The Office of Management and Budget (OMB) Compliance Supplement is issued annually providing information on Federal programs’ objectives, procedures, and compliance requirements as well as audit objectives and suggested audit procedures for determining the non-Federal entity’s compliance with these requirements. Auditors are required to follow both the provisions of 2 CFR Part 200, Subpart F, and this Compliance Supplement when performing a Single Audit.
Three reasons a non-Federal entity that receives Federal funding will benefit from using the Compliance Supplement:
1. Understanding the 12 types of compliance requirements, audit objectives, and suggested audit procedures.
When the award agreement or contract is signed, the non-Federal entity has agreed to understand and be bound by certain terms and conditions. These may include laws, regulations, and policies of the State and Federal government, standard terms and conditions of the awarding agency, supplemental terms and conditions of the awarding agency, and items within the contract, including all exhibits, attachments, appendices, and addenda. One of these requirements may be the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), which establishes uniform cost principles and audit requirements for Federal awards to non-Federal entities and administrative requirements for all Federal grants and cooperative agreements.
The Compliance Supplement discusses the 12 types of compliance requirements for non-Federal entities to comply with and are considered in all audits conducted under the Uniform Guidance. It also provides suggested audit procedures to address the audit objectives. The Compliance Supplement will help you understand the requirements and help you prepare for an audit.
2. Examples of internal controls over compliance requirements.
The Uniform Guidance requires the non-Federal entity to establish and maintain effective internal control over the Federal programs. The Compliance Supplement provides guidance and examples of internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
As part of a Single Audit, the auditor is required to gain an understanding of internal controls over compliance, determine if they are appropriately designed and implemented, and then test those internal controls. The Compliance Supplement will help you design, implement, and maintain effective internal controls over compliance.
3. Identify Federal program objectives, procedures, compliance requirements, and other information.
The compliance requirements applicable and subject to audit for most Federal programs and the compliance requirements of the largest Federal programs are included in the Compliance Supplement. The Compliance Supplement provides more specific guidance on these programs. As an auditee, you are required to identify your Federal programs and understand and comply with their compliance requirements.
The auditor is also required to test and determine whether the non-Federal entity has complied with the Federal statutes, regulations, and the terms and conditions of Federal awards that may have a direct and material effect on each of its major programs.
The Compliance Supplement will help you identify the compliance requirements and related internal controls over compliance that will be subject to audit.
The Compliance Supplement can be found on the OMB website.
If you receive Federal funding and are subject to a Single Audit and would like assistance with navigating the Uniform Guidance requirements, please contact Jolene Giese.