Frustration Over the Lack of Compliance Supplement Addendum Info Grows

If you among those recipients of American Rescue Plan Act (ARPA) (Pub. L. 117-2) funding, or their auditor, who is growing ever more frustrated waiting (and waiting) for an addendum to the 2021 Compliance Supplement, realize that you are not alone. There are many others out there that continue to await word from the Office of Management and Budget (OMB) on one, or potentially two, addenda to the 2021 supplement.

The grantee and auditee community are not the only ones urging OMB to release this information so that auditors can conduct their audits of ARPA programs, but the key government watchdog agency, the Government Accountability Office (GAO), has emphasized that OMB needs to release this ARPA guidance soon, and more generally, issue the annual Compliance Supplement earlier in the year. This is something we have espoused in our decades of covering grants.

GAO is required to submit to Congress regular updates on federal agency oversight of COVID-19 relief programs. Last week, it sent a massive report ― more than 430 pages ― to Congress addressing numerous programs to address the pandemic, including the Department of the Treasury’s State and Local Fiscal Recovery Fund (SLFRF) program. The report notes that because SLFRF and other programs included as part of ARPA were enacted in March, agencies did not have enough time to provide OMB with the information needed to audit these programs in time for the release of the 2021 supplement, which was issued Aug. 13. Therefore, OMB said this information would be released later this year through an addendum/addenda.

In GAO’s discussion in the report on grantee SLFRF oversight, it stated that state and local governments receiving these funds that expected their single audits to include SLFRF, some expressed concern about the timeliness of the 2021 Compliance Supplement, noting that auditors are not able to adequately plan their audit procedures for SLFRF until the supplement addendum is available. Respondents also expressed the need for additional guidance, such as clarification of requirements to report SLFRF data on the Schedule of Expenditures of Federal Awards and to report nonentitlement unit distributions, revenue loss and subrecipient monitoring.

These concerns were similar to those GAO expressed in a March report, which explained that auditors who conduct single audits for entities whose fiscal year ends on June 30 have emphasized the need to receive the Compliance Supplement by no later than April each year to effectively plan their audits and conduct interim testing. GAO recommended in March that OMB work with federal agencies and the audit community to update OMB’s process for preparing single audit guidance so that it can “be issued in a timely manner and is responsive to users’ input and needs.”

Unfortunately, GAO reported that OMB neither agreed nor disagreed with its recommendation. OMB stated that it shares a draft Compliance Supplement with the grant and audit communities early each year as part of the Compliance Supplement preparation process, but it has not taken steps to move the process along quicker. OMB officials went on to say that they “believe there is currently an appropriate balance between the timeliness of issuing the annual Compliance Supplement and the consideration given to inputs and comments from federal agencies and the audit and grantee community.”

Still, GAO wasn’t satisfied. It requested again in July that OMB consult with Treasury to issue timely and sufficient single audit guidance for auditing SLFRF recipients. Again, OMB neither agreed nor disagreed, issuing the 2021 supplement in August and announcing the forthcoming addendum, although it still has not released a planned issuance date. GAO again met with OMB and the audit community in September to further discuss the audit community’s concerns and the additional single audit guidance needed.

At this point, GAO’s pleas, and those similar requests from the grant and audit community, seem to be going nowhere. One can only hope that the addendum, or addenda if needed, come out soon, and that next year will finally be the year when the Compliance Supplement is issued in the spring, instead of late summer. But going by past history, we’ll believe when we see it.

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