The U.S. Office of Management and Budget (OMB) has officially released the 2025 Compliance Supplement.
This is after a draft was released in the fall to facilitate planning of these audits but prohibited final issuance until the final supplement was released. This annual publication is a critical resource for auditors and entities that receive federal funds. It provides detailed guidance for conducting Single Audits and ensuring compliance with federal regulations. The 2025 OMB Compliance Supplement is effective for Single Audits of fiscal years beginning after June 30, 2024. This means if your organization’s fiscal year started on July 1, 2024, or later, auditors will use the 2025 Supplement for compliance testing.
The 2025 OMB Compliance Supplement was released much later than usual, arriving in late November, instead of its typical release date in spring or early summer. This delay was largely due to the extensive updates required to incorporate the revised Uniform Guidance, which became effective on October 1, 2024. OMB also needed additional time to integrate new programs and compliance requirements following significant federal funding changes and to ensure consistency across multiple agencies.
Even with the delayed release of the 2025 Compliance Supplement, the Uniform Guidance outlines strict reporting requirements for Single Audits. Audit reports must be submitted to the Federal Audit Clearinghouse within the earlier of 30 days after receipt of the auditor’s report or nine months after the end of the audit period. OMB has stated that extensions for submitting Single Audit reports are not automatic and must be formally requested. Organizations that need additional time should submit their request to their cognizant or oversight agency for audit, rather than to OMB. You can find a contact listing for the various cognizant agency contacts here. The request should clearly state the reason for the delay and specify the length of the extension being sought. Agencies have discretion to approve or deny these requests, and approval is generally based on whether the circumstances are valid and do not compromise federal oversight. OMB encourages agencies to consider granting extensions in extraordinary situations, such as significant changes in federal requirements or events beyond the entity’s control. Even when an extension is approved, entities are expected to complete their audits as quickly as possible.
What’s New in 2025?
The 2025 Compliance Supplement introduces several significant changes that are designed to streamline compliance and strengthen accountability.
- First, the 2025 Compliance Supplement now includes a dual compliance framework. There are two separate compliance sections: Part 3.1 applies to awards under the Uniform Guidance issued before October 2024, and Part 3.2 applies to awards under the revised Uniform Guidance that became effective on October 1, 2024. Auditees must determine which section applies based on the award date, which adds complexity but ensures alignment with updated regulations.
- Second, the Single Audit threshold has increased from $750,000 to $1,000,000 for federal expenditures of awards issued after October 1, 2024. This change is intended to reduce the audit burden for smaller entities. Organizations with fiscal years ending on or after September 30, 2025, will be the first to take advantage of the higher audit threshold.
- Third, compliance requirements have been expanded. Updates include stricter procurement standards, enhanced subrecipient monitoring and new reporting elements that align with federal systems.
- Fourth, the supplement places greater emphasis on internal controls. Entities must now demonstrate that internal controls are not only properly designed but also operating effectively across areas such as cash management, eligibility determinations and performance metrics. This trend on increased focus on internal control has been occurring for the past few releases.
- Fifth, there are program-specific changes. New programs have been added, including the Summer EBT for Children program from the USDA, the Title IV-E Prevention Program from HHS, and the Greenhouse Gas Reduction Fund from the EPA. COVID-19 programs have largely been phased out. There have been updates to major clusters such as Student Financial Assistance, Medicaid and Housing programs.
- Finally, the supplement introduces a terminology shift. The term “non-federal entity” has been replaced with “recipient” and “subrecipient,” which reflects clearer accountability across funding chains.
As always, it is important for organizations that receive federal funding to be familiar with all of these changes to ensure that you are remaining compliant with all of the applicable laws and regulations.
How Can I Access the 2025 OMB Compliance Supplement?
The full document, which spans more than 2,200 pages, is available on the OMB website. You can also find a summary of the significant changes in Part 8 – Appendices beginning on 8-V-1 to help you quickly digest changes to any programs your organization participates in.
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