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  • Writer's pictureJoe Williams

What is 2 CFR 200, anyway?

2 CFR 200, also known as the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is a crucial set of regulations that governs the management of federal funds. In this summary, we will highlight the most important portions of 2 CFR 200, focusing on key areas of significance.

One of the primary objectives of 2 CFR 200 is to ensure consistency and transparency in the administration of federal awards. It applies to various entities, including state, local, and tribal governments, institutions of higher education, and nonprofit organizations that receive federal awards. Compliance with these regulations is crucial for organizations to effectively and responsibly manage federal funds. The rules may seem daunting if this is your first time receiving a federal award or subaward, but they are an incredibly helpful framework once you know how to navigate them.

The administrative requirements outlined in 2 CFR 200 play a vital role in pre- and post-award processes. Pre-award requirements emphasize the criteria used by federal awarding agencies to select recipients. These criteria ensure that federal awards are granted to eligible and qualified entities, promoting fair and equitable distribution of funds. Additionally, the regulations establish procedures for pre-award review and approval of certain costs, enhancing accountability and ensuring the proper use of federal funds. Post-award requirements cover financial and program management standards. These standards aim to promote effective financial management and program performance. Entities receiving federal awards must maintain accurate accounting records, implement internal controls, and exercise budget controls. Moreover, program management standards emphasize program planning and monitoring, performance measurement, and property management. Adhering to these standards helps ensure that federal funds are utilized efficiently and effectively to achieve the intended outcomes.

The cost principles outlined in 2 CFR 200 are of significant importance. They determine the allowability of costs charged to federal awards. These principles establish guidelines for distinguishing reasonable, allocable, and necessary costs, both direct and indirect. Proper understanding and application of these principles are crucial to ensure that costs charged to federal awards are appropriate and justifiable.

Procurement standards are another critical aspect of 2 CFR 200. These standards govern the acquisition of goods and services using federal funds. They emphasize fair and open competition, proper contracting methods, and effective contract administration. Compliance with these standards ensures that the procurement process is transparent and free from conflicts of interest, promoting fair competition and value for money.

The audit requirements specified in 2 CFR 200 are essential for ensuring accountability and integrity in the use of federal funds. Entities that receive federal awards are subject to different types of audits, with a focus on the single audit for entities expending $750,000 or more in federal awards. These audits help identify any potential mismanagement, fraud, or noncompliance, enabling corrective actions to be taken promptly.

Finally, 2 CFR 200 addresses compliance and enforcement measures. Noncompliance with the regulations may result in corrective actions and penalties imposed by federal awarding agencies. These measures underscore the importance of adhering to the regulations to maintain accountability and ensure the proper stewardship of taxpayer dollars.

In summary, 2 CFR 200 provides a comprehensive framework for the uniform administrative requirements, cost principles, and audit requirements for entities receiving federal awards. It encompasses crucial aspects such as pre- and post-award requirements, cost principles, procurement standards, audit requirements, and compliance measures. Adherence to these regulations is essential for organizations to effectively manage federal funds, promote transparency, and uphold accountability in the use of taxpayer dollars.

Jallied Consulting is pleased to offer training in 2 CFR 200 and best practices for compliance. Drop us a line to learn more.

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