As parts of the country are starting to phase into the reopening process, this includes award recipients hoping and preparing to reinstate the performance of federally funded projects.
As you may recall, the federal Office of Management and Budget (OMB) issued three memoranda intended to offer direction to federal awarding agencies on how to provide short-term flexibilities for grant administrative, financial and audit requirements of award recipients: 1) OMB M-20-11, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) (March 9, 2020); 2) OMB M-20-17, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations (March 19, 2020); and 3) OMB M-20-20, Repurposing Existing Federal Financial Assistance Programs and Awards to Support the Emergency Response to the Novel Coronavirus (COVID-19) (April 9, 2020).
As parts of the country are starting to phase into the reopening process, this includes award recipients hoping and preparing to reinstate the performance of federally funded projects. In response to these efforts, OMB issued OMB M-20-26, Extension of Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations. The memorandum accomplishes three things:
This amendment provides clarity to the question we’ve all been asking: “Can I ‘double dip’?”. Simply put, no. While awarding agencies may allow organizations to charge salaries and benefits and other costs incurred toward the effort of resuming activities to active federal awards, the organizations must only do so in accordance with their standard policy as applied to federal and non-federal funding sources. And all costs that benefit a federal project must still be allocated in accordance with applicable federal cost principles.
What does this mean for costs paid with Payroll Protection Plan (PPP) money? This memorandum clearly states that payroll costs paid with PPP or any other CARES Act funds must not also be charged to current federal awards as it would result in the federal government paying for the same expenditure twice. In their effort to ensure federal funds are properly allocated and utilized toward the federal project, award recipients must utilize funds from other funding sources to supplement costs incurred to sustain operations. As required under “normal” circumstances, award recipients must maintain supporting documentation to corroborate costs charged to federal projects that relate to the interruption of services. In addition, organizations must retain information that documents their efforts to obtain funds from other resources and reduce overall operating costs.
Understanding that, at a minimum, organizations are experiencing a slowdown in production and a decrease in staffing levels, OMB is offering an extension for required filings. Award recipients and subrecipients that have normal due dates for filing with the Federal Audit Clearinghouse between March 30, 2020 and June 30, 2020 and have not filed their federal single audits as of March 19, 2020, may delay submission up to six months beyond the original due date. Organizations that have filing due dates between July 31, 2020 and September 30, 2020 have an extension up to three months beyond the normal due date. Award recipients and subrecipients need not obtain approval for the extension but should maintain adequate documentation to substantiate the reason for the delayed filing. In addition, organizations that take advantage of the extension will still qualify as a “low risk auditee.”
You may be wondering how federal CARES Act funding and related expenditures would be reported within the single audit? This memorandum clarifies that recipients and subrecipients must separately identify COVID-19 Emergency Acts expenditures on the Schedule of Expenditures of Federal Awards and the Schedule of Findings and Questioned Costs, if applicable.
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