What is the Impact to my Organization for the OMB Compliance Supplement Addendum Coming Later this Fall?

Changes are expected to be coming to the U.S Office of Management and Budget (OMB) 2020 Compliance Supplement as federal awarding agencies work to identify COVID-19 funding programs and the need for these programs to be added in an addendum to the Supplement. Organizations should be aware of these potential changes as it could impact audit requirements.

Overview and Background

On August 18, 2020, OMB released the final 2020 OMB Compliance Supplement. OMB has stated that an addendum to the Supplement will be released in the Fall of 2020.

The AICPA has issued a list that identifies new COVID-19 federal programs and existing federal programs with COVID-19-related changes that are expected to be included in the upcoming addendum. It was provided to the Government Audit Quality Center (GAQC) by the OMB for auditors to use for planning purposes. It is possible that programs not included on this list could be added, or that programs included will be deleted. If there are future changes to the list, the AICPA will update this posting and communicate any change through a GAQC Alert. Click to view the current full listing.

Impact to Your Organization

The impact of COVID-19 funding on organizations is still fluid as we wait for the addendum. Here are a few potential changes to keep in mind:

  • Depending on the amount and type of funding received, the Organization may be subject to the Single Audit requirement. For many organizations, this could be the first year the Single Audit is applicable and for others may affect the array of programs that typically receive Single Audits.
  • The delay in receiving the addendum may impact when the organization’s audited financial statements can be issued.

The BerganKDV Government and Not-For-Profit team compiled a few tips that your organization can begin thinking about now, that may help streamline your requirements once the addendum is released.

  • Read agreements and talk to funders to fully understand the terms.
    • New COVID-19 programs may be subject to Single Audit but may not be included in the addendum and the auditor must use Part 7 of the Supplement to determine which compliance requirements to test.
    • Identifying compliance requirements for new programs and requirement changes for existing programs could be a challenging task if not spelt out in the agreement.
    • In an effort to expedite funding, many entities received deposits without application or funding agreement, and some did not include the assistance listing (CFDA) number.
    • One of the largest new programs (Provider Relief Fund) introduced the concept of lost revenue, which will impact the amounts that are shown on the Schedule of Expenditures of Federal Awards (SEFA).
    • Documentation will be important!
  • The SEFA may include a combination of new and old funding. COVID-19 funding needs to be listed separately and identified as such for new and existing programs.
  • Provide your auditors with information for existing federal programs that have been granted significant flexibilities and/or waivers of compliance requirements. The Supplement may not have been modified for these changes.
  • Understand which COVID-19 funding is not subject to Single Audit, such as Paycheck Protection Program (PPP) and therefore should not be included on the SEFA.
  • Document processes and personnel changes that occurred due to the crisis. Your auditors will be interested in what has changed.
  • Some entities that typically have not acted as a Pass-Through Entity in the past may be in that position due to the CARES Act funding which could require subrecipient monitoring processes be in place.
  • Consult with your auditors.


Next Steps

The BerganKDV Government and Not-For-Profit team will continue to monitor the OMB’s progress towards the addendum release. Organizations with federal financial reporting requirements have many priorities and regulations to comply with, especially with the changes brought on by COVID-19. Our Government and Not-For-Profit team is here to assist and help you navigate the changes. Reach out to our team with any questions bergankdv.com/contact

CATEGORIES: Government | Nonprofit
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