When Guidance Arrives Late: Navigating Compliance Supplement Delays

Each year, auditors and auditees eagerly anticipate the release of the Compliance Supplement, a key document issued by the Office of Management and Budget (OMB) that provides detailed instructions for testing federal programs in single audits. The Compliance Supplement is an essential resource, outlining the requirements auditors must evaluate to ensure federal funds are used appropriately and in compliance with the Uniform Guidance. Traditionally issued before June 30^th, the Compliance Supplement guides audit work for the year ahead. However, as many nonprofits that closed their fiscal year on June 30^th continue waiting for the 2025 edition, uncertainty is mounting. The recent government shutdown that began October 1, 2025, has only fueled speculation of further delays, creating ripple effects that complicate planning, reporting, and compliance for auditees. Furthermore, the American Institute of Certified Public Accountants (AICPA) Government Audit Quality Control Center (GAQC) Alert No. 488 announced that auditors are unable to issue a June 30, 2025, year-end Single Audit until the final Compliance Supplement is released.

Why the Compliance Supplement Matters

The Compliance Supplement details which compliance requirements are subject to audit for each program, helping both auditors and auditees focus their efforts on areas deemed most critical by federal agencies. For organizations that receive significant federal awards, such as state and local governments, universities, and nonprofits, the document sets the roadmap for ensuring funds are administered according to federal standards. Without timely access to it, auditees operate with uncertainty about what will ultimately be tested and reported.

The Impact of Delays

When the Compliance Supplement is released late, it can compress an already tight audit timeline. Auditees face several challenges, including:

1. Planning Difficulties

Organizations often plan their year-end close and audit preparation months in advance. A delay in the Compliance Supplement means auditees are working without final clarity on what requirements will be tested. This creates the risk of preparing documentation that may later prove unnecessary or, worse, overlooking requirements that end up being subject to audit.

2. Increased Compliance Risk

Delays can leave auditees in the dark regarding new or revised program requirements. For instance, if federal agencies update rules related to procurement, reporting, or allowable costs, entities may not be aware of those changes in time to adjust internal controls and documentation. This heightens the risk of noncompliance, even for organizations that strive to follow best practices. In addition, auditees should be proactive in communicating with other regulators, as some may impose separate reporting or filing deadlines that differ from the federal requirement of 30 days after audit report issuance or nine months after year-end.

3. Resource Allocation Issues

Staff responsible for compliance and audit preparation often balance multiple priorities. A delayed Compliance Supplement means organizations may allocate resources prematurely, revisiting tasks once requirements are finalized. This rework consumes time and budget that many auditees can scarcely afford.

Broader Implications for Accountability

The Compliance Supplement delays also have implications beyond the audit process itself. Federal programs are designed to ensure taxpayer dollars achieve intended public benefits. When audits are rushed due to shortened timelines, the quality of assurance may suffer. Auditees risk findings not because of poor stewardship but because of systemic delays outside their control. This can affect reputations, future funding eligibility, and stakeholder trust.

How Auditees Can Respond

While auditees cannot control when the OMB releases the Compliance Supplement, they can take proactive steps to mitigate risks:

Stay Current on Drafts

The OMB has shared a draft version of the 2025 Compliance Supplement with the AICPA GAQC. A copy of the draft is available to download here by signing up for a free account. While this draft can be a valuable tool for early planning and risk assessment, it’s important to remember that it is not final. Once the official Compliance Supplement is released, auditors and auditees should carefully compare the draft to the final version to identify and address any changes.

Focus on Core Compliance Areas

Even without the final Compliance Supplement, organizations can prepare by strengthening controls in common compliance areas, such as allowable costs, procurement, subrecipient monitoring, and reporting.

Maintain Open Communication

Ongoing collaboration with auditors, not just during audit season, can help auditees stay prepared for potential changes and minimize surprises once the Compliance Supplement is finalized. Maintaining open dialogue with key stakeholders, such as donors and grantors, is equally important. These groups often rely on timely, accurate financial information to make funding and oversight decisions, so proactive communication builds trust and helps manage expectations.

Conclusion

Delays in the Uniform Guidance Compliance Supplement create real challenges for auditees, from planning hurdles to heightened compliance risks. While entities cannot influence the timing of federal guidance, they can take steps to remain agile and prepared. Ultimately, the delays underscore the importance of strong year-round compliance practices, robust internal controls, and proactive communication with auditors. By focusing on these areas, auditees can better navigate the uncertainty and continue meeting the high standards expected of stewards of federal funds.

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