Get a Head Start on Your Organization’s Annual Single Audit with the OMB Compliance Supplement

By John D'Amico  |  August 8, 2019

The finance and accounting leadership at nonprofits know that if their organization receives and expends federal grant funds of $750,000 or more in their fiscal year (either received directly from a federal agency or passed through from either a local government or from another nonprofit) it is subject to a Single Audit under Uniform Guidance.

What they may not be aware of is that there is a handy way to prepare for the annual audit - and that’s to use the Office of Management and Budget’s (OMB) Compliance Supplement.

This very useful guide can help recipients of federal grants understand the regulations and requirements of the federal program. Here are some of the main benefits:

  • When it is time for your audit, the auditors will be testing your compliance with the federal rules and regulations pertaining to your organization’s particular federal program. Not all federal programs are included in the Supplement, but many of the large and most common federal programs are.
  • The Supplement includes specific audit programs for numerous federal programs that auditors must use to perform their Single Audit tests. It details the audit objectives and suggested audit procedures that the auditor should perform.
  • Your auditors will also be tasked with determining whether your organization has the proper internal controls over compliance in place, and, by testing those controls, determine if they are working effectively. The information included within the Supplement can assist in ensuring ahead of time that your organization has the proper controls and procedures in place to comply with the federal requirements.

The Supplement consists of seven parts and nine appendices, as well as detailed information about the twelve types of compliance requirements and the suggested audit procedures that your auditors will be performing to determine if your organization is in compliance.

Another great benefit of the Supplement is its expansive nature, shown in this list of topics of interest for organizations receiving federal grant funds:

Activities Allowed or Unallowed, Allowable Costs, Cash Management, Eligibility, Equipment and Real Property Management, Matching, Level of Effort & Earmarking, Period of Performance, Procurement, Suspension and Debarment, Program Income, Reporting, Subrecipient Monitoring, Special Tests and Provisions

The 2019 Supplement, which was released on July 1, 2019, can be accessed here. The OMB has advised that there are significant changes in this year’s Supplement, as they have mandated that for each federal program, only six of the twelve compliance requirements will be subject to audit. (Information on those six requirements can be found here.)

To learn more about exactly what is covered in the Supplement and how you can use it to benefit your organization, read my full-length article, “Are You Ready for Your Upcoming Single Audit? The OMB Compliance Supplement Can Help,” which originally appeared in the Q2 issue of Marks Paneth’s Nonprofit & Government Times newsletter.

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About John D'Amico

John D'Amico, CPA, is a Partner within the Professional Standards Group at Marks Paneth LLP, which is responsible for monitoring quality control in the firm as mandated by professional standards. He specializes in pre-issuance reviews and inspections of nonprofit organizations, governments and Single Audits. Mr. D’Amico also provides consultation on accounting and attestation matters and tests and monitors the firm's quality review policies and procedures. He teaches continuing education classes for the firm and on... READ MORE +

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