In July 2015, OMB released the 2015 Compliance Supplement, which identifies the important compliance requirements relevant to federal programs for use by auditors when performing a Single Audit. The 2015 Compliance Supplement, which is effective for audits of fiscal years beginning after June 30, 2014, brings to light some of the complexities for 2015 audits caused by the issuance of 2 CFR part 200, subpart F, better known as the Uniform Guidance, on December 26, 2013. Auditors and auditees alike need to read through the changes thoroughly and understand how the new guidance will affect compliance requirements of federal programs in this transition year.
As many nonprofits with federal awards already know, the Uniform Guidance superseded OMB Circular A-133, A-87, A-21, and A-122 and enacted many changes to administrative requirements, cost principles, and audit requirements for federal awards. Because the changes to administrative requirements and cost principles for federal awards were not effective until December 26, 2014, grantees need to be mindful that they may have slightly different sets of rules to follow for their older, existing awards received before the effective date, versus their new awards after the effective date. Additionally, grantees should beware of any funding increments to older existing awards after December 26, 2014, because any new funding increments after that date will trigger the application of the Uniform Guidance administrative requirements and cost principles. The Uniform Guidance document, as well as information on changes contained in the Uniform Guidance can be found at www.cfo.gov/cofar where several useful FAQ’s, crosswalks, and videotaped training webcasts can also be found.
Accordingly, due to the transition from old to new requirements, Part 3 of the 2015 OMB Compliance Supplement was broken into two parts. Part 3.1 is applicable to federal awards made prior to December 26, 2014 and its compliance requirements and audit objectives are based on the old OMB circulars (A-102 and A-110). Part 3.2 is applicable to federal awards made on or after December 26, 2014 and its compliance requirements and audit objectives are based on the new Uniform Guidance. Most of the revisions in Part 3.2 as compared to Part 3.1 are to update references and to streamline the procedures and objectives such that they are applicable to all entities, where possible, and to remove outdated language. A few of the other notable changes are as follows:
- In Parts 3.1 and 3.2, the removal of two of the original 14 compliance requirements – Davis Bacon (formerly known as requirement D) and Real Property Acquisition and Relocation Assistance (formerly known as requirement K).
- In Parts 3.1 and 3.2, the title of compliance requirement H has been changed from “Period of Availability of Federal Funds” to “Period of Performance.”
- In Part 3.1, under compliance requirement L, “Reporting”, coverage of the subaward reporting requirements under the Federal Funding Accountability and Transparency Act (also known as FFATA) have been deleted.
- In Part 3.2, enhancements have been made to cover Federal Acquisition Regulation (FAR)-based cost-reimbursement contracts.
What this means for your nonprofit organization’s Single Audit is that, if your fiscal year ends June 30, 2015 or later, the audit procedures may differ depending on when the awards that make up the major federal program(s) were received. Taking the time now to read and understand the changes in the Uniform Guidance and the 2015 Compliance Supplement and identify which grants will be subject to the old guidance versus the new guidance will help make the audit process a smoother one for 2015.
Ariana Young is a manager in the Firm’s audit services department and can be reached at ayoung@tatetryon.com.
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