Time for the Fireworks! OMB Issues 2018 Compliance Supplement

May 21, 2018 | By Jerry Ashworth | Post a Comment

firework-1443831Chalk this under the “Ask and ye shall receive” department! Last week, we were posting snails as we waited for the Office of Management and Budget (OMB) to issue the 2018 2 C.F.R. Part 200, Appendix XI Compliance Supplement. Here we are one week later, and as promised, here are the fireworks! In today’s Federal Register, OMB announced that it has made the supplement available on its website.

The 2018 Compliance Supplement is effective for audits of fiscal years beginning after June 30, 2017. However, let’s just say that this isn’t your father’s Compliance Supplement. As had been discussed in other forums, this year’s version is a “skinny” version of the typical 1,000-plus page supplement. This year’s version comes in at a mere 251 pages. Why? Well, unlike previous annual updates to the supplement, this document only modifies sections of the 2017 supplement that were in need of a significant revision. Sections without revisions from the 2017 supplement were not copied into this year’s version. Therefore, auditors must use the 2018 and 2017 supplements together to perform audits for the audit period in effect.

Auditors should refer to the Table of Contents in the 2018 supplement to determine what sections were added, deleted or superseded from the 2017 version.

In this year’s version, in both Part 3.2-1 and in a new Appendix VII-A, OMB addresses the increased micro-purchase threshold under the National Defense Authorization Act (NDAA) of 2017 and the NDAA of 2018. In a nutshell, the NDAA of 2017 increased the small purchase threshold to $10,000 for institutions of higher education, or related or affiliated nonprofit entities, nonprofit research organizations or independent research institutes (which we’ll call “covered entities’), while the NDAA of 2018 increased this threshold to $10,000 for all entities. Although the NDAA of 2017 was enacted on Dec. 23, 2016, it has not been codified by federal agencies, and OMB has not established an effective date for the micro-purchase threshold, thus creating confusion among many auditees. The supplement notes that auditors are not expected to develop audit findings for the before-mentioned covered entities that implemented increased micro-purchase threshold provisions (i.e., $10,000 or more) after Dec. 23, 2016, as long as the entity documented the decision in their internal procurement policies. In addition, these type institutions that had established micro-purchase thresholds up to the $10,000 prior to the enactment of the NDAA of 2017 are allowed to continue to use the same threshold as long as the entity documented the decision in their internal procurement policies.

However, the provision of the NDAA of 2018 will not be effective until they are codified in the Federal Acquisition Regulation. The supplement stresses that if auditors determine that auditees (i.e., those that are not covered entities) have early implemented the provisions of this act for the micro-purchase thresholds, they are expected to develop audit findings for noncompliance caused by this early implementation. Once codified, the higher threshold will be available to all nonfederal entities except states, which are required under §200.317 of the uniform guidance to use the same policies and procedures they use for procurements from their nonfederal funds. We here at Thompson will explain this further in an article for our subscribers at Grants Compliance Expert and in the Single Audit Information Service newsletter.

Also in Appendix VII-A, OMB discusses administrative relief for grantees impacted by Hurricanes Harvey, Irma or Maria. The supplement refers to an Oct. 26, 2017, OMB memorandum that identified 11 actions that offer those impacted some short-term relief from administrative, financial management and audit requirements under the uniform guidance without compromising their grant accountability requirements. This section discusses certain documentation that auditors should review for impacted auditees that accepted such administrative relief. The supplement also deletes two programs, adds another and created a new cluster.

What are your reactions to the 2018 Compliance Supplement? We’d love to hear from you.


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