Updated single audit guidance provided by OMB in 2021 Compliance Supplement

By Ken Tysiac

Federal requirements for single audits became a bit more clear Thursday when the Office of Management and Budget (OMB) released the 2021 Compliance Supplement, but some questions remain as OMB is expected to issue more guidance in two future addenda.

The 2021 Supplement takes effect for audits of fiscal years beginning after June 30, 2020, and supersedes the 2020 Compliance Supplement and its Addendum.

Among the important changes in the 2021 Supplement are the following:

  • Identifies several programs as higher-risk programs, including the Education Stabilization Fund, the Coronavirus Relief Fund, and the Provider Relief Fund. All three of those programs were part of the federal government’s COVID-19 relief efforts. This designation will likely affect the auditor’s major program determination.
  • Provides an indication of the programs that may be included in future OMB addenda.
  • Updates Part 3 of the 2021 Supplement for the November 2020 revisions to 2 C.F.R. Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.
  • Incorporates into the Reporting section in Part 3 of the 2021 Supplement the Federal Funding Accountability and Transparency Act (FFATA), P.L. 109-282, requirements that originally were included in the 2020 Addendum, along with guidance on when auditors must test FFATA.
  • Clarifies key requirements for the Provider Relief Fund program in terms of when this funding is included on an entity’s schedule of expenditures of federal awards and what aspects of an entity’s required reporting for this program the auditor is required to test.

The AICPA Governmental Audit Quality Center (GAQC) has issued an alert summarizing the guidance and the latest information on OMB’s plans for additional guidance in the future. The first Addendum is expected to be issued in the early fall and is expected to include guidance on the Coronavirus State and Local Fiscal Recovery Funds and an update on the Education Stabilization Fund.

The second Addendum, expected later in the fall, is expected to include guidance on the Capital Projects Fund, the Homeowner Assistance Fund, and the Local Assistance and Tribal Consistency Fund. There is also a possibility that additional programs could be added to this list.

For more information, visit the GAQC’s website.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

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