The Office of Management and Budget (OMB) released its 2016 Compliance Supplement, which is effective for audits of fiscal years beginning after June 30, 2015.
Released on August 1, the supplement—codified under Title 2 of the Code of Federal Regulations, Chapter 2, Part 200 (2 CFR 200), Appendix XI—contains a number of changes that affect the following types of entities that receive federal funding or grants:
Updating terminology was an important consideration when the OMB made changes. Here are two examples of changes that were made throughout the supplement:
You can review Appendix V, List of Changes, of the compliance supplement to better understand what’s new in the 2016 supplement as well as changes made to individual programs by Catalog of Federal Domestic Assistance (CFDA) number. You’ll find important announcements from OMB that may be relevant to your 2016 single audit in Appendix VII, Other Audit Advisories.
In the meantime, here’s an overview of changes that will have the greatest impact.
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.
Also, now if a compliance requirement is applicable to a specific program, the cells in the matrix will show “N” as opposed to being shaded. Compliance requirements under “D” and “K” are still “reserved” and shaded while several “Y” responses were revised to “N” and vice versa. Finally, each program or cluster included in Parts 4 and 5 was updated to include the applicable row from the Part 2 matrix to assist auditors in properly using the various parts of the supplement together. This puts the Part 2 matrix where auditors need to see it when they’re making decisions based on Parts 4 or 5.
Part 3 of the 2016 supplement continues to be divided into two parts:
In Part 3.1:
In Part 3.2:
The Introduction to Part 3 also includes a discussion regarding COFAR FAQs published after the 2016 supplement is issued—FAQs issued or updated after September 2015. These will be available at the COFAR Web site and should be considered (to the extent they apply) in the single audit work plan and reviews.
In addition to regular annual additions, deletions, and modifications to individual programs—which could be very significant to the programs themselves—the OMB removed selected American Recovery and Reinvestment Act of 2009 (ARRA) programs because funding was eliminated or greatly reduced.
Programs and clusters were added and deleted due to regulatory and other changes. The compliance requirements for the Student Financial Assistance and Research and Development clusters in particular saw several updates and modifications.
The Other Clusters section of Part 5 was also revised to:
Part 6 was added back to the 2016 supplement after being removed in 2015. It gives an overview of internal controls and emphasizes that these controls should be in compliance with one of the following:
This section of the supplement also covers the characteristics of internal controls relating to each of the five components of internal control as defined by the Green Book. Nonfederal entities will need to continue exercising judgment to:
This appendix includes updated information on responsible single audit offices and officials as well as program contacts.
The OMB made several substantive changes to this appendix, including:
For questions about how the OMB’s 2016 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 the OMB’s new guidance for federal awards.