Recent Uniform Guidance Revisions: What They Mean for Local Government Single Audits

Federal grant rules have changed, and those changes matter for local governments that receive or may receive federal funding. In April 2024, the Office of Management and Budget updated the Uniform Guidance under 2 CFR Part 200. These revisions took effect October 1, 2024 (beginning with September 30, 2025 year ends) and affect how grants are managed and how audits are performed. 

At a high level, the updates aim to make federal requirements clearer and easier to follow. Some changes reduce burden for smaller entities, while others raise expectations around documentation, internal controls, and oversight. 

Key Changes That Affect Local Governments 

Higher Single Audit Threshold

The most significant change is the increase in the Single Audit threshold. 

• Prior threshold: $750,000 in federal expenditures 
• New threshold: $1,000,000 in federal expenditures 

This change means some smaller local government/entities will no longer require a Single Audit, which can reduce audit costs. The new threshold applies to certain new and amended federal awards tied to the updated guidance. 

Greater Documentation Expectations

Audit reporting requirements are more detailed when questioned costs are identified. This increases transparency but also raises expectations for documentation. 

In practice, this means local governments must be able to clearly show how grant costs were calculated, approved, and paid. Costs charged to federal grants should have adequate documentation such as approved invoices, payroll records, or contracts, and calculations should be easy to follow. If a cost cannot be clearly explained, it becomes an audit risk, even if the cost itself is reasonable. 

Cybersecurity and Personal Data Protections

The revised guidance now clearly requires protections for cybersecurity and personal data. This applies to any local government/entity handling federal grant information that includes personally identifiable information, such as payroll records, vendor tax data, or resident information. 

This does not require sophisticated IT systems. It does require reasonable steps, such as limiting access to sensitive data, using basic system protections, and acknowledging responsibility for safeguarding information in internal policies. 

Higher De Minimis Indirect Cost Rate

The flat “de minimis” indirect cost rate has increased from 10 percent to 15 percent. Indirect costs are general administrative costs that support grant activities, such as accounting, payroll processing, and oversight. 

The de minimis rate allows local governments to recover these costs without preparing a detailed cost allocation plan. This option can reduce administrative burden, but it must be formally adopted in policy and applied consistently. 

Other Notable Updates

• Equipment capitalization threshold increases from $5,000 to $10,000 
• Clearer guidance for determining subrecipients versus contractors 
• Reinforced whistleblower protections 

What Local Governments Should Do Now

These revisions require action, but not full overhaul. 

Action Steps for Governing Bodies and Staff

1. Review federal grant activity and determine proximity to the $1,000,000 Single Audit threshold 
2. Update capitalization and asset disposal policies to reflect the $10,000 threshold 
3. Review grant, procurement, and internal control policies for alignment with the revised guidance 
4. Decide whether to use the 15 percent de minimis indirect cost rate and document that decision 
5. Add basic cybersecurity and data protection language to internal control policies 
6. Train staff and brief governing bodies so expectations are clear before the next audit 

The Takeaway

Federal grants are a valuable opportunity for local governments to access resources that would otherwise be out of reach. However, those dollars come with management responsibilities. The recent Uniform Guidance revisions do not require local governing entities to become experts in federal grants, but they do require them to understand the rules, document decisions, and maintain basic controls. 

Contact us for expert help on updating policies, clarifying responsibilities, and training staff to reduce audit risk, prevent compliance issues, and ensure federal funds remain an asset rather than a liability.