On May 29, 2026, the Office of Management and Budget published a proposed rule in the Federal Register that would rewrite 2 CFR Part 200 — the Uniform Guidance. At 412 pages, it is the most substantial revision to federal grant rules since the framework was first published in 2013. OMB has proposed renaming it the Uniform Grants Regulation and elevating it from guidance to binding regulation.
The 45-day comment period closed on July 13, 2026. OMB has targeted an effective date of October 1, 2026, to coincide with the start of federal fiscal year 2027.
Most of the coverage so far has come from law firms, and it has focused on policy: nondiscrimination provisions, foreign collaboration restrictions, merit review by political appointees. That coverage is useful, but it is written for general counsel.
This article is written for the controller.
Because underneath the policy provisions sit a series of changes that land squarely on your accounting system — how you record costs, how you request cash, how you classify a payment to a partner organization, and how quickly you can stop spending when an agency tells you to. If your grant accounting currently depends on spreadsheets bolted to a general ledger that was never built for fund accounting, several of these changes will be difficult to absorb.
A caveat before we go further: this is a proposed rule. It has not been finalized. Provisions may change in response to public comments, and portions may face litigation. But OMB’s own timeline is aggressive, and finance teams that wait for a final rule in September will have very little runway.
1. Fixed amount awards would disappear entirely
This is the single biggest operational change for finance departments.
The proposed rule would eliminate fixed amount awards and fixed amount subawards. OMB’s stated rationale is that lump-sum instruments limit transparency, because they carry no routine monitoring of actual costs and no financial reporting requirement.
If finalized, this means new awards move to a cost-reimbursement model. And cost reimbursement is a fundamentally different accounting discipline than fixed amount.
Under a fixed amount award, you deliver against milestones and invoice a predetermined sum. Under cost reimbursement, every dollar you request must be traceable to an actual, allowable, allocable cost recorded in your ledger. That requires:
- Transaction-level cost capture coded to the correct award, program, and fund
- Allowability screening at the point of entry, not at the point of audit
- Payroll and time and expense data allocated to awards with supporting documentation
- Reporting that reconciles cleanly from the drawdown request back to source documents
Organizations that have been running a mix of fixed amount and cost-reimbursable awards will find their fixed amount population shrinking as new awards are issued. Organizations that have relied heavily on fixed amount instruments to avoid the administrative burden of cost tracking will need to build that capability quickly.
2. Payment requests would need a written justification
Section 200.305 as proposed would require federal agencies to verify recipient eligibility through Treasury’s Do Not Pay system before disbursing funds. More consequentially for your team, payment requests from recipients other than states would need to include a justification describing the purpose of the payment and the specific award-related work it supports.
This changes the drawdown from a cash management task into a documentation task. A request that reads “reimbursement, June expenditures” will not clear the bar. You will need to tie the requested amount to identifiable activities, which in practice means your grant management module needs to produce award-level cost detail on demand rather than after a two-week reconciliation exercise.
Teams that already run an automated drawdown process off live ledger data will absorb this with minimal friction. Teams that assemble drawdowns manually in Excel each month will feel it immediately, and the delay will show up in cash flow.
3. New suspension authority means you need to be able to stop on short notice
The proposal adds a temporary suspension mechanism modeled on stop-work orders in federal procurement. An agency or pass-through entity could suspend an award, in whole or in part, for up to 90 days. During suspension, recipients would be required to minimize costs allocable to the suspended activities.
Separately, the rule would broaden discretionary termination authority, allowing agencies to end awards that no longer align with agency priorities or the national interest as measured at the time of termination. For discretionary terminations, agencies would not be required to provide hearings or appeals — only written notice with a brief summary of reasons, and an opportunity for the recipient to submit termination costs.
The accounting implication is specific: you need to know, on any given day, what you have committed but not yet spent on every award.
That is exactly what encumbrance accounting exists to do. Open purchase orders, requisitions, and vendor agreements represent real obligations that will keep generating cost after a stop-work order lands. If those commitments only live in a purchasing spreadsheet, you cannot produce a defensible termination cost statement in the window an agency gives you. If they sit in your ledger as encumbered amounts against the specific award, you can.
4. Transfers to affiliates would need formal classification
Two proposed provisions — at sections 200.331(c) and 200.332(h) — would prevent pass-through entities from treating payments to affiliates, subsidiaries, or related entities as internal transfers exempt from subrecipient or contractor determination. Each transfer would need to be evaluated and classified as a subaward or a contract.
For multi-entity organizations, this is a real change. Funds moving between a parent and a controlled affiliate, or between chapters, may currently be booked as due to / due from entries and treated as internal. Under the proposal, those transfers could carry full subrecipient monitoring obligations.
Alongside this, the rule tightens SAM.gov subaward reporting: recipients would need to confirm in performance reports that all subawards issued during the period were reported, and failure to report could serve as grounds for termination.
If your organization runs multiple legal entities, review how your inter-company accounting currently handles these flows. The classification decision has to be made at the point of transaction, and it has to be documented.
5. Cost allowability tightens in ways your chart of accounts should reflect
Subpart E changes would make several common cost categories harder to charge:
- Publication costs would be unallowable unless required by statute or approved in advance case by case
- Conference attendance would be allowable only where expressly approved and written into the award terms
- Advertising and public relations costs would be presumptively unallowable
- Fundraising and investment management costs would require prior written approval
- Commencement and convocation costs would be unallowable for all entity types
None of these are exotic. They are line items that appear routinely in program budgets. The control point is your chart of accounts and your approval workflow — you want the system to flag a conference registration coded to a federal award before it posts, not after an auditor finds it. This is where the granularity of your fund accounting structure does real work.
What is not changing
Worth stating clearly, because there has been confusion:
The proposal does not alter indirect cost rates. The 15% de minimis rate under section 200.414(f) stays in place, and OMB has explicitly said it may address indirect costs through separate future action. The $1,000,000 Single Audit threshold established in the 2024 revision also stands, as do the $10,000 equipment floor and the $50,000 subaward inclusion in modified total direct costs.
One indirect note does matter, though: the proposed pre-issuance review principles state that, all else equal, preference should go to institutions with lower indirect cost rates. That is not a rate change, but it is downward pressure.
The dual-population problem nobody is talking about
Here is the wrinkle that will cause the most confusion in practice.
The proposed requirements would apply to new awards and amendments issued after the effective date. Existing awards continue under their current terms.
That means from October 1 forward, most organizations will be administering two populations of federal awards simultaneously — legacy awards under one rule set and new awards under another — potentially for years, given multi-year periods of performance.
Your system needs to track which rule set governs each award. A fixed amount award issued in August 2026 and a cost-reimbursable award issued in November 2026 have different documentation requirements, different reporting obligations, and different allowability screens. If your only way to distinguish them is institutional memory, mistakes are inevitable — and mistakes in this area are precisely what triggers audit findings.
What to do in the next 60 days
- Inventory your fixed amount awards and subawards. Identify which will still be active after October 1 and which renewals will convert.
- Test your drawdown documentation. Pull a recent payment request and ask whether it would survive the new justification standard.
- Confirm you can produce commitment data by award. If a stop-work order arrived tomorrow, how long would it take to quantify open obligations?
- Review inter-entity transfers. Determine which currently treated as internal would need reclassification.
- Add an award-vintage field. Tag every award with the rule set that governs it before you have two populations to untangle.
- Map restricted cost categories. Ensure your chart of accounts can flag publication, conference, advertising, and fundraising costs at entry.
Most of this list is not a compliance exercise. It is a systems question. Organizations tracking grants in spreadsheets alongside a general ledger built for commercial accounting will find several of these steps difficult, and the ones that involve producing data quickly — commitments by award, cost detail supporting a drawdown — nearly impossible under time pressure.
If you are already reviewing your grant accounting infrastructure, understanding the full grant management lifecycle is a useful starting point, as is a candid look at where grant tracking most often breaks down.
The rule may change before it is final. The direction of travel will not: more documentation, more traceability, less tolerance for reconstruction after the fact. That is a systems problem, and October is closer than it looks.
