After nearly six months of delay, the Office of Management and Budget (OMB) has officially released the final version of the 2025 Compliance Supplement. While auditors were previously allowed to rely on a “final draft version” issued in August 2025 for planning purposes, the finalized supplement now governs audit execution, reporting, and submissions to the Federal Audit Clearinghouse.
Although the final version introduces no substantive changes from the draft, its release removes lingering uncertainty and confirms how nonprofits and auditors must proceed for fiscal years beginning after June 30, 2024. This article outlines what was finalized, key updates in the 2025 Compliance Supplement, and practical considerations for organizations subject to single audit requirements.
Final Version Confirms August 2025 Draft Guidance
Due to administrative delays and a federal government shutdown, OMB was unable to release the final 2025 Compliance Supplement on schedule. To avoid disrupting audit planning, OMB provided the AICPA with a “final draft version” in August 2025.
The AICPA cautioned auditors not to issue single audit reports for fiscal years ending June 30, 2025 and later until the final supplement was released. OMB later indicated that no material changes were expected between the draft and final versions.
That expectation proved accurate. The only difference between the draft and final Compliance Supplement is the inclusion of a November 2025 date on the cover page. Auditors should now rely exclusively on the final version when completing audits, issuing reports, and submitting packages to the Federal Audit Clearinghouse.
Effective Date and Scope
The 2025 Compliance Supplement:
- Applies to audits of fiscal years beginning after June 30, 2024
- Supersedes the 2024 Compliance Supplement
While the supplement applies to certain audits before October 1, 2024, not all Uniform Guidance revisions and threshold changes apply immediately. Understanding these overlapping effective dates is critical for audit accuracy.
Structural Changes in the 2025 Compliance Supplement
Part 1: Background, Purpose, and Applicability
Part 1 expands discussion of the 2024 revisions to the Uniform Guidance, with added clarity around transition rules and effective dates for both auditees and auditors.
Part 2: Matrix of Compliance Requirements
The compliance matrix continues to identify applicable requirements by program. Changes in 2025 are fewer than in prior years. The six-compliance-requirement limit introduced in 2019 remains in effect, with the Research and Development Cluster continuing to allow up to seven requirements.
Major Update: Division of Part 3
The most significant structural change in the 2025 Compliance Supplement is the division of Part 3 into two sections:
- Part 3.1 applies to awards subject to Uniform Guidance prior to the 2024 revisions and closely mirrors the prior year structure.
- Part 3.2 applies to awards subject to the post-2024 Uniform Guidance and includes substantial revisions aligned with updated regulatory requirements.
The introduction to Part 3 provides detailed instructions on determining which section applies, including effective date considerations.
Compliance requirements with notable updates include:
- Allowable Costs and Cost Principles
- Equipment and Real Property Management
- Procurement and Suspension and Debarment
Additionally, the former “Cost Sharing” requirement has been renamed to “Cost Sharing (including Matching), Level of Effort, Earmarking.”
Program Updates in Parts 4 and 5
Part 4: Agency Program Requirements
Two new programs were added, while seven programs were removed. Other updates reflect program title changes, clarifications, and technical corrections.
Notable program changes include:
- Coronavirus State and Local Fiscal Recovery Funds are no longer designated as higher risk
- Child Nutrition Cluster revisions to compliance classifications
- Supportive Housing programs adding reporting requirements and special tests
Part 5: Clusters of Programs
Part 5 includes technical clarifications but no new program additions or removals. The Student Financial Assistance Cluster includes changes to cash management and sampling requirements.
Updated Higher Risk Program Designations
Appendix IV identifies only two programs as higher risk in 2025:
- Abandoned Mine Land Reclamation
- Medicaid Cluster
Several COVID-19 related programs were removed from the higher-risk list, reflecting reduced federal emphasis on pandemic-related funding risks.
Appendix VII: Audit Advisories and Threshold Changes
Appendix VII includes expanded guidance on:
- Transition rules for the 2024 Uniform Guidance revisions
- Submission extensions for disaster-impacted recipients
- Transition from FSRS to SAM.gov for subaward reporting
- New procedures for determining audit report timeliness
Single Audit Threshold Increase
The increase in both the single audit threshold and the Type A program threshold from $750,000 to $1,000,000 is effective for fiscal years beginning on or after October 1, 2024.
Importantly, this threshold increase does not align perfectly with the effective date of the 2025 Compliance Supplement. Some entities will be subject to the 2025 Supplement but not yet eligible for the higher audit thresholds.
Why This Matters for Nonprofits and Auditors
The release of the final 2025 Compliance Supplement confirms audit planning assumptions and provides a stable framework for compliance. However, overlapping effective dates, revised compliance structures, and program-specific changes require careful evaluation.
Nonprofits should:
- Review federal awards to determine which Uniform Guidance version applies
- Coordinate closely with auditors on compliance requirement selection
- Confirm whether audit threshold increases apply to their fiscal year
Auditors should:
- Apply the correct Part 3 section based on award timing
- Ensure debt, procurement, and cost principles are evaluated under the appropriate guidance
- Use the final supplement for all reporting and submissions
Conclusion
The final release of the 2025 Compliance Supplement brings clarity after months of delay, but it also introduces meaningful structural changes that demand careful attention. While the lack of substantive differences from the draft version minimizes disruption, the revised Uniform Guidance framework, updated program requirements, and phased-in audit thresholds create a complex compliance environment.
Staying informed and proactive will help nonprofits and auditors navigate these changes confidently, reduce audit risk, and maintain compliance with federal funding requirements.
