The Office of Management and Budget’s 2021 Compliance Supplement, released on August 12th, replaces the 2020 version of the supplement in addition to the addendum that was published in November of 2020. The supplement is intended to help auditors understand grant program objectives and the compliance requirements of Federal awards for the single audit. The newly released supplement will apply to audits of the fiscal year beginning after June 30th, 2020.
Another addendum is expected in the early fall, and is expected to include more guidance on the Coronavirus State and Local Fiscal Recovery Funds (SLFRF). The new supplement includes compliance information for COVID-19 funding that could not be included in the 2020 supplement because of the expedited distribution of emergency funds, namely the Coronavirus Relief Fund (CRF). While compliance requirements are becoming more defined as we move through the pandemic, the nature of the need for rapid distribution of funding remains the same, and we still don’t have complete, comprehensive information despite the supplement’s sheer size.
What we do know is that each update from the OMB reinforces the increased importance of performance reporting and demonstrating outcomes, and the supplement too only further reinforces this. The supplement claims that “Federal awarding agencies are encouraged to continue to shift their focus in grants management from one heavy on compliance to a balanced approach that includes establishing measurable program and project goals and analyzing data to improve results” going forward.
Due to this increased focus on data-driven performance reporting, there are now performance reporting review requirements for 57 programs in the 2021 supplement (outlined in section 3-L-1) as opposed to the 29 in the 2020 supplement. The supplement even states that eventually, the “OMB would like to move to a state where the auditors are conducting performance audits as opposed to compliance audits and providing reports to agencies on the extent to which the program is achieving its stated goals.”
Appendix V Part 8 or “List of Changes for the 2021 Compliance Supplement,” provides a high-level overview of the changes that have been made to the guidance. Notably for grant managers, the supplement identifies the CRF Program that was established by the CARES Act as a “higher risk” Program. This means it may be helpful to start collecting more data for performance reporting. You will need to continue to ensure that your organization is implementing strong internal controls, paying close attention to subrecipient monitoring practices (if applicable) and begin standardizing data for reporting. Whether you are a grant seeker, a grant maker, or both, the creation of processes to collect standard data has been and will continue to be critical for maintaining compliance.
In short, keeping track of your performance and program outcomes will continue to be of the utmost importance when it comes to reporting on all of your COVID-19-related funds going forward. This focus on measurable outcomes ties in nicely with the Biden Administration’s focus on equity in funding distribution and its ability to increase accountability, provide transparency, and improve access when it comes to Federal spending and outcomes.
To make sure you’re collecting the data you need so it will be there when you need it, you can:
While we wait for the next addendum to the supplement for further SLFRF guidance, if you are looking for what you will need to report on for SLFRF programs based on the size of your organization, we have created a guide on the reporting requirements that you can access here.
Whether you are trying to maximize the impact of your funding or planning for a more equitable future, we’re here to help.
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