The 2025 Compliance Supplement Has Been Released: What Nonprofits and Government Agencies Need to Know

By Stephanie Smith, CPA

The Office of Management and Budget (OMB) has released the 2025 Compliance Supplement, and for nonprofits and government agencies receiving federal funds, this update is more than a routine revision—it’s a significant shift in compliance expectations. Understanding these changes now will help organizations avoid audit surprises and maintain eligibility for critical funding. This final 2025 Compliance Supplement replaces the draft that was provided in August 2025 and is effective for all Federal single audits for fiscal years beginning after June 30, 2024.

A New Era of Compliance

The 2025 Supplement, finalized on November 25, 2025, introduces a dual compliance framework. This means nonprofits and government agencies must determine which set of rules applies based on when their awards were issued:

• Part 3.1 applies to awards under the pre-2024 Uniform Guidance.
• Part 3.2 applies to awards issued under the revised guidance effective October 1, 2024.

This split framework adds complexity for organizations managing multiple funding streams, making accurate tracking and documentation essential.

Key Changes You Can’t Ignore

One of the most notable updates is the increase in the Single Audit threshold from $750,000 to $1,000,000 for federal awards issued after October 1, 2024. However, nonprofits and government agencies should note that this higher threshold only applies to audits for fiscal years ending September 30, 2025, or later. For many organizations, the old threshold still governs current audits.

The supplement also introduces new programs—such as Summer EBT for Children and the Greenhouse Gas Reduction Fund—and phases out COVID-19 programs that dominated previous years. High-risk programs like the Medicaid Cluster remain under close scrutiny.

Terminology has shifted as well: “non-federal entity” is now “recipient and subrecipient,” reinforcing accountability at every level. Additionally, Part 6 strengthens internal control requirements, signaling OMB’s emphasis on oversight and risk management.

What This Means for Nonprofits and Government Agencies

For nonprofits and government agencies, these changes translate into heightened responsibility. Organizations must:

• Apply the correct compliance framework for each award.
• Prepare for more rigorous internal control and documentation standards.
• Stay alert to program-specific updates and risk designations.

Failure to adapt could lead to audit findings, delayed funding, or even loss of eligibility.

Looking Ahead

The 2025 Compliance Supplement is not just a technical document—it’s a roadmap for transparency and accountability. Nonprofits should act now by reviewing the full supplement, updating audit plans, and training staff on revised requirements. Strong internal controls and proactive communication with auditors will be key to navigating this transition smoothly.

For the full document, visit OMB’s Compliance Supplement page.

Need Help Preparing?

For more than 40 years, Rivero, Gordimer & Company has partnered with nonprofits and government agencies to navigate evolving compliance and audit requirements.  We work with a wide range of organizations including civic and social services, health and welfare, education, arts/culture/faith, trade associations, and private foundations and provide trusted audit and consulting services for governmental agencies. 

Our team is deeply experienced in Government Auditing Standards (Yellow Book), Uniform Guidance, Chapters 10.550 and 10.650 Rules of the Florida Auditor General, the Florida Single Audit Act, and other applicable standards. If you need support understanding how the 2025 Compliance Supplement affects your awards, internal controls, or audit readiness, we’re here to help you prepare with confidence.