SEFA Tutorial
Lesson 1: Federal Reporting Requirements – Background
OMB Compliance Supplement
The OMB Compliance Supplement is a guide that provides program specific guidance and requirements for federal awards and agreements. The OMB Compliance Supplement identifies federal programs and program clusters. This guide also identifies specific audit, SEFA, reporting and other administrative requirements for certain federal programs and clusters.
The OMB Compliance Supplement is typically published each federal fiscal year, often during the summer months and may be published as one or more parts. When a new OMB Compliance Supplement is published, the guide typically states whether information included in the guide replaces or is in addition to the prior version(s) of the OMB Compliance Supplement.
Each agency that receive federal awards (whether direct or pass-through) must review each new addition of the OMB Compliance Supplement to determine if any of its federal awards include new requirements or clarification of the interpretation of previous requirements. New versions of the OMB Compliance Supplement will often contain additional guidance for federal funds that impact multiple federal awarding agencies. Examples of this type of federal funding that appear in the OMB Compliance Supplement include:
- The American Recovery and Reinvestment Act of 2009 (ARRA)
- Coronavirus Disease 2019 (COVID-19) relief funding
- Various disaster relief funding
Much of the OMB Compliance Supplement focuses on the audit responsibilities for external auditors of non-federal entities agencies that receive federal funds (for example, the Texas statewide independent auditor over federal programs who audits agencies that receive federal funds). The OMB Compliance Supplement identifies a compliance matrix of 12 different types of compliance requirements and then specifies for each program which of those requirements external auditors are required to test when developing audit procedures in the OMB Compliance Supplement. The compliance matrix indicates for a federal program whether the compliance requirement must be tested. These compliance requirements include:
- Activities Allowed or Unallowed
- Allowable Costs/ Cost Principles
- Cash Management
- Eligibility
- Equipment/ Real Property Management
- Matching, Level of Effort, Earmarking
- Period of Performance
- Procurement/ Suspension and Debarment
- Program Income
- Reporting
- Subrecipient Monitoring
- Special Tests and Provisions
Not all compliance requirements apply to all federal programs. Recent versions of the OMB Compliance Supplement:
- Limit the number of compliance requirements by federal programs. The external auditor must test the compliance requirements identified in the compliance matrix for a program for the external auditor to comply with 2 CFR 200 subpart F audit requirements.
- Includes suggested procedures for the external auditor to follow to audit each federal program, though the auditor must use independent judgement to determine if those suggested procedures are enough to meet audit objectives.
Agencies may use the OMB Compliance Supplement auditor responsibilities to help determine program requirements and ensure compliance. The OMB Compliance Supplement identifies the minimum compliance areas that an external auditor must test when developing auditing procedures for the audit of a federal program. The statewide independent auditor must follow these requirements when developing auditing procedures, but the statewide independent auditor may use professional judgement to determine additional procedures testing and procedures necessary to meet the federal audit objectives.