OMB Releases 2021 Compliance Supplement

On August 12, 2021, the Office of Management and Budget (OMB) released the 2021 Compliance Supplement.  The Compliance Supplement is issued annually to describe the compliance requirements for organizations that received funding from a variety of federal financial assistance programs.  Organizations should carefully review the Compliance Supplement annually for programmatic and agency requirements and changes.  Part of this supplement details the requirements for the 14 new programs added related to COVID-19 funding legislation, along with additional reporting requirements in the Federal Funding Accountability and Transparency Act (FFATA).

The 2021 Compliance Supplement is effective for audits of fiscal years beginning after June 30, 2020.  This Supplement has been updated for funding under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Coronavirus Response and Relief Supplemental Appropriations (CRRSAA) Act, along with part of the Compliance Supplement for the American Rescue Plan (ARP) Act. 

There will be two future addendums issued this fall to cover all programs within the ARP funding.  The first addendum is anticipated to include the Coronavirus State and Local Fiscal Recovery Fund (21.027) program and updates to the Education Stabilization Fund (84.425) Section 1.  The second addendum is expected to cover three Treasury programs, including Capital Projects Fund (no Assistance Listing number yet assigned); Homeownership Assistance Fund (21.026); and the Local Assistance and Tribal Consistency Fund (no Assistance Listing number yet assigned).

Most noted changes throughout the 2021 Compliance Supplement include updates for the Revised Uniform Guidance and programmatic changes for the new COVID-19 programs.  The OMB is required to review the Uniform Guidance every five years.  The Revised Uniform Guidance is effective for all new Federal awards and modifications of existing awards on or after November 12, 2020.  Updates for the Revised Uniform Guidance have been made directly in Part 3 of the Compliance Supplement and are not contained in a Part 3.1 or 3.2 version.  Procurement thresholds and the reporting requirements for FFATA are two of the largest changes.  Appendix II of the Compliance Supplement lists the agencies and their progress on adopting the Revised Uniform Guidance.  The OMB has revised terminology in how it refers to program numbers from Catalog of Federal Domestic Assistance (CFDA) to Assistance Listing (AL) Number.  Remember, this change is effective after November 12, 2020, so start updating your vocabulary to include Assistance Listing Number.   

The largest of the COVID-19 programs include the Education Stabilization Fund (ESF), Coronavirus Relief Fund (CRF), and Provider Relief Fund (PRF), which have all been identified as higher-risk programs in the 2021 Compliance Supplement, and as such, these are likely to be audited as major programs by your auditors, regardless of the current year spend.  The following are some of the highlights of these three programs:

  • ESF – This program was funded by the CARES, CRRSAA and ARP Acts. Funding to K-12 entities is commonly referred to as ESSER under Section 1. For institutions of higher education, this is known as the Higher Education Emergency Relief Fund (HEERF) program under Section 2.  The HEERF program was granted in three tranches, each including a student and institutional piece, and later tranches include a reimbursement for lost revenue.  Section 1 was only updated in the 2021 Compliance Supplement for the implications of CRRSAA but has not been updated for implications of ARP. However, Section 2 was updated for all three of the aforementioned Acts;
  • CRF – This program was funded by the CARES Act, but provisions of CRRSAA extended the spending on these funds from December 30, 2020 to December 31, 2021.  The Compliance Supplement notes that Uniform Guidance does not apply to these funds, and Treasury Requirements should be followed; and
  • PRF – This program was also funded by the CARES Act to provide relief funds to hospitals and other healthcare providers.  When to report these program expenditures has been in flux since the release of the 2020 Compliance Supplement Addendum last year.  Clarity has been provided on how to report expenditures and/or lost revenues of the Schedule of Expenditures for Federal Awards (SEFA) beginning with fiscal year-ends on or after June 30, 2021.  Organizations should also review the PRF Reporting Portal submissions for the correct period to record the expenditures on the SEFA based on the award date.

In addition to these three larger COVID-19 programs, Appendix IV of the Compliance Supplement contains a list of all other programs that have been designated higher risk as result of them including funding due to COVID-19 legislation.  The Appendix also walks through various considerations for auditors’ major program determination on Type A and Type B programs with these higher-risk designations.

Appendix VII of the Compliance Supplement should be read by all organizations, as it contains additional information on the COVID-19 funding.  It is noted within this section that OMB issued a Memorandum in March 2021 giving recipients and subrecipients an extension of six months for the completion and submissions of the single audit reporting package not yet submitted as of March 19, 2021 through June 30, 2021 fiscal year-ends.  Unlike previous extensions, no action is required for this extension.

This section also contains reminders on identification of COVID-19-related programs on the SEFA and reporting to the Federal Audit Clearinghouse.  Along with COVID-19 funds, any donated personal protective equipment (PPE) should be identified.  If the donated PPE was provided to organizations without any compliance or reporting requirements, the fair market value of the donated PPE is to be presented in a footnote and may be marked unaudited.  When the recipient uses federal funds provided under an Assistance Listing to purchase PPE, the PPE must be reported on the SEFA in that case. 

Please stay tuned as we follow the current updates related to the COVID-19 funding and the future releases of the addendums this fall.  In the meantime, please contact us with questions on the Compliance Supplement or any federal funding questions.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Persistent Challenges Facing Manufacturing
Tax-Exempt Organizations Must Notify IRS of Responsible Party Changes
OMB Releases 2021 Compliance Supplement
IRS Provides Taxpayer-Friendly Guidance for the Employee Retention Credit
What to Know About the Latest Title IX Guidance
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×