New guidance (M-20-26) issued by the federal Office of Management and Budget (OMB) rescinds the blanket six-month single audit deadline extension for fiscal year-ends (FYEs) through June 30, 2020 and revises some of the administrative flexibility regarding single audit compliance outlined in previous memos. OMB did not explain the change to the deadline extension, but the decision likely stems from concern with agency oversight of COVID-19 funding requirements, implications for existing programs, and auditor guidance.
The extended deadline, originally offered to reduce the compliance burden for recipients as part of COVID-19 relief efforts, continues for single audits not yet submitted as of March 19, 2020. Single audit reports for entities with FYEs of 9/30/19 and 12/31/19 will be due December 31, 2020. FYEs after 12/31/19 no longer get an extension. Recipients and sub-recipients who submitted their audits on the extended schedule can still qualify as a low-risk auditee, but should document the reason for delayed filings.
According to REDW Principal Chris Tyhurst:
“Much of the funding from the CARES Act will be subject to single audit under the OMB Uniform Grant Guidance. The completion of FY2020 single audits will be heavily dependent upon the timely issuance of a comprehensive 2020 Compliance Supplement that includes these new funding requirements to provide guidance to both auditees and auditors.â€
Provisions relating to the allowability of salaries and other project activities continue through September 30, 2020. Recipients must maintain appropriate records and cost documentation to substantiate the charging of any salaries and other project activity costs due to COVID-19 related interruptions to operations or services.
Other changes addressed in the new guidance require recipients to:
- Exhaust other funding sources to sustain their workforce and implement necessary steps to save overall operational costs, such as renegotiating rent. This preserves federal funds for the ramp-up effort.
- Present separate “COVID Emergency Acts funding†on the Schedule of Expenditures of Federal Awards (SEFA) and audit findings.
- Avoid “double-dipping.†Recipients cannot charge payroll costs paid with Paycheck Protection Program (PPP) loans or any other federal CARES Act programs to current federal awards, since it would result in the federal government paying for the same expenditures twice.
Please contact REDW Principal Chris Tyhurst to discuss any concerns you have regarding your single audit or other federal awards expenditures or compliance issues.
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.
