Pay Attention to the Specific Timeline for the Subpart F Revisions
Did you ever look at a group photo and note that while most of the individuals are all relatively similar, there often is one oddball off to one side that just doesn’t seem to fit in with the rest. In a matter of speaking, the same thing can be said about the audit requirements in subpart F of the uniform guidance.
The Office of Management and Budget (OMB), when it issued the 2024 revisions to the uniform guidance on April 22, stated that the new revisions would be applicable to new awards, or amendments to existing awards, issued on or after Oct. 1, unless federal agencies elect to implement them as early as June 21. Included among all of the revisions was a subpart F change at §200.501 to increase the single audit threshold from $750,000 in federal awards that an auditee expends annually to $1 million in federal awards expended annually.
However, this is where it gets tricky. The Oct. 1 date for the most part applies to auditee compliance with subparts A-E (and the appendices) of the uniform guidance. The subpart F provisions are based on the auditee’s fiscal year. Therefore, the subpart F provisions of the 2024 revised guidance will only apply to audits (either single audits or program-specific audits) starting with those auditees whose fiscal years begin Oct. 1, 2024, and those starting thereafter.
Let’s put it another way. If a recipient that has a July 1, 2024, through June 30, 2025, fiscal year receives a new award on Oct. 1, the auditor, when testing compliance for that award, will assess compliance with subparts A-E of the 2024 revised guidance. However, the audit itself would still follow the subpart F requirements in the existing uniform guidance. Therefore, if the auditee by the end of the fiscal year had expended $900,000 in federal funds, it would still be required to undergo a single audit (or program-specific audit) because the new $1 million threshold will not have applied yet based on this fiscal year.
In the same circumstance, if the auditee received the same Oct. 1 award, and has an Oct. 1, 2024, through Sept. 30, 2025, fiscal year, subpart F of the 2024 revisions would apply, and the auditee would not be required to undergo a single audit since it did not meet the $1 million threshold.
To totally through a monkey wrench into the mix, federal agencies may early adopt the 2024 guidance, which makes it critically important for auditees receiving new awards between June 21 and Oct. 1 to determine which version of the uniform guidance is applicable under their terms and conditions. OMB stressed this fact to auditors in the recently released 2024 Compliance Supplement, warning auditors that federal agencies may differ in their award oversight as some may elect to implement the 2024 revisions early and others may not. Even more direct, OMB states that auditors must not apply compliance requirements from the 2024 revisions in circumstances in which the federal agency has not yet applied the 2024 revisions to the federal award subject to audit.
Entities and auditors should be especially wary about these compliance dates. Officials with associations such as the American Institute of Certified Public Accountants have expressed concerns that entities and auditors will want to adopt the subpart F changes earlier than they apply to the auditee’s applicable fiscal year, which will can hinder audit quality.
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