Local, state, and tribal governments will be relieved to learn the Office of Management and Budget (OMB) has provided guidance changes to indirect cost requirements that better align with the use of Coronavirus Aid, Relief, and Economic Security (CARES) Act funding.
The 335-page Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27, 2020, focused on addressing the immediate needs of individuals and organizations resulting from the coronavirus pandemic. But as weâ€™ve seen, good intentions donâ€™t always reap their intended results. The rapid deployment of complex legislation caused more questions than answers, moreover, as initial deadlines approach and new economic conditions are considered, updates to the Interim Final Rule are necessary to meet those conditions. Some recent and important changes are highlighted below.
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Coronavirus Relief Fund
The Coronavirus Relief Fund (CRF) is of particular relevance to the tribal entities, state, and local governments. It was established as part of the CARES Act to make $150 billion available to those organizations.
The federal government has provided ongoing compliance guidance on the nuances of the program to preserve the intention of the funding and to aid the populations it is intended to help.
A recent update by the Office of Management and Budget (OMB) approved an exception to exclude CARES Act funding direct cost recoveries from the indirect cost calculation requirements for received Coronavirus Relief Funds (CRF). This clarifies the picture for grant application reviewers and helps them understand the true needs and expenses of the potential recipients.
Indirect Cost Allocations
The OMB recognized that the standard allocable costs processâ€”2 C.F.R Â§ 200.405(b)â€” conflicted with the CARES Act in some situations where funding grant requirements do not permit indirect cost recovery and therefore, has allowed this exception to bring the regulations into alignment.
Update on Future Grant Submissions
Tribal entities and state and local governments also requested that CRF funding be excluded from indirect cost submissions. The request cameâ€”and was grantedâ€”to avoid the unintended consequence of effectively reducing indirect costs incurred by entities and the funding they would be eligible to receive.
Fulfillment Delay Guidance Update
Supply chain issues have also had a great impact for state, local, and tribal governments in their effort to utilize CRF monies they have received. These fulfillment issues were likely to result in many entities being unable to complete their purchases by the December 31, 2021 due date.
In response, on December 14, 2021, the U.S. Department of Treasury revised their guidance to indicate that CRF funding may be utilized when the obligation is made by December 31, 2021. We have highlighted important details about the Treasury’s revision of guidance for CRF usage.
Your trusted REDW business advisors study the regulatory updates that affect your organizations and welcome your questions and concerns about recording and using CRF and other Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. We welcome your questions below.