The guidance and requirements that auditors must follow to perform single audits, including program specific audits, are included in the U.S. Office of Management and Budget’s (OMB) annual Compliance Supplement. Although the supplement is written for auditors, it is also a good resource for organizations that receive and expend federal awards.

The Compliance Supplement has helpful information to assist recipients of federal grants with the regulations and requirements of the federal program.

This article provides a quick summary of what auditors and not-for-profit organizations need to know about 2021 single audits based on the most recent addenda, which only impact certain parts of these audits (depending upon when they are issued). Although no one can predict what will be in the 2022 Compliance Supplement, it seems logical to assume that the guidance from the addenda will find its way into the 2022 edition. Of course, changes and additional requirements may also be included.

Recap of Which Organizations Need a Single Audit

Not-for-profits and state and local governments are subject to a federal single audit if they expend $750,000 of federal financial assistance or more in their fiscal year. This includes COVID-19 assistance either in grants or loans and all other non–COVID-19 federal financial assistance expended in their fiscal year. For-profit entities receiving federal financial assistance are required to have either a single audit (or program-specific audit) or a financial audit under Government Auditing Standards. Loans obtained under the Paycheck Protection Program (PPP) and refunds resulting from the Employee Retention Tax Credit (ERTC) are not subject to a single audit.

For the 2021 Compliance Supplement, OMB issued two addenda. The 2021 Compliance Supplement and these addenda are effective for single audits for entities with year-ends of June 30, 2021, through June 29, 2022. The recent addenda are not on OMB’s web-site, but can be found at

Addendum 1

Addendu m 1 was issued on December 3, 2021, and contains two programs:

  • Coronavirus State and Local Government Fiscal Recovery Fund (21.027). This is a new, $350 billion federal program which is to be distributed to state and local governments but will most likely also be passed down to many not-for-profits.
  • Updated Program – Education Stabilization Fund (ESF) (84.425). This program is broken into two sections—elementary/secondary and higher education. Section 1 (84.425U and 84.425X) was updated in this addendum to reflect the American Rescue Plan Act of 2021 (ARPA). Section 2 was already updated for this act in the 2021 Compliance Supplement.

Auditors will test compliance with the requirements that existed at the time of the expenditures. Essentially, what this means is that if a program was audited and the report date was prior to December 3, 2021, there is no need to address what is included in Addendum 1.

Organizations with a report date and that undergo an audit after December 3, 2021, should note that auditors will be looking at whether their awards were put toward eligible uses. There are four eligible uses for these funds; note that revenue loss is not one.

Auditors will should look for eligible use expenditures on an organization’s Schedule of Expenditures of Federal Awards (SEFA) reporting, where the aggregate of these four expenditures is reported.

Addendum 2

Addendum 2 contains new programs and changes to existing programs due to ARPA. It was issued January 19, 2022, and contains seven programs:

  • 10.542—Pandemic Electronic Benefits Transfer (EBT) Food (new)
  • 10. 6 49 — Pandemic EBT – Administrative Costs (new)
  • 14.871—Section 8 Housing Choice Vouchers (changes for ARP)
  • 20.315 — National Railroad Passenger Corporation Grants (new)
  • 93.499—Low Income Household Water Assistance Program (new)
  • 93.558—Temporary Assistance for Needy Families (changes for ARP)
  • 93.575 — Child Care and Development Block Grant (changes for ARP).

Addendum 2 is effective for reports dated after January 19, 2022. Single audit reports issued prior to this date are not affected.

John D’Amico, CPA, is a managing director in the professional standards group, CBIZ Marks Paneth.