 7 and 8, where this topic will be among many covered. It's a great service you provide, and I look forward to participating.

KAT KIZIOR: I look forward to reviewing the redline compliance information; it's 446 pages of material. If you'd like to contact me with questions about the podcast or request particular grant content, you can email me at kat.kizior@cbh.com. Catch up on all our Grants Management podcasts at cherrybekaert.com.

CHRISTIAN FUELLGRAF: This was Christian again. I hope you enjoyed this episode and look forward to our next one. Don't forget to subscribe.