OMB Releases the 2016 Compliance Supplement and Updates Part 6 Internal Controls
Leah Guidry, Anne Sullivan Pifer
On August 9, 2016, the Office of Management and Budget (OMB) published the 2016 OMB 2 CFR 200, Subpart F — Compliance Supplement, including an important update to Part 6 — Internal Controls.
The 2016 Compliance Supplement applies to audits of fiscal years beginning after June 30, 2015, and serves as a guide to auditors evaluating internal controls and determining compliance with federal law. Huron recommends reviewing the Compliance Supplement guidance to understand what compliance areas may be audited during your Single Audit and to evaluate how internal controls are integrated into your institution’s compliance environment.
Uniform Guidance, also known as UG or 2 CFR 200, places particular emphasis on recipients’ internal controls for managing federal awards, but previous Compliance Supplements did not detail the standards of internal controls auditors may use, aside from references to COSO and the Green Book. In the 2016 update, Part 6 specifies characteristics of internal controls that should reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards.
While the guidance is not prescriptive on the system of internal control that a recipient must have or document, the 2016 Compliance Supplement is helpful advisory guidance on the types of characteristics an auditor may evaluate. Each characteristic is tied to a corresponding Green Book and COSO principle, including the five components below:
- Control environment
- Risk assessment
- Control activities
- Information and communication
Huron assists institutions with enhancing policies, procedures, and training to be aligned with Uniform Guidance, and our Accelerated Research Compliance (ARC) Assessment can help your institution identify strengths, opportunities for improvement and gaps in your internal controls and compliance structure.
For additional information, or if you have questions or concerns, please contact our experts on the Huron team.Contact Us