The Office of Management and Budget (OMB) has released a draft 2026 Compliance Supplement to help auditors and recipients begin planning for upcoming Single Audits. The draft is currently for planning purposes only, although OMB does not expect significant changes before final issuance.
Key Changes in the 2026 Compliance Supplement
The following highlights are based on the draft 2026 Compliance Supplement. While they provide insight into expected changes, organizations should be aware that revisions may occur before the final version is released.
Changes to Federal Program Structures & Assistance Listings
Several federal programs have been realigned into multiple Assistance Listing Numbers (ALNs) or clusters. For example, the Highway Planning and Construction Program and Airport Improvement Program have been restructured. These changes are primarily administrative and generally do not affect program funding or compliance requirements.
Increased Focus on FFATA Reporting Requirements
A significant change for 2026 is the requirement for auditors to evaluate Federal Funding Accountability and Transparency Act (FFATA) reporting for all major programs when applicable.
FFATA reporting applies when a recipient makes certain federal subawards that meet federal reporting thresholds. If FFATA reporting is required for a major program, auditors will now be required to evaluate compliance, even if Reporting is not otherwise identified as a direct and material compliance requirement for that program.
Organizations that pass federal funds to subrecipients should:
- Determine whether any subawards are subject to FFATA reporting.
- Verify that required data is reported timely through the appropriate federal reporting system.
- Maintain documentation supporting compliance with reporting requirements.
New & Removed Federal Programs for 2026
The Supplement adds several new federal programs and removes others, including the Education Stabilization Fund (ALN 84.425). Organizations with programs no longer listed in the Compliance Supplement may require additional audit planning and compliance analysis.
Federal Programs Identified as Higher Risk
OMB continues to identify certain programs and clusters as higher risk, including:
- Medicaid Cluster
- Child Care and Development Fund (CCDF) Cluster
- Temporary Assistance for Needy Families (TANF)
Recipients of these programs should expect increased audit focus.
How Organizations Can Prepare for 2026 Single Audits
- Review federal programs to determine whether any have been realigned or reclassified.
- Evaluate whether FFATA reporting requirements apply and ensure supporting documentation is maintained.
- Coordinate early with your auditors regarding any new or modified federal programs.
Preparing for the Final 2026 Compliance Supplement
The 2026 Compliance Supplement applies to audits of fiscal years beginning after June 30, 2025 (i.e. June 30, 2026, fiscal year end organizations and later). Organizations should monitor for the release of the final Supplement and consider these changes as part of their audit preparation process. Since audit requirements are ultimately based on the final Compliance Supplement, Single Audit reports for 6/30/2026 year-end organizations and beyond should not be issued until the final guidance is available and its impact has been evaluated.
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This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
