OMB Releases 2015 Compliance Supplement

On July 14, the Office of Management and Budget (OMB) released its 2015 compliance supplement, which is applicable for audits of fiscal years beginning after June 30, 2014.

It contains a number of changes that affect states, local governments, Indian tribal governments, and not-for-profit organizations that receive federal funding or grants. In addition, the title of the compliance supplement was changed to remove reference to OMB Circular A-133 and reflect OMB’s new Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (often referred to as the uniform guidance).

The full list of changes for 2015 is available in Appendix V of the compliance supplement. Let’s take a brief look at a few of those with the greatest impact.

Part 2: Matrix of Compliance Requirements

Several compliance requirements for various programs were added, deleted, or corrected to be consistent with Part 4, Agency Program Requirements, and Part 5, Clusters of Programs. Two compliance requirements also were removed from the supplement. Columns D (Davis-Bacon Act) and K (real property acquisition and relocation assistance) were removed and are now shown as “reserved.”

Part 3: Compliance Requirements

The introduction of Part 3 was revised to address awards made before December 26, 2014, and new awards or certain funding increments made on or after that date. It also explains the structure of Part 3 for the 2015 compliance supplement.

Because some awards may have been made prior to the implementation date of the uniform guidance, Part 3 of the compliance supplement has been divided into two parts: one for awards made prior to December 26, 2014 (Part 3.1), and the other for awards made subsequent to that date and subject to the uniform guidance (Part 3.2).

In Parts 3.1 and 3.2, the title of Section H, Period of Availability of Federal Funds, has been changed to Period of Performance. Part 3.1 notes that prior years’ audit findings will refer to this as Period of Availability of Federal Funds.

In Part 3.1:

  • Aligning with the change in Part 2, Section D, Davis-Bacon Act, was deleted as one of the previous 14 compliance requirements. Certain programs retained wage-rate requirements in the Special Tests and Provisions section of Part 4, Agency Program Requirements.
  • Section K, Real Property Acquisition and Relocation Assistance, was removed as a compliance requirement.
  • In addition, Section L, Reporting, removed subaward reporting requirements under the Federal Funding Accountability and Transparency Act.

As noted above, Part 3.2 was added to reflect changes resulting from issuance of the uniform guidance. Part 3.2 also includes enhanced coverage of cost reimbursement contracts awarded under the Federal Acquisition Regulation.

Part 4: Agency Program Requirements

In addition to OMB’s regular annual additions, deletions, and modifications to individual programs—which could be very significant to the programs themselves—the following are some overall changes made in Part 4:

  • All program supplements were modified to remove entry III.L.4, Subaward Reporting Under the Transparency Act, based on removal of this as a compliance requirement to be tested by auditors.
  • All program supplements were modified in the introductory language to refer to 12 compliance requirements rather than the previous 14.
  • References to compliance requirement H, Period of Availability of Federal Funds, were changed to “period of performance.”

Part 5: Clusters of Programs

As with Part 4, references were added or changed as a result of the issuance of the uniform guidance. In addition, several updates and modifications were made to the compliance requirements for the clusters Student Financial Assistance and Research and Development. For example, the Indirect Cost Limitation Special Test and Provision was deleted from the Research and Development cluster because it no longer applies.

The Other Clusters section of Part 5 was also updated to remove clusters based on the deletion of American Recovery and Reinvestment Act of 2009 (ARRA) programs, update a program name, and add a program to a cluster.

Part 6: Internal Control

The content was removed from Part 6. Instead, OMB included a statement concerning internal control and OMB’s intent to revise Part 6 for the 2016 compliance supplement based on changes to internal control requirements.

Part 7: Guidance for Auditing Programs Not Included in This Compliance Supplement

This part was updated to reflect issuance of the uniform guidance, to remove compliance requirements related to the Davis-Bacon Act and real-property acquisition and relocation assistance, and remove subaward reporting under the Federal Funding Accountability and Transparency Act.

Appendix III: Federal Agency Single Audit and Program Contacts

This appendix includes updated information on responsible single audit offices and officials and program contacts.

Appendix VII: Other Audit Advisories

In addition to the full list of changes for 2015 in Appendix V of the 2015 compliance supplement, Appendix VII contains very important highlights for recipients of federal awards and their auditors. Especially this year, Appendix VII contains helpful information in this year of transition to the uniform guidance. For example:

  • Additional language describes the treatment of compliance requirements removed from the 2015 compliance supplement.
  • OMB-approved exceptions to the uniform guidance resulting from federal department and agency adoption and implementation are discussed.
  • OMB removed outdated ARRA coverage, including removal of the table of ARRA programs not included in Parts 4 and 5 of the compliance supplement.
  • The appendix clarified that safe-harbor treatment for loan and loan-guarantee programs in making Type A program determinations applies only to audit periods covered by OMB Circular A-133. Subpart F of the uniform guidance addresses this directly.

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For questions about how OMB’s 2015 compliance supplement could affect your organization, contact your Moss Adams professional. You can also visit our uniform guidance topic page for additional articles and resources related to OMB’s new guidance for federal awards.