The Office of Management and Budget (OMB), has issued the finalized new rules for Non-profit institutions, that are awarded federal funds, or otherwise provide services to local, state or federal governments. The finalized new rules also contain new guidance for auditors. The parameters of the new Uniform Guidance issued by the OMB, provides final details on the administrative and audit requirements for qualifying non-profit institutions. The final guidance follows major changes started by the OMB in December of 2013, which significantly overhauled the administrative requirements and cost principles used by non-profits for federal awards.

How Will Non-Profits Be Effected?

According to the Uniform Guidance, which consolidates and updates eight previous OMB circulars into a single set of regulations, all federal agencies and “pass-through entities” – state and local governments that receive federal funding – must reimburse non-profits for their “reasonable” indirect costs.

In a statement to the press, the National Council of Nonprofits expressed support for the new OMB Guidance. “The new guidance means that nonprofits should be able to focus more on their missions and should be under less pressure to raise additional funds to essentially subsidize governments. In turn, charities with no government contracts or grants could see less competition for scarce philanthropic dollars. This is a major win for the entire charitable nonprofit community.”

While the Uniform Guidance is generally regarded as good news for non-profit organizations, it is imperative that all new audit and administrative reporting requirements are followed.

What Should Your Organization Do Now?

If you are a federal award recipient, you will be required to implement new administrative procedures and cost principles under the guidance.

The new audit requirements are effective for fiscal years beginning on or after December 26, 2014; early implementation by auditors is not permitted. Which means the first audits that can be performed under the Uniform Guidance are those of non-profit entities with years ending December 31, 2015. As that mark is approaching, non-profit institutions who receive federal awards are urged to contact MBAF to verify if you are in compliance with the new Uniform Guidance.

Understanding the provisions of the new OMB Guidance, can be quite complex. If you would like to benefit from our expertise in these areas, or if you have further questions on this Advisory, do not hesitate to contact our Non-Profit Institution specialists, or call us at 1-800-239-1474.