As many organizations wrap up their fiscal 2025 audits, they are left without clarity on the 2025 Office of Management and Budget (OMB) Compliance Supplement. This in-between period, in which the OMB Compliance Supplement has still not been officially released, continues to challenge leaders in the nonprofit and audit community. 

For organizations subject to the Uniform Guidance (Single Audit), this delay matters since auditors rely on the Supplement to determine which compliance requirements apply and how they must be tested. Without it, single audit reports cannot yet be issued, which can affect grant reporting timelines and funding closeouts.

 

GUIDANCE FOR NONPROFITS SUBJECT TO SINGLE AUDIT REPORTING

Organizations that must comply with the Uniform Guidance should be aware of the following during this time:

  • The Compliance Supplement is the roadmap. The Compliance Supplement identifies which compliance requirements apply to each federal program and how auditors are expected to test them. Although OMB has released a final draft version of the Supplement, without the finalized 2025 version, there is still uncertainty around what rules will ultimately apply.
  • Single audit reports are on hold. Auditors cannot finalize or issue single audit reports for audits of fiscal 2025 year-ends until OMB releases the official version. In many instances, this may also impact the state compliance reporting, and certain state funders are requesting reporting packages to still be submitted on time – even without the single audit reports. If the release continues to lag, nonprofits may face reporting bottlenecks, especially for programs with strict submission deadlines.
  • Uniform Guidance revisions add another layer. OMB’s April 2024 update to the Uniform Guidance (effective Oct. 1, 2024) revised several key provisions including thresholds, definitions and compliance expectations. The 2025 Compliance Supplement is the first to reflect those changes, which makes this transition year especially complex.
  • Split reporting. Even though single audit reports cannot be issued, auditors can still issue the financial statements reports. That means that the audit will be distributed in two stages: first the audited financial statements, and then the Uniform Guidance compliance opinion (once the final 2025 Compliance Supplement is out). This is the approach to follow when the audited financial statements are needed as soon as possible to meet debt compliance reporting, funding applications requirements and internal Board expectations. 

 

STEPS FOR NONPROFIT FINANCE TEAMS TO TAKE NOW

Nonprofit finance teams can take certain steps in the interim to prepare for the release of a final version:

  • Stay in close contact with your audit team: Ask how the delay may impact the audit issuance timeline and agree on a plan for issuance, whether it is delaying issuance entirely until the Supplement is out or issuing the financial statements first and the compliance reports later.
  • Keep your Audit Committee and Board up to date: Ensure the organization’s Audit Committee and Board are aware of the situation and can weigh in on the issuance plan.
  • Coordinate with your funders: Communicate early with funders about the timing of the issuance and their expectations. Some may provide extensions or interim guidance related to audit submissions.

GHJ’s Nonprofit Practice continues to closely monitor the OMB’s release timeline and coordinate across its nonprofit audit teams to ensure a smooth transition once the 2025 Compliance Supplement is finalized. If your organization receives federal funding, now is a good time to touch base with your auditors to understand how this delay may affect your audit schedule or grant reporting obligations. Reach out to GHJ to learn more.