Key takeaways from OMB’s 2021 Compliance Supplement

The Office of Management and Budget (OMB) has released the 2021 Compliance Supplement, which is effective for single audits for fiscal years ending on or after June 30, 2021.

Although the Compliance Supplement is intended to provide guidance for auditors performing single audits, it can help you understand the key changes and impacts on your upcoming single audits.

We’ve put together the highlights:

Terminology change

The term Assistance Listing (AL) number has replaced the Catalogue of Federal Domestic Assistance (CFDA) number when identifying programs. This updated terminology should be reflected on your schedule of expenditures of federal awards (SEFA), schedule of findings and questioned costs, and other instances where the term CFDA # previously appeared in the audit report.

2021 Compliance Supplement addenda

OMB intends to release addenda to the 2021 compliance supplement to address certain programs funded under the American Rescue Plan Act (ARPA) and the Coronavirus Response and Relief Supplemental Appropriations Act. The addenda will be posted on the CFO.gov website when available.

The following programs are expected to be addressed by the addenda. Final agency determination is pending for programs marked with an asterisk:

Treasury

• *Capital Projects Fund (Assistance Listing has not been assigned)
• *Homeownership Assistance Fund (Assistance Listing 21.026)
• *Local Assistance and Tribal Consistency Fund (Assistance Listing has not been assigned)
• State and Local Fiscal Recovery Fund (Assistance Listing 21.027)

Education

• Education Stabilization Fund (ESF) (Assistance Listing 84.425) — Note that while there is a planned release of this existing program in the upcoming addendum, ESF is also included in the supplement.

The AICPA recommends not issuing single audits impacted by these programs until the addenda have been issued.

Higher risk designations

There are programs that have been identified as “higher risk” that may impact the major program determinations performed by your auditor. You may want to discuss the possible impact with your auditor if you have any of the following programs:

Updated Uniform Guidance

Revisions to Uniform Guidance that became effective in 2020 are incorporated in Part 3 of the compliance supplement.

Keep in mind that not all federal agencies have adopted the new Uniform Guidance in their agency regulations, included Departments of Defense, Health and Human Services (HHS), Energy, Interior and Transportation. Appendix II of the compliance supplement provides a listing of agencies that have adopted.

The updated Uniform Guidance includes increased thresholds for micro-purchases and simple acquisitions. The supplement instructs the auditor not to issue an audit finding if your organization adopted the increased procurement thresholds on an agency-wide basis but receives funding from an agency that has not yet adopted the new Uniform Guidance.

To learn more about the updated Uniform Guidance, consider attending one of our Uniform Guidance trainings.

SEFA and data collection form (DCF)

Appendix VII indicates that organizations should continue to report COVID-19 funding separately on the SEFA and DCF. The fair value of donated personal protective equipment (PPE) purchased with federal assistance funds should continue to be reported as a stand-alone footnote accompanying the SEFA, if applicable.

Federal Funding Accountability and Transparency Act (FFATA)

Your auditor is required to test compliance with the FFATA requirements for all major programs (regardless of whether COVID-19 funding is involved) when the reporting compliance requirement is applicable and direct and material to the program, and the organization makes first-tier subawards/subcontracts of $25,000 ($30,000 in the new Uniform Guidance) or more. The FFATA requirement will not need to be tested for the Coronavirus Relief Fund (AL # 21.019).

Single audit deadlines

Appendix VII provides a reminder of the six-month extension of the single audit submission deadline provided by OMB Memo M-21-20 for audits of years ended through June 30, 2021. There is currently no due date extension available for audits of fiscal year-ends after June 30, 2021. Audit packages of entities with years ended June 30, 2021, are to be submitted to the Federal Audit Clearinghouse by the earlier of 30 days after audit completion or September 30, 2022.

Specific program guidance

Part 2 — Compliance matrix: Part 2 of the compliance supplement provides the matrix of compliance requirements that may be subject to audit for your major programs. Additional programs added to the matrix and changes to the applicable compliance requirements are highlighted on the matrix. This is a helpful resource to determine what compliance requirements may be audited for your major programs.

The following notable changes were made to programs commonly operated by nonprofit grant-funded organizations. (This list is not all inclusive and Part 2 should be consulted for your major programs.)

• AL # 17.258, 17.259 and 17.278 (WIOA Cluster): The WIOA Cluster – Allowable Costs/Costs Principles was changed from applicable (Y) to not applicable (N).
• AL # 17.207, 17.801 and 17.804 (Employment Service Cluster): Allowable Costs/Costs Principles, period of performance, and subrecipient monitoring were changed from Y to N. Matching, level of effort, earmarking was changed from N to Y.
• AL # 93.044, 93.045, and 93.053 (Aging Cluster): Reporting changed from N to Y, and Special Tests and Provisions changed from Y to N.
• AL # 14.231 Emergency Solutions Program: Activities Allowed and Allowable Costs/Cost Principles changed from N to Y, and Period of Performance and Program Income changed from Y to N.
• AL # 94.006 AmeriCorps: Reporting changed from Y to N, and subrecipient monitoring changed from N to Y.

Appendix V provides a roadmap of changes incorporated in the 2021 compliance supplement and is a good reference to determine if program-specific guidance was changed for your major programs.

Part 5 — Clusters of programs: Clusters of programs are groupings of related programs that share common compliance requirements and are viewed as one program when your auditor determines your major programs.

Changes to the clusters of programs include the addition of AL # 10.579 (Child Nutrition Discretionary Grants Limited Availability) to the Child Nutrition Cluster and a new cluster called the Federal Motor Carrier Safety Administration (FMCSA) cluster. The FMCSA cluster includes AL # 20.218 (Motor Carrier Safety Assistance Program) and # 20.237 (High Priority Grant Program).

Provider Relief Fund (PRF)

The 2020 compliance supplement addendum indicated that PRF expenditures and/or lost revenue was to be reported on SEFAs beginning with December 31, 2020 year-ends. Guidance issued by HHS earlier this summer superseded the 2020 addendum, and it states that PRF expenditures and/or lost revenues should be reported on SEFAs for fiscal years ending on or after June 30, 2021.

For year ends between June 30, 2021, through December 30, 2021, total expenditures and lost revenues from the Period 1 report submission to the PRF Reporting Portal are to be reported on the SEFA. For year-ends December 31, 2021, through June 29, 2022, both period 1 and period 2 report submissions should be reported on the SEFA.

The matrix of compliance requirements for this program was updated, with Special Tests and Provisions for testing out-of-network patient out-of-pocket expenses being applicable in the 2021 supplement.

Health Resources & Services Administration COVID-19 Uninsured Program (HRSA)

The matrix of compliance requirements for this program was updated from the 2020 compliance supplement addendum by adding Special Tests and Provisions for testing that all claims submitted were full and complete.

Education Stabilization Fund (ESF)

This program is broken out between numerous subprograms denoted by alphabetic character identifiers. Most of the subprograms are broken out in two sections and include Section 1: Elementary and School Secondary Relief Fund (ESSER) and Section 2: Higher Education Emergency Relief Fund (HEERF).

There are also subprograms not specifically addressed in Sections 1 or 2, and auditors must refer to Part 7 for guidance in determining the compliance requirements to audit for those subprograms.

The matrix of compliance requirements for Section 1 programs was updated, with matching no longer being applicable and new applicability for Special Tests and Provisions for testing of participation of private of private school children and prioritizing services or assistance for non-public schools under Emergency Assistance to Non-public Schools (EANS).

Although ESF is included in the first release of the 2021 OMB compliance supplement, there will also be updates related to certain ESF subprograms that received ARPA funding in a future supplement addendum.

Need assistance interpreting the OMB Compliance Supplement?

Wipfli is here to help your organization. Please reach out if you have any questions about the 2021 compliance supplement.

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