If your organization relies on federal funding, you already know that scrutiny is increasing, not decreasing. As federal oversight intensifies, understanding the 2025 Compliance Supplement and its impact on your next Single Audit is essential. With the Office of Management and Budget (OMB) releasing the final supplement on November 26, 2025, organizations must now prepare for some of the most significant updates seen in years.
The 2025 Supplement aligns with the substantial 2024 revisions to the Uniform Guidance. The changes are designed to clarify expectations, modernize thresholds, and improve reporting across federal programs. Below is a breakdown of what organizations need to be aware of as they look ahead to fiscal years ending in June 2025 or later.
A Dual Compliance Framework: Know Which Rules Apply
One of the most notable changes this year is the introduction of a dual compliance structure, effectively creating two rulebooks within a single supplement.
- Part 3.1 applies to awards governed by the pre-2024 Uniform Guidance.
- Part 3.2 applies to awards governed by the revised 2024 Uniform Guidance, which applies to new awards or amendments issued on or after October 1, 2024.
This split requires organizations and their auditors to track which version of the guidance applies to each award. For recipients with complex portfolios or multiple federal partners, this adds a new administrative layer that must be carefully managed to ensure accurate testing and reporting.
Higher Single Audit Threshold: Fewer Audits, But Not Necessarily Less Work
The supplement raises the Single Audit threshold from 750,000 dollars to 1,000,000 dollars in federal expenditures.
This increase applies to fiscal years beginning on or after October 1, 2024.
While this change may reduce the number of organizations subject to a Single Audit, those that remain within scope can expect the scrutiny to continue. Compliance expectations are not easing even as thresholds shift.
Program Updates and Retirements
The 2025 Compliance Supplement includes updates, additions, and retirements across dozens of federal programs. Notably:
- Many COVID-19 era programs have been phased out or have seen the removal of their higher-risk designations.
- Agencies have updated program requirements to reflect post-pandemic funding priorities and more stable, long-term oversight structures.
Organizations receiving funding across multiple agencies should review these updates closely to ensure they understand the latest compliance mandates.
Revised Definitions and Thresholds
OMB introduced updates to several financial definitions and dollar thresholds, including:
- The equipment threshold increased from 5,000 dollars to 10,000 dollars, aligning requirements with current asset costs and reducing administrative burden.
- Other key definitions and financial limits were updated to reflect modern operating environments.
These updates may affect capitalization policies, disposition requirements, and internal controls.
Reporting Shifts to SAM.gov
The supplement confirms the full transition of subaward reporting to SAM.gov, formalizing the retirement of the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS).
This shift centralizes reporting, but organizations must ensure their internal systems and staff are aligned with the new reporting process.
What Organizations Should Do Now
The 2025 Compliance Supplement serves as the primary roadmap for Single Audit readiness. To stay ahead of potential disruptions, organizations should:
- Map awards to the correct section, Part 3.1 or Part 3.2.
- Update internal policies, including equipment thresholds and reporting processes.
- Review program-specific updates for all federal awards.
- Confirm readiness for the SAM.gov reporting transition.
- Provide internal training on the revised requirements.
Final Thoughts
Federal expectations continue to evolve. The consequences of noncompliance remain significant. By understanding the 2025 Compliance Supplement and preparing early, organizations can minimize risk, strengthen internal controls, and keep their federal funding stable.
At Han Group, we help organizations navigate these updates with clarity and confidence. If you have questions about how the new supplement affects your audit or compliance requirements, we are here to help. Contact us.
