OMB Issues the 2024 Compliance Supplement

On May 29, 2024, the Office of Management and Budget (OMB) issued the 2024 Compliance Supplement (Supplement). The Supplement is effective for fiscal years beginning after June 30, 2023 and can be accessed on the OMB website.

What is the Supplement?

The Supplement is issued to assist auditors by providing a source of information related to various federal programs and assist with the identification of compliance requirements. However, auditees,  both for-profit and nonprofit, should be familiar with the content included in the Supplement as it relates to their federal funding. Auditees can utilize the Supplement to better understand the federal requirements to which they must adhere. The Supplement provides the compliance requirements that an entity should comply with and should be utilized as a resource for auditees in designing their system of internal control over applicable compliance requirements. Auditees can utilize the Supplement to prepare for their audits by identifying the compliance areas and internal controls that the auditors will review. This knowledge can assist in ensuring that their management of federal awards is in line with federal expectations, potentially reducing findings of noncompliance.

In addition, the Supplement outlines both entity-wide controls over federal awards and internal controls specific to each type of compliance requirement. This section can be utilized by auditees to assist in designing their internal control system. It is important for auditees to understand that even if their federal expenditures are less than the single audit threshold they are still responsible for complying with federal guidelines and can be audited by a federal agency.

It is important to note that many more for-profit entities may  require a single audit due to the Infrastructure Investment and Jobs Act (IIJA) since a greater amount of federal funding is being provided to for-profit entities under the IIJA than historically  under other federal programs.

Part 2 – Matrix of Compliance Requirements (Matrix)

It is important to review the Matrix to determine, for the programs included in the Supplement, the compliance requirements that have been identified by the federal government as subject to audit. Although auditees need to ensure they comply with all requirements of their agreements imposed by the federal government and, where applicable,  pass-through entities, the Supplement is helpful to see which compliance areas could be subjected to audit for their major programs.

Part 4 – Agency Requirements

There were several new programs added to the Supplement in 2024, as well as many programs that have significant changes. In addition, more programs than usual were deleted from the Supplement in an effort to identify and remove programs that are not frequently audited. 

The Department of Agriculture added six new programs, while other federal agencies, collectively, added a total of 10 new programs. There were 13 programs removed from the Supplement.

Part 5 – Cluster of Programs

Student Financial Assistance

This program has several changes, clarifications and updates for 2024 to reflect regulatory changes and other updates. 

Other Clusters

There were several changes made to the Other Clusters including the addition of a new cluster, a deletion of an entire cluster and changes in programs included in clusters.

Appendix IV – Higher Risk Designation

The title of this appendix was revised in 2024. This section of the Supplement identifies the programs designated as higher risk. 

See excerpt from Appendix IV of the higher risk programs below.

*These programs were created by one of the laws cited in Appendix IV and are thus considered 100% COVID-19 funding.

**These programs were existing programs that received additional IIJA or COVID-19 funding from one or more of the laws cited in Appendix IV. 

Appendix VII – Other Audit Advisories

All those with federal funding should read this section. A majority of the content in this Appendix is the same or very similar to the prior year. One new area in the Appendix discusses the effective date of the increase in the single audit threshold to $1 million that was established in the recently revised Uniform Guidance (UG). This increase is effective for auditee fiscal years beginning on or after Oct. 1, 2024 (i.e., fiscal year ends Sept. 30, 2025 and later). This revised threshold cannot be adopted prior to this date. 

This Appendix also discusses the broader government-wide effective date of the UG which is for awards issued on or after Oct. 1, 2024. 

Summary

If you have federal funding you should ensure you are familiar with the Supplement. This is a valuable tool that should not be overlooked.