Grant Compliance Simplified: Navigating OMB and State Standards

Fulfilling grant compliance requirements is more than just checking boxes — it’s about administering the funding your institution needs while avoiding audit risks that could jeopardize future opportunities. For education professionals juggling multiple grants, federal and state requirements can feel overwhelming. Frequent policy changes at the federal level, including recent updates to the Uniform Grant Guidance issued by the Office of Management and Budget (OMB) and state-level changes like Texas Grants Management Standards (TxGMS) Version 2.0, emphasize the importance of staying informed.

To help simplify this process, we’ve outlined a step-by-step approach that schools can follow to stay compliant, reduce risks and maintain funding eligibility.

Step 1: Identify and Understand the Compliance Requirements

Start by laying the foundation. Before diving into grant activities, it’s essential to carefully review and understand the compliance requirements detailed in the grant agreement. Proactively addressing these areas enables you to minimize compliance risks and maintain transparency with funders. Look for these key elements in your grant agreement:

• Contract amount and terms: Know the scope of work, funding limitations and match requirements
• Allowable vs. unallowable costs: Know what expenses are permitted and what is not
• Reporting requirements: Note due dates and formats for financial and performance reports
• Funding sources: Confirm whether the grant is subject to state-specific standards
• Key contacts: Build relationships with grant administrators for routine guidance and clarification

Step 2: Distinguish Between Federal and State Compliance Standards

Once you’ve reviewed your grant requirements, the next step is to understand which rules apply. Both federal and state standards shape grant compliance, but they differ in scope and application.

• Federal standards: The OMB Uniform Guidance (2 CFR 200), also called the Super Circular, establishes baseline rules for federal grant cost principles, administrative requirements and audits. In addition to compliance, this guidance helps link funding decisions to outcomes and accountability.
• State standards: TxGMS Version 2.0 takes effect on September 1, 2025. While it aligns with federal standards, it may include stricter requirements to reflect state priorities. If your grant includes state-administered funds, be sure to apply these standards as well.

Step 3: Stay Updated on Uniform Guidance Changes

As policies shift, your team should be aware of the latest updates. Effective fiscal year 2026, the Uniform Guidance updates will impact the way schools manage federal grants, adding a stronger focus on efficiency, security and accountability. The key updates include:

• Increased thresholds:
  • Single audit threshold raised from $750,000 to $1 million.
  • Equipment vs. supply distinction increased from $5,000 to $10,000.
  • De minimis indirect cost rate increased from 10% to 15%.
  • Fixed amount subaward limitation raised from $250,000 to $500,000.
• Cybersecurity requirements: Grant recipients must adopt reasonable cybersecurity measures and disclose any federal law violations related to fraud, bribery or conflicts of interest.
• Administration changes: Organizations must inform employees in writing about federal whistleblower rights.

Step 4: Use the OMB Compliance Supplement to Guide Your Audit Preparation

To help manage these changes, the federal government provides a powerful tool — the OMB Compliance Supplement, commonly called the Compliance Supplement. Updated regularly, this is an efficient, cost-effective resource to understand federal program objectives, procedures and compliance mandates.

The Compliance Supplement includes eight key parts. Understanding how each part functions allows you to apply its guidance in a practical context. Part 2 (the Matrix of Compliance Requirements) and Part 7 (guidance for unlisted programs) are especially useful for schools.

Part 2: Matrix of Compliance Requirements: This quick reference tool simplifies the audit process and categorizes compliance requirements into areas such as allowable costs, eligibility, procurement standards, reporting obligations and other key areas. Schools can leverage the matrix effectively through:

• Streamlined research: Quickly locate applicable requirements
• Risk mitigation: Focus on high-risk areas like eligibility or reporting
• Audit preparation: Compliance alignment with auditors and grant recipients during single audits

Part 7: Auditing unlisted programs: Part 4 of the supplement doesn’t list all federal programs, but schools can still ensure compliance by:

• Reviewing grant documents: Start with the grant agreement, application and award for requirements
• Leveraging internal documentation: Process documentation that outline the program requirements
• Communicating with grantors: Contact funding agencies for additional guidance on program rules
• Checking agency websites: Review program-specific information online to fill any gaps

Other Parts to Know:

Part 1: Background, purpose and applicability

Part 3: Compliance requirements across all federal programs

Part 4: Individual program-specific details

Part 5: Clusters of related programs

Part 6: Internal controls best practices

Part 8: Appendices with annual updates and audit advisories

Why Schools Need the OMB Compliance Supplement

For educational institutions managing federal funds, the Compliance Supplement is more than a guide — it can be lifeline to simplify complex regulations and help ensure smooth audits. Tools like the Matrix of Compliance Requirements and guidance for unlisted programs can streamline compliance efforts and reduce audit risks. Using these resources effectively keeps schools accountable, protects their funding and enables them to focus on what matters most — educating students.

Final Thoughts

Grant compliance doesn’t have to be daunting. With the right tools and a clear understanding of federal and state requirements, schools can manage their grants more easily. The OMB Compliance Supplement provides the structure and insights needed to navigate audits while safeguarding funding. Staying informed and leveraging these resources can turn compliance challenges into opportunities for growth and transparency.

Ready to simplify your grant compliance process? Contact us today. We can help you navigate the requirements with confidence.

Authored by Brandon Tanous and Jenn Garrett

©2025