Helpful Guidance: Addenda to the 2021 OMB Compliance Supplement

The guidance and requirements that auditors must follow to perform Single Audits, including program specific audits, are included in the U.S. Office of Management and Budget’s (OMB) annual Compliance Supplement (the Supplement). Although the Supplement is written for auditors, it is also a good resource for organizations that received and expended federal awards.

The Supplement has helpful information to assist recipients of federal grants with the regulations and requirements of the federal program. Or put another way: why not know ahead of time what your auditors will be looking for and testing? It is like getting the answer key before taking the test!

Our resource provides a quick summary of what you need to know about 2021 Single Audits based on the most recent addenda which only impacts certain parts of these audits based on their date of issuance. While we cannot predict what will be in the 2022 Compliance Supplement, it seems logical to assume that the guidance from the addenda will find its way into 2022 guidance. Of course changes and additional requirements may also be included in 2022 guidance. We will seek to share more about 2022 when that is known.

Recap on Which Organizations Need a Single Audit

Not-for-profits and state and local governments are subject to a federal Single Audit if they expend $750,000 of federal financial assistance or more in their fiscal year. This includes COVID-19 assistance either in grants or in loans and all other non-COVID-19 federal financial assistance expended in their fiscal year. For-profit entities receiving federal financial assistance are required to have either a single audit (or program-specific audit) or a financial audit under Government Auditing Standards. Loans obtained under the Paycheck Protection Program (PPP) and refunds resulting from the Employee Retention Tax Credit (ERTC) are not subject to a Single Audit.

For the 2021 Compliance Supplement, OMB issued two addenda. The 2021 Compliance Supplement and these Addenda are for Single Audits for entities’ with year-ends of June 30, 2021 through June 29, 2022.

Addendum #1

Addendum #1 was issued on Dec. 3, 2021, and contains two programs:

Coronavirus State and Local Government Fiscal Recovery Fund (21.027).

This is a $350 billion new federal program which is to be distributed to state and local governments but will most likely be passed down to many nonprofits also.

Updated Program - Education Stabilization Fund (ESF) (84.425)

This program is broken into two sections (Elementary/secondary and Higher Ed). Section 1 (84.425U and 84.425X) was updated in this Addendum to reflect the American Rescue Plan Act (ARP). Section 2 was already updated for this in the 2021 Compliance Supplement.

Auditors will test compliance with the requirements that existed at the time of the expenditures. Essentially, what this means is that if your program was audited and the report date was prior to December 3, 2021, there is no need to address what is included in Addendum #1.

Organizations with a report date and that undergo an audit after Dec. 3, 2021 should note that their Single Auditors will be looking at whether their awards were put toward eligible uses. There are four eligible uses for these funds; note that revenue loss is not one.

Auditors will look for eligible use expenditures on your Schedule of Expenditures of Federal Awards (SEFA) reporting, where your organization would report the aggregate of these four expenditures.

Addendum #2

Addendum #2 contains new programs and changes to existing programs due to the American Rescue Plan Act. It was issued January 19, 2022, and contains seven programs:

  • 10.542 – Pandemic Electronic Benefits Transfer (EBT) Food – New
  • 10.649 – Pandemic EBT – Administrative Costs – New
  • 14.871 – Section 8 Housing Choice Vouchers – Changes for ARP
  • 20.315 – National Railroad Passenger Corporation Grants – New
  • 93.499 – Low Income Household Water Assistance Program – New
  • 93.558 – Temporary Assistance for Needy Families – Changes for ARP
  • 93.575 – Child Care and Development Block Grant (part of the Child Care and Development cluster).Changes for ARP and the addition of the Reporting compliance requirement for financial and special reporting requirements regarding FFATA. (This was approved by OMB to exceed the six-requirement mandate.)

Addendum #2 is for reports dated after Jan. 19, 2022. Single Audit Reports issued prior to this date are not affected.

To Learn More

The recent addenda are not on OMB’s website, but can be found here. For comments, questions, or concerns about how the addenda and 2021 Compliance Supplement affect your organization’s Single Audit, please contact a member of our team. 

Published on March 29, 2022