On May 31, 2024, the Office of Management and Budget (OMB) issued the highly anticipated 2024 Compliance Supplement, setting the tone for entities with fiscal year ends ending June 30, 2024, and thereafter. This release comes with notable clarifications and adjustments across various compliance requirements, shedding light on key changes affecting auditors and entities alike.

Single Audit Threshold

One of the most important points in the Supplement is the clarification regarding the effective date of the increase in the Single Audit threshold to $1 million. Contrary to initial expectations, this adjustment is not effective until the auditee fiscal year ending Sept. 30, 2025, and thereafter, as outlined in Appendix VII.

Part 2, Matrix of Compliance Requirements

The 2024 update maintains the six-requirement mandate, with exceptions granted by OMB for the Research and Development Cluster and the Childcare Disaster Fund Cluster. This nuanced approach (ALNs 93.575/93.596/93.489) reflects OMB's responsiveness to sector-specific needs while ensuring compliance integrity.

Part 3, Compliance Requirements

Part 3 includes several noteworthy changes, including clarifications and expansions in compliance requirements.

Specifically:

• Equipment and Real Property Management: Clarification underscores the relevance of audit procedures in the "Disposition of Real Property Acquired Under Federal Awards" section to all non-federal entities.
• Procurement: Enhanced guidance regarding the Build America Buy America Act (BABA) section includes updated citation references, regulatory clarifications and a new suggested audit procedure focusing on monitoring contractors' compliance with BABA domestic preference clauses in infrastructure projects.

Part 4, Agency Program Requirements

The Supplement introduces several new programs across various departments, including Agriculture, Commerce, Transportation, Health and Human Services (HHS) and the Environmental Protection Agency. Some of these programs are funded through the Infrastructure Investment and Jobs Act, reflecting ongoing efforts to bolster national infrastructure and stimulate economic growth.

Conversely, the 2024 update also sees the removal of several programs, with more deletions than usual, including those removed from clusters.

Key changes in certain programs include:

• Education Stabilization Fund (ESF) 84.425
• Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) 21.027
• Provider Relief Fund (PRF) 93.498
• Disaster Grants 97.036
• Student Financial Assistance (SFA)

Appendix IV: Higher Risk Designation

Appendix IV identifies higher risk designations for specific clusters, shedding light on areas warranting heightened scrutiny.

Notable designations include:

• 93.778/93.777/93.775 - Medicaid Cluster
• 21.023 - Emergency Rental Assistance
• 21.027 - Coronavirus State and Local Fiscal Recovery Funds
• 15.252 - Abandoned Mine Land (AML) Grants

In conclusion, the release of the 2024 Compliance Supplement marks a significant update for entities subject to federal audit requirements. With clarifications, adjustments and new program introductions, stakeholders must remain vigilant in navigating the evolving compliance landscape to ensure accountability and transparency in the management of federal funds.

Copyright © 2024, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly traded and privately held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).