In the United States, compliance requirements are a series of directives United States federal government agencies established that summarize hundreds of federal laws and regulations applicable to federal assistance (also known as federal aid or federal funds). They are currently incorporated into the OMB A-133 Compliance Supplement, which was created by the US Office of Management and Budget (OMB).

To facilitate a recipients' compliance with federal laws and regulations, and as well as its annual Single Audit, the OMB created fourteen basic and standard compliance requirements that recipients must comply with when receiving and using such federal assistance. The OMB also provides detailed explanations, discussions, and guidance about them in the OMB A-133 Compliance Supplement. Compliance requirements are only guidelines for compliance with the hundreds of laws and regulations applicable to the specific type assistance used by the recipient, and their objectives are generic in nature due to the large number of federal programs.A-133 Sup Part 3 (2013); pg. 3-1, ¶ 1-2 Each compliance requirement is identified by a letter, in alphabetical order.

Activities allowed or unallowed (A) This compliance requirement establishes that each program operates for a specific purpose (such as the care of elderly persons or the education of children), and that funds provided for the program must only be used in activities that benefit that purpose.A-133 Sup Part 3 (2013); Section A – Activities Allowed or Unallowed, pg. 3-A-1. Therefore, federal assistance provided to a recipient for a specific purpose must be expended for such purpose only.

Allowable costs/cost principles (B) This compliance requirements is one of the most important sections, because it covers cost accounting policies, expenses and expenditures, and actual use of federal funds to administer a federal assistance program. In other words, it provides the basis and principles recipients must adhere to when spending federal funds.A-133 Sup Part 3 (2013); Section B – Allowable Costs / Cost Principles, pg. 3-B-1.

The federal government categorizes recipient types into three groups: State, local, and Indian tribal governments Institutions of higher education Non-profit organizations

Prior to December 26, 2014, each group has a separate set of cost principles to follow. The cost principles applicable to a recipient type apply to all federal assistance received by that entity, regardless of whether the awards are received directly from the federal government or indirectly through a pass-through entity.

The OMB issues a Cost Principle Circular for each category. This is a guide for spending federal assistance in accordance with laws and regulations:

OMB Circular A 87, "Cost Principles for State, Local, and Indian Tribal Governments" (2 CFR part 225) – This circular includes the 50 States of the United States and the District of Columbia (Washington, D.C.), any agency or instrumentality of these governments—and any county, parish, municipality, city, town, State-designated Indian tribal government, school district, United States territories and possessions, and any agency or instrumentality of these governments. OMB Circular A-21, "Cost Principles for Educational Institutions" (2 CFR part 220) – All institutions of higher education (e.g., Colleges, Universities, etc.) are subject to the cost principles contained in this circular. OMB Circular A-122, "Cost Principles for Non-Profit Organizations" (2 CFR part 230) – Non-profit organizations are subject to this circular, except those non-profit organizations listed in OMB Circular A-122, Attachment C that are subject to the commercial cost principles contained in the Federal Acquisition Regulation (FAR).

The three circulars list various types of cost or expense item (such as travel expense, maintenance expense, payroll salaries, lobbying costs, purchase of materials, payment of utility bills, etc.), and establishes whether each is either allowable or unallowable. Allowable costs are those the federal government determines permissible for federal assistance. Unallowable costs are those the government prohibits incurring for federal assistance. Certain cost items are considered universally unallowable, such as cost related to illegal activities and lobbying costs, but others may be considered unallowable for a type of recipient while being allowable for another type of recipient. As a general rule, any assistance used inappropriately, such as incurring unallowable costs, requires reimbursement to the federal government.

The Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards was issued by the Office of Management and Budget on December 26, 2013. This final guidance superseded and streamlined the requirements from OMB Circulars A-21, A-87, A-110, and A-122 (which have been placed in OMB guidance);OMB 2 CFR Part 200 – Super Circular (formerly OMB A-87, 2 CFR Part 225) Circulars A-89, A-102, and A-133; and the guidance in Circular A-50 on Single Audit Act follow-up.

In order for cost to be considered allowable, they must be supported by adequate documentation.

Documentation standards – payroll costs Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; [2 CFR § 200.430 (i)] Documenting time worked on federally funded activities is commonly referred to as Time and Effort Reporting.

Documentation standards – non-payroll costs The nature of documentation required for nonpayroll costs will vary by the nature of the transaction.

Per 2 CFR §200.403, Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards:

(a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this Part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented.

Cash management (C) This section covers the actual management, or handling, of funds pertaining to a federal program, specifically on how federal assistance is distributed to recipients and how recipients manage the funds until disbursement. The actual transfer of funds, commonly referred to as “drawdowns”, is usually done electronically by requesting the funds to the federal agency via website or a network. The funds are automatically transferred from the US Department of Treasury to the recipient's bank account. Federal assistance for program operations is provided to recipients usually by one of two methods, also called “funding techniques”: by either advances of funds or by reimbursement of funds.A-133 Sup Part 3 (2013); Section C – Cash Management, pg. 3-C-1.

Advances of funds – Advances are federal funds provided to a recipient before the program activity is performed. Recipients determine the amount needed for a future expenditure (e.g., through budget process) and request the amount to the federal government (or in the case of subrecipients to the pass-through entity, see Subrecipient Monitoring below). The federal funds received are then expended to perform the specific activity (e.g., purchase good or service or for payroll). However, laws and regulations require recipients to request funds only when it is immediately needed, and recipients must try to minimize the amount of time between the receipts of funds to the actual disbursement. Examples of programs under these funding techniques are the Section 8 program and the Community Development Block Grant program. Reimbursement of funds – This funding technique requires the recipient to pay program expenditures with their own funds, and then request a reimbursement for those expenses from the federal government or pass-through entity. Recipients prepare and send reimbursement requests, and maintain supporting documentation showing that the costs for which reimbursement was requested were paid prior to the date of the reimbursement request.

Davis–Bacon Act (D) As part of the US Department of Labor’s (DOL) governmentwide implementation of the Davis–Bacon Act, federal regulations require that all laborers and mechanics who work for a contractor or subcontractor on federally financed construction contracts over $2,000 must be paid wages not less than those the DOL established for the project location (i.e., the prevailing wage).A-133 Sup Part 3 (2013); Section D – Davis–Bacon Act, pg. 3-D-1.40 USC 276a to 276a-7 This Compliance Requirement was created to assure that recipients oblige contractors to comply with the Davis–Bacon Act, by including in their construction contracts with a contractor or subcontractor a clause or requirement to comply with the Davis–Bacon Act and the DOL regulations.29 CFR part 5 The clause should also include a requirement for the contractor or subcontractor to submit to the recipient weekly (e.g., for each week in which any contract work is performed) a copy of the construction payroll accompanied by statement of compliance. This report is commonly referred to as "certified payrolls", and is often done using Optional Form WH-347 (OMB No. 1215-0149), a standard form pre-designed by the OMB.29 CFR 5.5 and 5.6

Eligibility (E)