Issuance of Uniform Guidance
On December 19, 2014, the joint interim final rule was issued by the Office of Management and Budget (OMB) implementing the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 CFR 200 (Uniform Guidance) in the Federal Register. This joint interim final rule incorporates the implementing regulations of all the federal awarding agencies and was necessary to bring into effect the new Uniform Guidance for Federal Awards under 2 CFR 200. It was effective on December 26, 2014.
Included in this are certain technical corrections to language included in the original Uniform Guidance (previously referred to as the Supercircular) which are highlighted below:
• The effective applicability date has been revised to allow a grace period of one fiscal year for non-federal entities to implement changes to their procurement policies and procedures in accordance with the revised procurement standards.
• CFR Section 200.320 was revised to clarify that the requirement for sealed bids to be advertised and opened “publicly” is applicable to state, local and tribal entities only.
• There were several places in the guidance where “should” has been revised to “must”.
Management of nonprofit organizations should review the Uniform Guidance to ensure that all requirements of the guidance have been addressed by their organization.
2015 OMB Compliance Supplement
The OMB has provided the AICPA Governmental Audit Quality Center (GAQC) with a draft version of the 2015 OMB Compliance Supplement (Supplement) for their review. The major change in the Supplement this year is the incorporation of the requirements and guidance from OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
During the period covered by the 2015 Supplement, organizations will have federal awards expended that are subject to requirements from different sources. For example, federal awards made before December 26, 2014, are subject to the “old” OMB cost principles and administrative requirements. However, new federal awards are subject to the cost principles and administrative requirements contained in the Uniform Guidance. To address this transitional situation, a new section will be included in Part 3 of the 2015 Supplement. The new Part 3.2 will apply to compliance testing of new federal awards and incremental funding made on or after December 26, 2014. Part 3.1, which is the previous Part 3 from the 2014 Supplement updated for normal annual changes, will apply to federal awards subject to the “old” rules.
It is important for management to review these guidelines when the Supplement is issued to ensure they are in compliance. The new Section 3.2 will be effective for March 31, June 30, and September 30 year-end single audits if federal funds have been expended under federal awards subject to the new Uniform Guidance.
There is no stated date for the release of the 2015 Supplement, however, OMB’s goal is to try and issue it earlier than in the past due to the significant changes being made as a result of the Uniform Guidance.
FASB Prepares to Release Not-for-Profit Financial Reporting Proposal Draft
For the last 18 months, we’ve been closely monitoring updates from the Financial Accounting Standards Board (FASB or the Board) regarding the organization’s Not-for-Profit Financial Statement Reporting Project. To date, we’ve highlighted the Board’s tentative decisions surrounding not-for-profit financial reporting, expense report requirements and cash flow statements in both our blog and newsletter.
On March 4, the Board announced long-awaited news: It voted 5-2 to release a proposal for updates to the existing net classification scheme, as well as requirements concerning liquidity, financial performance and cash flow information that nonprofits must present and/or disclose. The proposal’s exposure draft will likely be issued to the public for review and comment in early to mid-April.
Stay tuned to BDO’s Nonprofit Standard blog in the weeks ahead, as we’ll provide a detailed overview of the FASB’s proposal draft once it’s released. In the meantime, you can review past posts on the Board’s deliberations up to this point:
• FASB Announces Tentative New Decisions on Not-for-Profit Financial Reporting
• FASB Continues Deliberations on Nonprofit Financial Reporting
• FASB Outlook – How Recent Decisions by the FASB Board to Reset its Agenda Might Impact Nonprofits
• FASB Board Discusses Potential Updates to NFP Expense Report Requirements
• FASB Board Proposes Changes to Nonprofit Cash Flow Statement
