Sneak Preview: AICPA: Draft Supplement Would Delete Sections; Unify Part 3
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) Although the Office of Management and Budget (OMB) has not released the 2026 Compliance Supplement, a key official with the American Association of Certified Public Accountants (AICPA) recently divulged that a draft version of the document provided for audit community review would remove some traditional parts — including Part 6, Internal Controls — and would return Part 3, Compliance Requirements, from a split section (as provided in the 2025 supplement) back to a single section on suggested audit procedures.
Speaking to attendees at the AICPA Not-for-Profit Conference in National Harbor, Md., Lindsey Kennimer, CPA, senior director of governmental auditing and accounting at AICPA, highlighted some of the updates included in the 2026 draft version that AICPA reviewed. She stressed that OMB has not yet published a final version, and that auditors may not issue a June 30, 2026, year-end audit based on the draft version because the final version, when issued, could contain other changes.
Because OMB released the 2025 supplement late last year (in November) (see “2025 OMB Compliance Supplement Features Split Part 3 Requirements,” January 2026), it requested that federal agencies conduct a limited-scope review process (i.e., only include statutory and regulatory updates to programs) for revisions to the 2026 version.
Among the key changes in the draft version, Part 3 would revert back to a single part. To enable auditors to test for compliance requirements in light of changed requirements stemming from the 2024 revisions to the uniform guidance, in Part 3 of the 2025 supplement OMB implemented two sections for auditors — Part 3.1 when testing awards subject to the uniform guidance prior to the 2024 revisions, and Part 3.2 when testing awards subject to the 2024 revisions. Because this situation does not apply for fiscal year audits reviewed under the draft 2026 supplement (i.e., audits with a fiscal year beginning after June 30, 2025), two separate sections are no longer needed.
Another proposed change in Part 3, which would also apply throughout the supplement, would eliminate the use of “matching” in favor of “cost sharing.”
OMB, in the draft supplement that AICPA reviewed and discussed, would remove the current Part 6, Internal Controls. Kennimer said that AICPA requested this part remain in the supplement for another year, but she noted that “these are not really audit requirements; they are basically best practices and different examples of the controls over compliance.” She said that if this section is removed in the final version, auditors can still refer to it in the 2025 supplement.
(The full version of this story has now been made available to all for a limited time here.)
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