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2 CFR Part 200, Subpart F: The Accounting Requirements Needed to Pass a Uniform Guidance Audit (UGA)

April 8, 2023 / Ed Jameson / Blog Posts
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2 CFR Part 200, Subpart F

In order to ensure that federal grant awards are handled in a fiscally responsible manner, the Office of Management and Budget (OMB) issued 2 CFR Part 200, THE UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS.

2 CFR Part 200, Subpart F outlines the accounting requirements to a Uniform Guidance Audit, also known as a 2 CFR 200 Audit and formerly known as an OMB A-133 Audit.

The 2 CFR 200 regulations requires for-profit Companies with certain Grant awards (including NIH grants and DOE Grants and Cooperative Agreements) to be audited in accordance with the Uniform Guidance Audit rules.


Organizations with expenditures from SBIR, STTR, ARPA-E and EERE awards that exceed $750,000 in federal funds (irrespective of amounts drawn) during their fiscal year must have an annual audit performed in accordance with UGA.

From the receipt of a Notice of Grant Award (NGA), policies and procedures that document direct and indirect grant expenditures will be tested to ensure that spending occurs in accordance with all applicable laws, rules, regulations, and terms and conditions governing your grant. The burden of proof rests with the grantee.

The level of accounting required by a small business subject to UGA is far greater than the acceptable accounting system needed for Phase 1 Grant and Contract awardees in several regards.

Some of the significant elements to be tested during the Uniform Guidance Audit include:

1. Direct, indirect and unallowable costs should be properly identified and treated consistently. Costs which are clearly identifiable to a specific project should be treated as a direct expense. Costs which are common to a number of projects and cannot be clearly allocated to one project should be treated as an indirect expense.

2. All funds have been expended during the period of performance.

3. The generation of program income during the project has been credited to the government.

4. The grantee has properly managed cash and used the Payment Management System (PMS) correctly; and can demonstrate that funds have been drawn in concert with proper revenue recognition.

5. The grantee has properly filed all Financial Status Reports (FSR).

6. Costs are consistently treated in accordance with the NIH Grants Policy Statement.

7. All sub recipients (subcontractors and consultants) have been properly monitored.

During the UGA audit, or the “2 CFR 200 audit”, auditors will look for weaknesses in the grantee´s internal control system. Ultimately, all expenditures must be reasonable, prudent, allocable, and be of benefit to the government.

Each transaction should have a well-documented audit trail that includes authorization for expenditure, backup documentation and allocation of expenditure. Expenses on federal awards should be treated consistently with non-federal expenses.

The UGA audit must be performed by a CPA firm that has a solid understanding of the Federal Acquisition Regulation (FAR) and is well versed in the supplemental regulations issued by the specific funding agency awarding your project work.

We have over 40 years of government award accounting experience and over $6 billion in awards managed.  We can help you set up the most cost-efficient FAR and 2 CFR 200 compliant accounting system and help you maintain it.

Speak With A Government Funding Award Expert!
Call Now: 781-862-5170 – or – Schedule A Call

To learn more, check out our Whitepaper – Understanding the Basic Accounting Requirements.

Read through our seven-part series about the Uniform Guidance Audit:

  1. Is Your Grant Subject To a Uniform Guidance Audit?
  2. What Happens During a Uniform Guidance Audit?
  3. How a UGA Auditor Tests Your Company’s Internal Controls
  4. How To Avoid Uniform Guidance Audit Findings on SF-425 Reporting
  5. How To Avoid UGA Findings: Direct Subcontractors
  6. How To Avoid UGA Findings: Direct Consultants
  7. What Happens To NIH and DOE Grant Audit Findings?
Ed Jameson, CPA, Managing Partner

I’ve been in practice for over 40 years helping our small business clients procure, manage, and survive audits on more than $6 billion in federal government contract and grant funding. We’ve been featured presenters and panel moderators at Tech Connect’s National SBIR/STTR conferences since 2010, and I’ve presented at the DOD’s Mentor Protégé Summit and present regularly for several state and local organizations.