The Compliance Supplement and the twelve types of compliance requirements

In this lesson you will

Identify the parts of the Compliance Supplement and what each provides
Use the Part 2 matrix to find the compliance requirements subject to audit for a program
Determine the direct and material compliance requirements for a major program
Apply Part 7 to a major program not included in the Supplement

What the Supplement is

The Compliance Supplement is Appendix XI to 2 CFR 200. It identifies the compliance requirements the federal government expects auditors to consider in a single audit, so you do not have to research every statute and regulation for every program. Part 1 states that its use is mandatory, and an audit of the requirements it covers meets Subpart F (200.514(d)(3)). Where requirements have changed and the change is not reflected in the Supplement, the auditor must determine the current requirements and modify procedures.

OMB issued the final 2025 Supplement in late November 2025, months after the usual spring release. Part 1 states that it applies to audits of fiscal years beginning after June 30, 2024 and supersedes the 2024 Supplement (dated May 2024). A fiscal year that began July 1, 2025 belongs to the next edition, so a June 30, 2026 audit waits on the 2026 Supplement. Check the OMB Compliance Supplement page each year before planning: release dates move from year to year (the 2025 edition arrived in November 2025), and agencies issue revised program sections and addenda separately.

The parts

Part	Content
1	Background, purpose and applicability
2	Matrix of compliance requirements by program
3	The compliance requirement types, with audit objectives and suggested procedures
4	Agency program requirements, program by program
5	Clusters of programs
6	Internal control
7	Guidance for auditing programs not included
8	Appendices, including changes from the prior year

The twelve types

Part 3 is organized by type of compliance requirement, lettered with gaps: A Activities Allowed or Unallowed; B Allowable Costs/Cost Principles; C Cash Management; E Eligibility; F Equipment and Real Property Management; G Matching, Level of Effort, Earmarking; H Period of Performance; I Procurement and Suspension and Debarment; J Program Income; L Reporting; M Subrecipient Monitoring; N Special Tests and Provisions.

The Part 2 matrix and the six-requirement limit

Part 2 marks each requirement type "Y" (subject to audit) or "N" for each program. A "Y" does not mean the requirement applies to every entity: the entity may have no activity subject to it, or the activity could not have a direct and material effect. Since 2019, agencies identify no more than six requirements per program, with A and B counted as one, except that the research and development cluster identifies seven. If the matrix shows "N" for a requirement, you are not expected to test it even if the award agreement contains such terms.

Determining what to test

For each major program:

Pull the Part 4 or Part 5 section and the Part 2 row.
For each "Y," decide whether the requirement applies to this entity and could have a direct and material effect on the program. Document the reasoning for each "N" you assign.
Read the award agreements for program-specific special tests and terms.
Check Part 1 and agency notes on which version of the Uniform Guidance governs each award. Part 1 of the 2025 Supplement warns that agencies implemented the 2024 revisions at different times and that auditors must not apply 2024 requirements to awards whose agency has not implemented them.

For a major program not in the Supplement, follow Part 7: use the Part 3 types to identify the requirements that could have a direct and material effect, based on the award documents and program regulations. The six-requirement limit does not apply to programs not included.

The Compliance Supplement checklist records these decisions program by program.

Common file mistakes

Using the prior year's Supplement or missing an addendum.
Testing all twelve types for every program instead of following the matrix.
Marking a "Y" requirement not applicable with no explanation.
Ignoring Part 7 for a program not in the Supplement.
Applying 2024 Uniform Guidance rules to awards the agency has not moved to the 2024 revision.

Worked example

Bayview Housing Authority: scoping two major programs

Bayview Housing Authority (June 30, 2025 year-end) has two major programs. The fiscal year began July 1, 2024, after June 30, 2024, so the 2025 Supplement applies.

Program 1 is in Part 4. Its Part 2 row shows six "Y" marks: A/B (counted as one), C, E, H, L and N. The team concludes:

Requirement	Applies?	Reason
A/B	Yes	Program expenditures
C	Yes	Reimbursement draws, tested to confirm costs were paid before each request
E	Yes	Tenant eligibility determinations
H	Yes	Award period ends during the year
L	Yes	Federal financial reports filed quarterly
N	No	The only Part 4 special test covers an activity the authority did not carry out this year

Five requirement areas are tested. The reason for excluding N is documented with the evidence that the activity did not occur during the year.

Program 2 is a state-administered pass-through program not in the Supplement. Following Part 7, the team reads the subaward and program regulations and identifies A/B, E, I and M as direct and material, four requirement areas with A and B counted as one. The six-requirement limit does not constrain a program outside the Supplement, but the team still documents why J and L were judged not direct and material.

Self-check

Answer each question before you open the answer.

A requirement type shows "Y" in the Part 2 matrix. Must the auditor test it?
Show answer
Only if it applies to the entity and could have a direct and material effect on the program. A "Y" means it is subject to audit, but the entity may have no relevant activity, and the auditor documents that conclusion.
How are Activities Allowed or Unallowed and Allowable Costs counted under the six-requirement limit?
Show answer
As one requirement. Part 1 of the Supplement treats A and B together when applying the six-requirement maximum.
What guidance does the auditor follow for a major program not included in the Supplement?
Show answer
Part 7, using the Part 3 requirement types to identify the requirements that could have a direct and material effect, based on the award documents and program regulations (200.514(d)(3)).

Sources

Back to the syllabus

Standards are paraphrased from the primary sources listed above; read the source before relying on a requirement. This lesson is training material, not professional advice. Report an error