On May 29, 2026, the Office of Management and Budget (OMB) published a proposed rule in the Federal
Register that would comprehensively revise 2 C.F.R. Part 200, commonly known as the Uniform Guidance, along
with conforming changes across multiple parts of Title 2. The proposal is a joint-interagency effort involving
virtually every federal grantmaking agency in the Executive Branch. Comments were due July 13, 2026, and the
OMB had indicated that it aimed for the final rule to take effect by October 1, 2026.
The proposed guidance combines traditional grant-administration reforms with policy priorities of the current
presidential administration. It’s three primary objectives are to increase transparency, accountability and
oversight of federal fund; convert the Uniform Guidance from “guidance” into a binding government-wide
regulation; and reduce recipient burden and streamline administration.
Section 157 of the Senate’s continuing resolution, passed on August 6, prohibits OMB from moving forward with
finalizing the proposed rule until at least December 11, 2026. The House passed its own continuing resolution
extending government funding through December 4, 2026. The reconciled continuing resolution was signed
by the President on September 2, 2026, which effectively extends the consideration of the proposed revisions
through December 11, 2026.
Senate Democrats also sent a formal letter to OMB requesting that the entire proposed rule be rescinded,
arguing that the sweeping changes exceed OMB’s statutory authority and infringe on Congress’s constitutional
power of the purse.
Well over 70,000 comments posted on the docket: https://www.regulations.gov/docket/OMB-2026-0034/
comments
Commentors:
State/Local Governments
NFPs
Higher Ed
Research
Healthcare
Trade/Advocacy Groups
Direct Recipients
General Public
Generally, commentors support goals of accountability, transparency and stewardship of federal funds. However, they also question whether the proposal would accomplish those goals in a clear, balanced, administratively feasible way.
Impact of reclassifying 2 CFR 200 from “guidance” to binding regulation
Broadened termination-for-convenience authority per changes in program goals, agency priorities, national interest
Elimination of fixed-amount awards/subawards
New pre-disbursement verification requirements
Effect of DEI-related funding restrictions
Increase in subrecipient oversight requirements
Interpreting vague, undefined or highly subjective terminology on compliance and enforcement
Feasibility of the implementation timeline
Numerous other concerns voiced by commentors
Enhanced authority to terminate discretionary grants in part or entirety for deemed noncompliance
Under broadened termination for coverage provision, both Federal and State agency would have expanded discretion to terminate funding
Awards with specific amount of support without regard to actual costs incurred
Additional scrutiny to affirm that a state program’s goals and objectives are “aligned with administration policies and priorities”
The $1 million single audit threshold remains the same, the 15% de minimis indirect cost is unchanged, and the
indirect cost rate negotiation structure is not being changed.
AICPA focus: Changes to CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards
Regulatory reclassification from “guidance” to binding regulation raises the stakes of noncompliance
Uncertainty caused by removal of annual update frequency for the Compliance Supplement
Eliminating reference to COSO internal control framework
Subrecipient and contractor determinations and pass-through entity requirements
Reference to “separate legal persons”, no definition, not elsewhere in 2 CFR
Fixed-amount award elimination changes substantive testing
Termination-for-convenience authority raises critical accounting/auditing questions:
Revenue recognition
Subsequent events
Going concern
New pre-disbursement verification steps affect internal control testing
DEI-related restrictions create a compliance testing risk area
Subjective/undefined terms: “National Interest”, “Agency Priorities”, “Questionable Practices”
Other Single Audit implications:
Compliance expectations may become less clear
Auditors may need additional documentation supporting management judgments
Audit findings could become more likely where requirements are not objectively defined
Expect auditors to spend more time testing:
Subrecipient monitoring
SAM reporting - both NFP organizations and its subrecipients
E-Verify compliance (for employees and contractors)
Payment documentation
Stay informed, but avoid prematurely implementing major policy changes until there is a final resolution.
Consider leveraging your enterprise risk management program and keep the Board, Finance Committee and Audit Committee informed. Strong governance, documented controls and clean audits will become even more
important.
Evaluate cash flow availability and needs, including how changes in the timing of funding requests and
reimbursements could affect your organization. Inventory federal awards to identify those most dependent on
multi-year funding, and examine vendor and staffing commitments that rely on federal funding.
Review existing grant management policies and documentation practices, with particular attention to
procurement, conflicts of interest, whistleblower policies and subrecipient monitoring.
Take inventory of your subrecipient documentation, including signed agreements, UEI confirmation and
SAM.gov verification, the most recent audits, monitoring reports and corrective action plans. Review risk
assessments to ensure they demonstrate why each subrecipient receives its level of monitoring and that
assessments are risk-based, repeatable and updated annually.
For the potential impact of DEI-based proposed revisions, consider consulting legal counsel to review employee
handbooks, hiring procedures and grant-funded program eligibility criteria.
Please contact the HoganTaylor team for additional information or to discuss how these developments may
affect your organization. Our team is available to answer questions and help you navigate what comes next. Download a copy of the OMB's proposed changes below.
The HoganTaylor Nonprofit team of business advisors and CPAs is comprised of former CFOs, controllers, and industry experts with extensive experience providing the guidance organizations need to lean forward again in their leadership. If you have any questions about this content, or if you would like more information about HoganTaylor’s Nonprofit practice, please contact David Stiles, CPA, Nonprofit Practice Lead.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.