2022 Compliance Supplement Released
The U.S. Office of Management and Budget (OMB) released the 2022 Compliance Supplement on May 11, 2022. The Compliance Supplement is the guide auditors use in planning and performing a single audit. It can also be a helpful resource to nonfederal and for-profit entities that receive federal funding because it provides information on each compliance requirement and insight into program-specific requirements federal agencies are most interested in having audited for compliance. The 2022 Compliance Supplement is applicable for audits of fiscal years beginning after June 30, 2021, (i.e., June 30, 2022, year-ends and after). In addition to issuing the Compliance Supplement earlier than in previous years, the OMB does not anticipate issuing any addendums to the 2022 Compliance Supplement. This should remove some of the barriers to single audit completion that caused audit delays in prior years.
Below is a summary of changes impacting nonfederal and for-profit entities. This list is not comprehensive of all changes to the 2022 Compliance Supplement. For a complete list of changes included in the 2022 Compliance Supplement, please refer to Part 8, Appendix V, List of Changes for the 2022 Compliance Supplement.
Summary of Changes
Part 2 – Matrix of Compliance Requirements
The requirement for auditors to test six compliance requirements remains in effect. Applicable requirements for programs have been updated, and changes are in bold and yellow highlighting in Part 2. New programs included in the 2022 Compliance Supplement, which were previously incorporated into the compliance supplement through addendums 1 and 2 to the 2021 Compliance Supplement, are identified with an asterisk. Select programs of interest are noted below.
Auditees can use Part 2 to quickly review their specific programs and gain insight into how their federal agency is viewing compliance risk by observing changes in the compliance requirements subject to audit. Additions can be seen as areas of increased risk for auditees, and deletions can be viewed as areas where federal agencies feel they’re able to exercise sufficient oversight without the involvement of auditors.
Certain Program Changes
Shuttered Venue Operators Program (AL 59.075) has been added to the 2022 Compliance Supplement. Nonfederal entities and their auditors who were waiting on this guidance to complete single audits for 2021 fiscal years can begin to move forward. As a reminder for for-profit entities, the U.S. Small Business Administration is expected to release separate guidance and audit requirements applicable to for-profit entities in the near future. The information will be posted on the SBA website once released.
Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) has been identified as a higher risk program, which means it is more likely to be selected for an audit. The Final Rule issued by the Department of the Treasury has been incorporated into the 2022 Compliance Supplement.
Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution (AL 93.498) was referred to as the Provider Relief Fund in the 2021 Compliance Supplement. The 2022 Compliance Supplement includes updated information related to Special Tests and Provisions, information related to ARP, and clarification on reporting Period 5 PRF payments.
Education Stabilization Fund (ESF) (AL 84.425) has new subprograms included and adds Cash Management as a compliance requirement subject to audit.
Student Financial Assistance Cluster, which includes funding under various assistance listing (AL) numbers, has been updated for changes to regulations that mainly impact various Special Tests and Provisions.
Those reviewing the 2022 Compliance Supplement should be aware of the following changes:
- Appendix IV, Internal Reference Tables now contains a complete list of programs that are considered higher risk by their oversight agency. This portion of the 2022 Compliance Supplement also explains what it means for a program to be considered higher risk. In general, higher risk programs are more likely to be picked as major programs to audit if the nonfederal entity has received significant funding under the program. Auditees can review this list compared to their federal funding sources to proactively gain insight into which programs their auditors may test. This can begin conversation on new programs, which could help streamline the single audit process.
- The transition of the Federal Audit Clearinghouse from the U.S. Census Bureau to the General Services Administration (GSA) will take place on Oct. 1, 2022. This will impact where auditees submit their Data Collection Form (DCF). If your fiscal period ends in 2021 (e.g., Dec. 31, 2021), you will be required to submit the DCF to the Census Bureau by Sept. 30, 2022, under the current process. The Census Bureau intends to continue to receive and process DCF submissions for a limited time after Sept. 30, 2022, to accommodate in-process submissions. If your fiscal period ends in 2022 (e.g., June 30, 2022), GSA will not begin accepting submissions until Oct. 1, 2022. If it is not possible for an auditee to meet the reporting requirement for submitting the DCF because the GSA has not begun accepting submissions, the violation will be waived, and the nine-month reporting deadline will be applied instead. More detail on this can be found in Appendix VII, Other Audit Advisories.
If you have questions about the 2022 Compliance Supplement and how it may impact the audit of your federal funds, please contact your KSM advisor or complete this form.
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