An auditor is performing a Single Audit under the Uniform Guidance. The auditor identifies a material instance of noncompliance with federal grant requirements. The noncompliance does NOT result in a material misstatement of the financial statements. The auditor should:

Under the Uniform Guidance, the auditor must report material noncompliance with federal program requirements in the Schedule of Findings and Questioned Costs. This is separate from the financial statement opinion. Since the FS are correct (the noncompliance didn't distort the numbers), the FS opinion is untouched, but the Compliance report will note the finding.