OMB Releases the 2015 Compliance Supplement
The Office of Management and Budget (OMB) released the long-awaited 2015 Compliance Supplement this week. The Compliance Supplement is annual guidance designed to assist auditors conducting single audits and to determine recipient compliance with applicable Federal laws and requirements.
It has always been an important resource for the grants community, however, the 2015 Compliance Supplement has additional significance as it provides guidance on implementing 2 CFR 200.
Appendix V of the Compliance Supplement identifies the list of changes from the previous year. Important changes to the 2015 Compliance Supplement include
- The name of the guidance has been changed from the A-133 Compliance Supplement to the Compliance Supplement
- The compliance requirements for the Davis-Bacon Act and Real Property Acquisition and Relocation Assistance have been removed
- Additional audit advisories, including updated coverage of low-risk auditee criteria
- Updated references to 2 CFR 200
The grants community should pay particular attention to the two sections in Part 3. Section 3.1 identifies compliance requirements for awards issued before December 26, 2014. Section 3.2 identifies compliance requirements for awards that adhere to 2 CFR 200.
It is important to note that the audit requirements under 2 CFR 200 – Subpart F do not apply until a non-Federal entity’s first full fiscal year after December 26, 2014. The following table identifies the applicable audit requirements.
|Fiscal Year Dates||Guidance for Audit Requirements|
|7/1/2014 – 6/30/2015||OMB Circular A-133|
|10/1/2014 – 9/30/2015|
|1/1/2015 – 12/31/2015||2 CFR 200|
|7/1/2015 – 6/30/2016|
|10/1/2016 – 9/30/2016|
The grants community will find Part 6 of the Compliance Supplement disappointing. In the past, OMB has identified internal control requirements in Part 6. This year, however, Part 6 reads:
In 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) updated the “Internal Control – Integrated Framework,” and, in September 2014, the Government Accountability Office (GAO) issued an updated “Standards for Internal Control in the Federal Government,” commonly referred to as “The Green Book.” Due to the need to update other parts of this supplement for the Uniform Guidance in 2 CFR Part 200, OMB was unable to also update Part 6 for the revisions to COSO and The Green Book without delaying the issuance of this supplement. Since the 2014 version of Part 6 is out of date, it was not carried forward to this supplement. Non-federal entities and their auditors should look to the COSO and Green Book for guidance on internal controls until Part 6 is updated. OMB plans to update Part 6 for the 2016 Compliance Supplement.
Until OMB updates Part 6, it will be critical for the grants community to review both the Green Book and the COSO Integrated Framework. 2 CFR 200 does not require non-Federal entities to adopt either guidance, however, each contains best practices that would be beneficial to protect Federal funds from waste, fraud, and abuse.
The Compliance Supplement also noted that Federal agencies are expected to publish their final implementing rules for 2 CFR 200 in 2015. OMB notes that agencies “may include changes to their interim final regulations.”
What are your thoughts on the 2015 Compliance Supplement? Are you disappointed that OMB did not include information about internal controls? Leave your thoughts in the comment section below.