What You Need to Know About the 2022 Compliance Supplement

All non-federal government agencies and nonprofit organizations that expend $750,000 or more in direct federal awards and federal awards passed through state agencies in a given fiscal year are required to obtain a Single Audit in accordance with OMB Uniform Guidance. However, for the past two years, most organizations received some type of federal funding as a result of the COVID-19 pandemic and these organizations may be required to obtain a Single Audit this year.

In May, the Office of Management and Budget released the 2022 Compliance Supplement (the Supplement), which is effective for audits of fiscal years beginning June 30, 2021. This latest 2022 version also supersedes the 2021 Compliance Supplement, Addenda 1 and 2, and the technical update.

The Supplement provides key information for auditors regarding the federal program’s objectives, procedures, and significant compliance requirements. The Supplement also provides audit objectives and suggested audit procedures for determining compliance with these requirements.

The Supplement outlines significant changes to several existing programs, including:

• 027 — Coronavirus State and Local Fiscal Recovery Funds (CSLFRF): Revisions were added to incorporate the CSLFRF Final Rule and clarifications were made regarding reporting of expenditures on the Schedule of Expenditures of Federal Awards (SEFA), stating that it should not be the total amount of the lost revenue calculated for this program, but the aggregate expenditures for government services. Additional guidance was also provided for alternative approaches (compliance examination engagement) for CSLFRF recipients that would otherwise not be required to undergo an audit if the recipient’s CSLFRF award is below $10 million and all other federal award expenditures in the given fiscal year are less than $750,000.

• 425 — Section 2 Higher Education Emergency Relief Fund (HEERF): Cash Management was added as a compliance requirement.

• 498 — Provider Relief Fund: The Special Tests and Provisions requirements were removed.

New programs in the 2022 Compliance Supplement include:

• 888 — Lead Based Point Capital Fund Program and Housing-Related Hazards Capital Fund.

• 023 — Emergency Rental Assistance (ERA).

• 026 — Homeowner Assistance Fund.

• 029 — Coronavirus Capital Projects Fund.

• 009 — Emergency Connectivity Fund.

• 075 — Shuttered Venue Operators Grant (SVOG).

• 671 — Family Violence and Prevention and Services/Domestic Violence Shelter and Supportive Services.

What to Expect

To get ready for a Single Audit in accordance with OMB Uniform Guidance, organizations should prepare and plan for the following:

• Additional time — While some Single Audit procedures are related and comparable to financial statement audit procedures, most are not. If you believe you may be subject to a Single Audit or are close to the $750,000 threshold, tell your auditor as early as possible so they may provide guidance and build in the necessary time to plan the engagement within the required reporting period.

• Detailed information — Auditors will need to gain an understanding of an organization’s program, including the overall internal controls and the internal controls for each compliance requirement. Program directors and related grant staff should be readily available to assist your auditors since no one knows your program better than the program staff.

• Grant-specific documents — Auditors will require specific documentation and information for testing, which may include participant eligibility files, invoices coded to the program to determine allowability, and ensuring reimbursed grant expenditures were paid by the organization from its own coffers prior to the reimbursement request being submitted.

Organizations that require a Single Audit are also required to submit and certify their audit with the Federal Audit Clearinghouse within 9 months of their fiscal year end.

The full version of the 2022 Compliance Supplement is available here.