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Single audit complexities

Making sense of the 2021 Compliance Supplement addendums

By Rachel Flanders, CPA, CliftonLarsonAllen LLP

March 8, 2022

Single audits aren’t likely getting any easier this year. The 2021 Compliance Supplement was issued in August 2021 and is applicable for single audits with year-ends after June 29, 2021. This year, there were many changes to the supplement, and updates were also shared after the supplement was issued. Keep these in mind while planning and performing single audits.

Consider these top 10 takeaways

1. New program introduced in first addendum

In December 2021, Addendum No. 1 to the compliance supplement was issued, which introduced a new program: the Coronavirus State and Local Fiscal Recovery Fund.
The addendum also updated an existing program issued in the original compliance supplement: Education Stabilization Fund (ESF). ESF was updated only in Section 1 to address American Rescue Plan Act (ARPA) funding in Assistance Listing Number (ALN) 84.425U and 84.425X.

2. Seven programs listed in second addendum

In January 2022, Addendum No. 2 was issued, which included the following programs:
  • ALN 10.542 Pandemic EBT — Food Benefits.
  • ALN 10.649 Pandemic EBT — Admin Costs.
  • ALN 14.871 Section 8 Housing Choice Vouchers (included in the first release of the compliance supplement, updated for new incremental Emergency Housing Vouchers).
  • ALN 20.315 National Railroad Passenger Corporation Grants.
  • ALN 93.499 Low Income Household Water Assistance Program.
  • ALN 93.558 Temporary Assistance for Needy Families (included in the first release of the compliance supplement, updated for information on Pandemic Emergency Assistance Fund).
  • ALN 93.575 Child Care and Development Block Grant (included in the first release, updated for additional funding added by the ARPA).

3. Questions remain around future guidance

Could there be a third addendum? The Office of Management and Budget (OMB) has not indicated it will issue another addendum. There are also new programs which will be addressed in the 2022 Compliance Supplement.

4. Next compliance supplement in the works

The 2022 Compliance Supplement process is already underway. OMB is striving to issue the 2022 supplement in late spring, with subsequent addendums anticipated for many new programs established by the Infrastructure Investment and Jobs Act.

5. Determining risk is critical

When originally issued, the compliance supplement designated certain programs as “higher risk” in Appendix IV. Consider these programs high risk unless the program otherwise meets the criteria for a low-risk Type A program and the percentage of COVID-19 funding in the program or cluster during the fiscal year is not material to the program as a whole. Since many of the programs on the list are entirely COVID-19 funding, auditors will be required to assess as high risk.
The following programs are on the list:
  • ALN 93.778/93.777/93.775 Medicaid Cluster.
  • ALN 93.498 Provider Relief Fund.
  • ALN 93.461 COVID-19 Uninsured Program.
  • ALN 20.106 Airport Improvement Program.
  • ALN 20.500/20.507/20.525/20.526 Federal Transit Cluster.
  • ALN 21.019 Coronavirus Relief Fund.
  • ALN 21.023 Emergency Rental Assistance.
  • ALN 84.425 Education Stabilization Fund.
  • All new ARPA programs.

6. Organizations reporting PRF funds should take note

The Provider Relief Fund (PRF) program has some nuances around when amounts are reported on the Schedule of Federal Expenditures (SEFA). Instead of aligning with when funds are expended, reporting on the SEFA instead aligns with the reporting of amounts into the HRSA PRF Reporting Portal. A table is included in the PRF supplement in Part 4 to clarify SEFA reporting.

7. Auditors of educational organizations should review testing requirements

The Education Stabilization Program (ESF) is a complex program that utilizes one ALN with many different alpha characters for various tranches of funding. Sections 1 and 2 of the ESF programs also have differing compliance requirement matrices. In addition, for certain alpha characters, auditors will need to use Part 7 of the compliance supplement as some programs are not part of Sections 1 or 2. Use caution when auditing subprograms and check that testing covers the differing requirements.

8. New reporting testing may be required

Federal Funding Accountability and Transparency Act of 2006 (FFATA) reporting testing is required now for all major programs where:
  • The reporting type of compliance requirement is marked as a “Y” in the Part 2 Matrix of the compliance supplement.
  • The recipient makes first-tier subawards/subcontracts of $25,000 or more. 
Coordinate with auditees to review the information, as these details are found in a FFATA Subaward Reporting System accessible only by the recipient.

9. Federal agency requirements may apply to for-profit entities

For-profit entities are subject to certain types of compliance audits depending on the program and federal agency requirements. Many for-profits using the PRF program and Shuttered Venue Operators Grant program will be required to have some type of audit.
Additionally, there may be programs where funding goes to entities not traditionally subject to a single audit, such as credit unions or smaller local governments or nonprofits. There will likely be thousands of new audits required across the country.

10. Determine what resources you may need

If your firm performs single audits and is not a member of the AICPA’s Government Audit Quality Center (GAQC), seriously consider it. The GAQC is in regular communication with federal agencies and OMB and provides timely updates to programs or supplement changes to its members, along with webcasts and other training.
Rachel Flanders, CPA is a principal at CLA. For more information on single audit changes, you may reach her at or 612-397-3027.
The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP to the reader. For more information, visit
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