NASACT Affiliate Again Urges Release of Final Compliance Supplement

In case you were wondering, no, you haven’t missed it. What is “it”? The final version of the 2025 Compliance Supplement from the Office of Management and Budget (OMB). It’s now the middle of November and this document is way past due.

Auditors rely on the annual supplement when testing grant programs. It typically is released in late spring or early summer, but here we are, a couple of weeks away from Thanksgiving, and the 2025 final version has yet to be seen. The level of concern in the audit community has led the National Association of State Auditors, Comptrollers and Treasurers (NASACT) to send not one, but two letters to OMB calling for the document’s release.

NASACT sent an initial letter in August requesting the release of the supplement. In late October, Washington State Auditor Pat McCarthy, who is president of the National State Auditors Association, an affiliate of NASACT, penned another letter to OMB. “The annual Compliance Supplement is essential to achieving the purposes of the Single Audit Act,” she said. “It establishes uniform audit requirements for federal awards, promotes sound financial management, supports the efficient and effective use of audit resources and reduces administrative burden on nonfederal entities.”

OMB in August provided the audit community with a draft — but not final — version of the 2025 Compliance Supplement to enable auditors to prepare their audit testing. The draft version is available at the American Institute of Certified Public Accountant’s Government Audit Quality Center (GAQC) website for GAQC members. Auditors can use the draft version for federal fiscal year 2025 audits, but they cannot release them until the final version is issued. Auditors proceeding with the draft must exercise caution, as updates in the final version could affect completed work.

McCarthy expressed concern about how to assess two certain programs. The 2024 Compliance Supplement identifies two programs, Coronavirus State and Local Fiscal Recovery Fund and Emergency Rental Assistance, as higher risk programs while the 2025 version does not.

“If auditors use the 2024 Compliance Supplement for 2025 audits, in most cases it will result in these two programs being unnecessarily audited, which will waste taxpayer resources,” she said. “Proceeding with the version of the 2025 Compliance Supplement already provided by OMB is a necessary but problematic approach. While NSAA members audit hundreds of billions in federal expenditures due to the size of their auditees, these audits only account for a small portion of the total number of single audits. Without a final version made publicly available, there will be inconsistency in practice in the auditing industry. This lack of consistency would hinder federal agencies’ ability to ensure that audits adequately address key areas of concern, such as those most likely to cause improper payments, fraud, waste and abuse.”

NSAA is calling for OMB to formally release the final 2025 Compliance Supplement “as soon as practicable.” McCarthy added that “because we intend to continue working with the version provided to us, we ask that any additional changes to the current version be deferred to future years to increase the likelihood that 2025 audits can be completed timely.”

When the 2025 supplement goes final, we at Thompson Grants will post the document and provide analysis to assist auditors in using it.

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