In 2024, the NC Office of State Budget and Management (OSBM) updated the state regulations on the administration of state grants. The updated rule, which took effect on July 1, 2024, and applies to grants starting after that date, makes three significant changes:
- The revised rule modernizes the audit threshold for nonprofits receiving state grants. Under the old rule, any nonprofit that received, held, used, or expended more than $500,000 in state grant funds in a year was required to have a single or program-specific audit (also known as a Yellow Book audit) completed each year. The new rule raises the audit threshold to the level set in the OMB Uniform Guidance. That means that the audit threshold increased to $750,000 in grant funds on July 1, 2024, and it increased to $1 million when the revised OMB Uniform Guidance took effect on October 1, 2024. The state audit threshold will automatically increase in the future when the federal audit threshold in the OMB Uniform Guidance increases.
- The revised rule streamlines the reporting process for nonprofit grantees by establishing two levels of grantees (based on the audit threshold in the OMB Uniform Guidance), eliminating a third level ($25,000 in state grants) from the previous rule. This change means that nonprofits with less than $25,000 in state grants are now required to report to the state agency making the grant on their activities, accomplishments, and performance measures (they had been exempt from this requirement previously).
- The revised rule also adds definitions to help clarify some of the responsibilities of state agencies in managing grant programs.
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