As auditors begin planning for upcoming Uniform Guidance audits, organizations should focus on three critical areas: incorporating revised federal award requirements, documenting internal controls, and reviewing accounts receivable. The 2024 updates to the Uniform Guidance introduce new thresholds, clarified definitions, and documentation expectations. Early preparation and formalized processes will help organizations ensure compliance, reduce audit findings, and maintain operational resilience.
Top Areas Auditors Will Focus On
Auditors will pay particular attention to:
- Incorporating the revisions for federal awards
- Documenting the controls surrounding the compliance requirements for federal awards
- Reviewing all accounts receivables to ensure the allowance is reasonable
Key Revisions to the Uniform Guidance
As you may recall, on April 22, 2024, the Office of Management and Budget (OMB) issued guidance for “Federal Financial Assistance”, which included the 2024 revised Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
This revision is the most significant since its establishment in 2013 and reflects a commitment to reduce agency and recipient burden. The effective date for the revised Uniform Guidance is Oct. 1, 2024.
Auditors will review process memos to ensure all thresholds have been updated, such as:
- Increase of the audit threshold from $750,000 to $1,000,000 (Section 200.501 – Audit Requirements) and the increase in the Type A threshold from $750,000 to $1 million for non-federal entities expending $1M–$34M in federal awards (Section 200.518 – Major Program Determination)
- Adjusted exclusion threshold of subawards from $25,000 to $50,000 for modified total direct costs
- Raised de minimis rate for indirect costs from 10% to a maximum of 15% for recipients and subrecipients without a federally negotiated rate
- Raised the threshold for determining items considered to be equipment from $5,000 to $10,000
- Revised definition and examples of questioned costs for clarity
- Requirement to describe why dollar amounts for known questioned costs were undetermined if not reported
Auditees should ensure all applicable revisions are incorporated into their process memos.
Documenting Internal Controls
All internal controls must be formally documented and memorialized in a process memo. Auditors require this documentation to reperform controls. Post-it notes or emails will not suffice. The Standard requires formal documentation. If it was not documented, it was not done. Failure to document controls could result in audit findings.
Reviewing Accounts Receivable
Auditees should carefully review all accounts receivable, especially those from federal programs with stop orders. Management’s process must be documented. Because these are significant management estimates, auditors expect rigor, including:
- Evaluation of required reserves
- Assessment of expected payment dates
If there is uncertainty, it is prudent to establish a reserve.
Key Elements of a Successful Audit
- Documentation: Clear evidence of approvals and transactions
- Policy Compliance: Adherence to federal requirements and internal policies
- Corrective Actions: Steps taken to resolve prior-year findings
- Risk Assessment: Evaluation of high-risk programs for deeper testing
Final Thoughts
Successful Uniform Guidance audits require proactive preparation, strong documentation, and disciplined internal controls. Organizations that integrate the revised requirements, maintain clear process memos, and carefully review accounts receivable will be best positioned for smooth audit outcomes.
Han Group partners with organizations to design and implement customized SOPs and processes that strengthen compliance and support operational continuity. Our professionals work alongside clients to reduce audit risk and enhance long-term resilience. To learn how we can support your audit readiness efforts, Contact Us.
