Treasury issued FAQs on May 28, 2020 that provide additional guidance for tribal, state and local governments. Tribes should consider the following highlights of important new elements on how to expend, allocate and use COVID-19 Relief Funds under the CARES Act.
Federal Financial Assistance and Single Audits
Treasury assigned CFDA number 21.019 to the Relief Funds distributed to state, local and tribal governments, and defined them as “other financial assistance†(not grants). The Relief Fund expenditures must also comply with the Single Audit Act under 2 CFR 200, Subpart F, including internal control and sub-recipient requirements.
What does this mean? A few important items to note:
- Tribes should set up a special revenue fund to track all expenditures, transfers or grants as they distribute their Relief Funds, and include the expenditures on their audited Schedule of Expenditures of Federal Awards (SEFA) report.
- The Guidance states that transfers made to a government’s political subdivision would count as federal sub-recipient funding subject to the Single Audit Act. Per the sub-recipient requirements, a Tribe must monitor its sub-recipient, ensure an audit under the Single Audit Act when expenditures exceed $750,000 or more, and design an appropriate sub-recipient agreement.
- A Tribe should carefully examine and consider the documentation and methods they will use to distribute these funds.
Administrative Expenses
The Guidance allows a Tribe to charge administrative expenses to the Relief Funds when they represent an increase over prior-budgeted amounts and are necessary to administer the disbursement and compliance of the fund’s expenditures.
For Tribes, this would likely mean not charging an approved indirect cost rate, as those were budgeted. Tribes will need to determine direct administrative costs to charge, or devise a reasonable and necessary administrative rate to charge the Fund’s expenditures based on increased costs over the budgeted amounts.
Rural Broadband Fund Payments
Unfortunately, the FAQs do not allow broadband expenditures that would increase a Tribe’s capacity to extend past the public health emergency for distance learning and telework.
We believe eligible type of broadband communication expenditures would be limited to temporary sites and networks during the period of the authorized funding or federal pandemic response periods.
REDW can help
REDW can assist a Tribe and its pandemic response executive team to devise strategies and policies to serve the Tribe’s need to properly plan, record and expend the Relief Funds as well as meet the response needs of a Tribe and its members during this difficult period. We have specialists who cover all aspects of the federal funding response, including:
- Financial consulting and accounting services
- HR Consulting
- Accounting software consulting, including SEFAPro, our exclusive grants administration module
- Cybersecurity
- Business interruption claims
- PPP Loans
- Advisement on retirement benefits and member distributions using Relief Funds and the General Welfare Exclusion Act
Please contact REDW’s National Tribal Practice Leader, Corrine Wilson, if you have questions. Click here to read the latest Treasury guidance.
REDW is committed to keeping you informed at all times, but especially during a crisis of the magnitude of the COVID-19 pandemic. Stay connected with us on LinkedIn and @REDWLLC. Or check out some of our other updates here.
