Yet-Unreleased 2019 Compliance Supplement Already Facing Criticism

Jerry Ashworth
May 9, 2019 at 08:48:06 ET
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It appears that the 2019 Office of Management and Budget’s (OMB) Compliance Supplement is causing some controversy, and the document hasn’t even been issued yet.

At the Brustein & Manasevit Spring Forum yesterday in Washington, D.C., Brette Fishman of the OMB Office of Federal Financial Management provided a brief update on the progress of the 2019 supplement. First, she said that OMB expects to release the document “in the next two months or so.” Compare this to a statement from OMB’s Rhea Hubbard at the National Grants Management Association’s annual grants training in mid-April, in which Hubbard announced that the supplement would be issued “very soon.” Neither of these answers gives us a real good indication when we can expect it — perhaps as early as this week; perhaps as late as mid-July. We’ll just have to wait.

Fishman did note that OMB had originally hoped to release the supplement to the public in early 2019, but because staff was furloughed during the partial government shutdown in January, it has been delayed in getting the full document ready.

However, OMB presenters have announced the most notable change in the 2019 supplement. The compliance testing requirements in Part 3 of the supplement will change. OMB plans to take a new approach that will reduce the previous requirement for auditors to test up to 12 compliance requirements to a new plan in which agencies would require auditors to test six compliance requirements, depending on the program. It is anticipated that these six requirements could vary from year to year, depending on the agency’s priorities for testing. The reasoning behind this change is to reduce some of the testing burden for auditors and to allow agencies to focus on the key program concerns.

Now, while this change may be good news for auditors, it may create more headaches for grant recipients, particularly pass-through entities, contended Michael Brustein, Esq., partner with Brustein & Manasevit, at its spring forum. While auditors will be testing only six of the compliance requirements, pass-through entities will take on the extra burden of adding their own oversight measures to ensure that subrecipients are compliant with the remaining compliance requirements. “If the Compliance Supplement says that the single audit will only look at six, guess who will have to look at the others? You,” he said. “Someone has to do it. It’s not a situation where we just aren’t going to worry about the other [requirements]. The pass-through agency will always be responsible for 100 percent of the federal grant funds being lawfully expended. Making it simpler for the auditors makes your job more difficult. The onus falls to you to make sure that happens.”

In addition, Brustein noted that recipients won’t be provided extra funds to carry out the additional responsibilities. “You’re not going to have more resources to do what you have to do,” he said.

This concern was also raised by fellow Brustein and Manasevit partner and member of Thompson’s grants editorial advisory board Tiffany Kesslar, Esq., in a GrantViews video we recently posted. It’ll be interesting to see the long-term effect of this this change and how much backlash could be forthcoming if it does prove cumbersome for grantees. As always, we will let everyone know when the 2019 Compliance Supplement is released and what other changes are in store.