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COVID-19 Emergency Acts Fund Reporting - UPDATE

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.

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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:

  • Provides an extension for Allowability of salaries and other project activities to September 30, 2020 (previously June 16, 2020 under M-20-17);
  • Added restrictions to the flexibilities allowed under M-20-17; and,
  • Changes the expiration date of Extension of Single Audit Submission to December 31, 2020

Allowability of Salaries and Other Project Activities

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.

Extension of Single Audit Submission and COVID-19 Emergency Acts Fund Reporting

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.

 

COVID-19 Business Resources

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statutes, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

Disclaimer:  The contents of this resource are for general informational purposes only. While every effort has been made to ensure its accuracy, the information is provided “as is” and no representations are made that the content is error-free. We have no obligation to update any content, comments or other information for retroactive or prospective interpretations or guidance provided by regulators, financial institutions or others. The information is not intended to constitute legal advice or replace the advice of a qualified professional. There are areas of the CARES Act where additional clarification from the Treasury Department and the SBA is needed. Your judgment and interpretation of the act may be needed. Users should consult with their legal counsel and representatives of the lending institution regarding the proper completion of their application and supporting documentation.

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