OMB 2020 Compliance Supplement Addendum Released

January 28, 2021

In August 2020, the OMB released the 2020 OMB Compliance Supplement to provide guidance for performing single audits. When the August supplement was released, it did not include guidance for COVID-19 awards funded under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Families First Coronavirus Response Act, Coronavirus Preparedness and Response Supplemental Appropriations Act, or Paycheck Protection Program and Health Care Enhancement Act. OMB indicated an addendum to the compliance supplement would be released in the fall to provide guidance for awards funded under those Acts. After months of anticipation, the Compliance supplement addendum was released on December 22, 2020, to provide additional guidance for COVID-19 programs being audited. A link to the addendum is included here. In addition, the Governmental Audit Quality Center (“GAQC”) released Alert No. 419 to summarize key items included in the addendum. Some of the highlights and key points from the addendum and alert are discussed below:

Due to the late issuance of audit guidance for the COVID-19 programs contained in the addendum, OMB is providing a three-month audit submission extension for single audits of 2020 year ends through September 30, 2020, fiscal year ends. The three-month extension is only available if the recipient received some form of COVID-19 funding. There is no formal extension approval process; however, the recipient should maintain documentation of the reason for the delayed filing.

The effective date of the Supplement Addendum is the same as the original Compliance Supplement issued in August 2020. The effective date is for audits of fiscal years beginning after June 30, 2019. Furthermore, the Addendum should be used in conjunction with the original Supplement.

The December 2020 Addendum includes guidance not included in the August Supplement for eight new COVID-19 funded programs, six pre-existing program supplements (and CFDA numbers) to which COVID-19 funding and compliance requirements have been added, and one new non-COVID-19 program (CFDA 20.218).

Provider Relief Fund (CFDA 93.498) expenditures and lost revenue will not be included on the Schedule of Expenditures and Federal Awards (“SEFA”) until Dec. 31, 2020, year ends and later. This timing only affects the Provider Relief Fund program and does not apply to other COVID-19 funding that health care entities may have received.

  • Nonfederal entities that received donated personal protective equipment (“PPE”) should include the fair market value of the PPE at the time of receipt in a stand-alone footnote to the SEFA that can be marked unaudited. The auditor should not count the donated PPE for purposes of determining the threshold for a single audit or determining the Type A/B program threshold for major programs. Donated PPE is not required to be audited as a major program.
  • The auditor is required to test Federal Funding Accountability and Transparency Act (“FFATA”) reporting for all the COVID-19 programs included in the addendum (except for the Coronavirus Relief Fund program) where:
    • The reporting type of compliance requirement is marked as a “Y” in the Part 2 Matrix, and the auditor determines reporting to be direct and material; and
    • The direct recipient makes first-tier subawards of $25,000 or more to report subaward data through the FFATA Subaward Reporting System.
  • Auditors will need to address the FFATA reporting requirement for all selected major programs for audits of fiscal years after September 30, 2020, regardless of whether COVID-19 funding is involved. Auditors are required to report any noncompliance with FFATA reporting rules (such as if FFATA reporting was not made, incorrect amounts were reported, etc.). The guidance recommends a prescribed table format for reporting noncompliance findings in the Schedule of Findings and Questioned Costs.
  • Detailed information on new and existing programs is included in agency program requirement sections in the addendum, but there are other existing programs affected by COVID-19 that are not included in the addendum. For practitioners auditing an existing federal program that received funding under the CARES Act that is not included in the supplement addendum, the GAQC advises referring to Appendix VII of the August 2020 Supplement for guidance.

It is important to note that as a result of increased federal funding related to the pandemic, many nontraditional companies and smaller governments and not-for-profit entities may be subject to a single audit for the first time. For example, many companies in the Healthcare and Medical industry have received federal funds through the Provider Relief Funds Program (CFDA 93.498). Another example is Utility Commissions and Authorities receiving Municipal Utility Relief Funding through Coronavirus Relief Funds (CFDA 21.019) for the first time. If you have questions or concerns on how this relates to your business, please reach out to Tracy Bedgood or your trusted Cherry Bekaert professional.

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