A new federal grant single audit landscape is taking shape, and nonprofit leaders, government grantees, and their finance teams should be paying close attention. The Office of Management and Budget (OMB) published a proposed rewrite of 2 CFR Part 200, the Uniform Guidance, in the Federal Register on May 29, 2026, with public comments due by July 13, 2026. This proposal arrives less than two years after the last major revision reset the single audit threshold to $1,000,000 and raised the de minimis indirect cost rate to 15 percent, so organizations now face a second wave of change stacked on rules many have barely finished implementing.
Quick answer: OMB’s May 2026 proposed rule does not lower the single audit threshold or reverse the 15 percent de minimis rate. Both remain in effect at $1,000,000 of federal awards expended (2 CFR 200.501) and 15 percent of modified total direct costs (2 CFR 200.414(f)). The proposal instead targets broader grant administration policy, including pre-issuance review of selected discretionary awards and expanded agency termination authority. The audit framework in Subpart F is being refined, not rebuilt, but grantees should comment before the July 13, 2026 deadline and prepare for an effective date as early as October 1, 2026.
What Is Already Locked In: The $1M Threshold and 15% De Minimis Rate
Before evaluating the new proposal, it helps to be clear about what is already settled federal law. The 2024 revision to the Uniform Guidance raised the single audit threshold from $750,000 to $1,000,000, effective for fiscal years beginning on or after October 1, 2024. Under 2 CFR 200.501, an entity that expends $1,000,000 or more in federal awards during its fiscal year must obtain either a single audit or, in limited single-program situations, a program-specific audit.
That same 2024 package raised the de minimis indirect cost rate from 10 percent to 15 percent of modified total direct costs. Per 2 CFR 200.414(f), recipients and subrecipients without a current federally negotiated indirect cost rate may elect to charge up to 15 percent of MTDC. For many smaller grantees, this single change meaningfully increased the indirect cost recovery available on federal awards.
The 2024 revision also adjusted several supporting figures. The Type A program threshold rose to $1,000,000 for entities with total federal awards expended of $34 million or less, the subaward exclusion for MTDC moved from $25,000 to $50,000, and the equipment capitalization floor increased from $5,000 to $10,000. These are the operative baselines today, and the May 2026 proposal generally leaves them in place rather than reopening the dollar figures.
Understanding why these numbers matter requires connecting them back to the audit itself. The threshold decides who is in scope, the Type A figure shapes which programs get the most scrutiny, and the MTDC and equipment figures feed directly into how costs are charged and tested. A change to any one of them flows through your federal expenditure totals, so the fact that the proposal holds them steady is itself useful planning information.
If your organization receives significant federal pass-through funding, our team that works with nonprofit organizations can help you confirm whether you crossed the $1,000,000 line in your most recent fiscal year and what that means for your reporting calendar.
What the May 2026 Proposed Rule Actually Changes
The headline point for audit planning is reassuring: the single audit threshold and the core mechanics of Subpart F are being refined, not overhauled. OMB has not proposed dropping the threshold back to $750,000, nor has it proposed gutting the audit requirements that protect federal taxpayer dollars. Organizations that have already adjusted to the $1,000,000 trigger should not expect that number to move under this rulemaking.
Where the proposal does reach is grant administration and award terms. According to summaries from organizations including the National Association of Counties, the proposal introduces new policy-driven provisions, including senior agency pre-award review of selected proposals and expanded authority for agencies to terminate awards, with categorical exceptions noted for block grants, formula grants, and disaster recovery grants. These provisions speak to how federal money is awarded and managed, which can change the compliance terms baked into your award documents even if the audit threshold itself stays constant.
That distinction matters for single audit purposes. A single audit tests compliance with the terms and conditions of federal awards, so when those terms shift, the criteria your auditor tests against shift with them. New termination clauses, additional certifications, or other award conditions could surface as compliance requirements that auditors review under the applicable program in the Compliance Supplement.
OMB also indicated that the indirect cost rate negotiation system is not being revised in this rulemaking. Combined with the unchanged 15 percent de minimis rate established in the underlying regulation at 2 CFR 200.414, that means indirect cost recovery strategy stays stable for now, even as the surrounding administrative rules move. Grantees who switched to the de minimis rate in 2024 or 2025 do not need to revisit that election based on this proposal alone.
It is worth separating the two categories the proposal touches. One bucket is the financial machinery of the award, meaning thresholds, rates, and cost principles, which is largely untouched. The other bucket is the discretionary policy layer that governs how agencies issue, condition, and end awards, which is where the substantive movement sits. Reading the proposal through that lens keeps the audit conversation focused on terms and conditions rather than on dollar figures that are not actually in play.
How Do the Changes Stack for Single Audit Planning in FY 2026 and Beyond?
The practical challenge is that the May 2026 proposal lands on top of rules that are still new to many finance teams. The threshold and Type A changes from 2024 took effect for fiscal years beginning on or after October 1, 2024, so a large share of grantees are applying the $1,000,000 threshold for the first time in their current audit cycle. Layering a fresh administrative rewrite on that transition raises the stakes for accurate federal expenditure tracking.
A clean Schedule of Expenditures of Federal Awards (SEFA) remains the foundation of any defensible single audit. The SEFA drives the threshold determination, the major program selection, and the auditor’s risk assessment, so errors there ripple through the entire engagement. With multiple rule sets in motion, reconciling your SEFA to your general ledger and to subrecipient activity is more important, not less.
Timing is the other pressure point. The proposed rule contemplates an effective date as early as October 1, 2026, which would align with the start of the federal fiscal year. If finalized on that timeline, new award terms could begin appearing in agreements issued in late 2026, meaning compliance obligations may differ between awards signed before and after the effective date. Tracking award dates against the rule’s effective date will help you apply the correct requirements to each grant.
This creates a realistic possibility of a mixed portfolio within a single audit period. An organization could hold older awards governed by the current terms alongside newer awards carrying the revised provisions, and the auditor would test each against its own applicable criteria. Building that distinction into your grant records now, rather than reconstructing it later, keeps the eventual compliance testing orderly.
Now is also the moment to influence the outcome. The comment period closes July 13, 2026, and grantees, associations, and audit professionals can submit comments through the docket referenced in the Federal Register notice. If a proposed provision would create an unworkable compliance burden, a specific, well-documented comment carries more weight than a general objection. Our audit and assurance services team helps organizations read proposed compliance terms against real-world operations so the feedback you submit is grounded in how the rules would actually play out.
Steps to Take Before the Rule Is Finalized
First, confirm your single audit status under current law. Total your federal awards expended for the fiscal year and compare against the $1,000,000 threshold in 2 CFR 200.501, remembering that the count includes federal funds received directly and through pass-through entities.
Second, document your indirect cost approach. If you use the 15 percent de minimis rate, keep the election consistent and ensure your MTDC base is calculated correctly, because indirect cost questions are a recurring audit finding area. Confirm that you are excluding the right items, such as equipment and the portion of each subaward above $50,000, so the base you apply the rate to holds up under review.
Third, inventory your active awards and their terms. As new provisions on termination and pre-award review take effect, you will want a clear record of which agreements predate the rule and which fall under the new framework, so your compliance testing maps to the right criteria.
Fourth, engage early with your auditor and, where appropriate, submit a comment. Verifying the proposed dates and provisions against the Federal Register notice itself, rather than secondhand summaries, protects you from acting on figures that change between the proposed and final rule.
Frequently Asked Questions
Is the single audit threshold changing under the May 2026 proposed rule?
No. The single audit threshold remains $1,000,000 of federal awards expended during the entity’s fiscal year under 2 CFR 200.501. The May 2026 proposal refines Subpart F rather than altering the threshold, so organizations should continue to plan around the $1,000,000 trigger that took effect for fiscal years beginning on or after October 1, 2024.
Does the proposal change the 15% de minimis indirect cost rate?
No. The 15 percent de minimis rate under 2 CFR 200.414(f) stays in place, and OMB has stated the indirect cost rate negotiation system is not being revised in this rulemaking. Recipients without a negotiated rate may continue to elect up to 15 percent of modified total direct costs.
When does the comment period end, and when could the rule take effect?
Comments are due by July 13, 2026, based on the Federal Register notice published May 29, 2026. The proposal contemplates an effective date as early as October 1, 2026, though the final date and provisions can change before the rule is finalized, so verify against the official notice.
What should grantees do right now?
Confirm whether you crossed the $1,000,000 single audit threshold, keep your Schedule of Expenditures of Federal Awards reconciled, document your de minimis election, and track award dates against the proposed effective date. Submitting a specific comment before July 13, 2026 is also a meaningful way to shape the final rule.
