The single audit landscape is becoming increasingly complex, with tighter deadlines and growing uncertainty now standard features of the environment. The continued delay of the 2026 Office of Management and Budget (OMB) Compliance Supplement has added further pressure, creating significant challenges around timing and compliance with deadlines.
At the September 2026 meeting of the Government Performance and Accountability Committee (GPAC), the AICPA® Governmental Audit Quality Center (GAQC) shared an update on the essential issues affecting the governmental auditing environment today.
Evolving federal funding priorities, agency reorganizations efforts, Uniform Guidance revisions, and heightened attention on fraud prevention and oversight are creating additional planning, compliance, and execution challenges for auditors and governmental entities alike.
2026 Compliance Supplement: What to expect
As of September 2026, OMB had not yet released the 2026 Compliance Supplement. Once it is issued, it will apply to audits of fiscal years beginning after June 30, 2025. Auditors are required to use the version of the Compliance Supplement that corresponds to the applicable audit period.
Based on the GAQC’s review of draft materials, here’s what practitioners should anticipate:
Limited scope of changes: The 2026 Supplement is expected to reflect statutory and regulatory updates from federal agencies, rather than sweeping programmatic changes.
Program additions and removals: Expect five new federal programs to be added and nine to be removed from the Supplement.
Program realignments: Numerous program realignments will occur. A realignment occurs when one or more new Assistance Listing Numbers (ALNs) are added to an existing program and a new cluster is created. These are not new programs; instead, an existing program is broken into separate ALNs and identified as a cluster for federal agency purposes. OMB clarified that a program realignment does not, by itself, change the major program determination process. Because realigned programs are not new programs, the original ALN may continue to qualify as a low-risk Type A program if it meets the two-year look-back criterion, even when new ALNs have been added through the realignment
FFATA reporting requirement: Auditors will be required to perform FFATA reporting procedures for all major programs during the 2026 audit cycle, regardless of whether “Reporting” is selected as a compliance requirement subject to audit in the matrix.
Higher-risk programs: Medicaid Cluster, Child Care and Development Fund (CCDF) Cluster, and Temporary Assistance for Needy Families (TANF) will be identified as higher-risk programs.
Because these details are based on draft guidance, practitioners should review the final supplement carefully when it is released.
The GAQC will issue an alert when the Compliance Supplement is released, provide links to the Supplement, and update its Compliance Supplement Resource Center with section-by-section resources and key observations on changes from the prior year's supplement.
Federal oversight and fraud prevention: A heightened focus
Federal agencies and policymakers are focusing more on fraud prevention, improper payments, and financial accountability. Recent initiatives and congressional actions indicate ongoing scrutiny of internal controls, fraud risk management, and single audit quality. These developments reinforce the importance of robust internal control systems, effective fraud risk management, and high-quality audit execution.
Uniform Guidance revisions on the horizon
OMB proposed 2026 revisions to Uniform Guidance intended to:
Improve transparency, accountability, and oversight
Clarify the structure and authority of federal grant regulations
Reduce recipient burden
Importantly, no significant changes are proposed to audit requirements in Subpart F currently. Still, staying up to date with evolving guidance is essential for compliance.
Quality initiatives and the road ahead
The Financial Management Risk Reduction Act remains in the implementation phase, with the Department of Health and Human Services (HHS) leading government-wide analysis of single audit quality.
OMB is required to report results to Congress by December 2027, drawing from peer reviews, federal quality assessments, and stakeholder input. These efforts underscore the federal government’s ongoing commitment to strengthening audit quality and oversight.
Other areas to watch
The GAQC is closely monitoring several developments that may affect governmental auditing, including:
GAO Yellow Book quality management requirements and implementation
Standards and implementation activities from the Government Auditing Standards Board (GASB) that affect state and local governments
Emerging ethics, quality management, and AI-related guidance
Department of Education program transitions and other federal agency changes that may affect grant administration and compliance
Public sector CPA pipeline initiatives and related outreach efforts with GASB, National Association of State Auditors, Comptrollers and Treasurers (NASACT), Government Finance Officers Association (GFOA), and state CPA societies
The bottom line for practitioners
The governmental audit community should anticipate ongoing changes in the federal grants and auditing landscape. The coming year will bring further developments in Compliance Supplement guidance, fraud and accountability initiatives, Uniform Guidance revisions, and efforts to enhance single audit quality and strengthen the public sector financial management workforce.
Stay engaged with GAQC updates through additional resources: