Under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) many not-for-profit, and some for-profit, entities were awarded federal funding in response to the COVID-19 pandemic, including, but not limited to, Provider Relief Funds (“PRF”) or Coronavirus Relief Funds (“CRF”). As a result, recipients of these new awards by the Federal Government may now find themselves being subjected to the requirements of a Single Audit for the first time. Preparing for the added complexity and compliance requirements of a Single Audit may seem overwhelming, but it doesn’t have to be.
The purpose of the Single Audit is to provide assurance to the Federal Government that a non-federal entity has adequate internal controls in place, and is generally in compliance with program requirements. Under Subpart F of the U.S. Office of Management and Budget (“OMB”) Uniform Guidance (“UG”), an organization-wide financial and compliance audit is required if an entity expends $750,000 or more of federal awards received for its operations.
To determine if your organization is subject to a single audit the following steps should be completed:
A Single Audit, previously known as an OMB Circular A-133 audit, is an entity-wide financial statement audit and federal awards audit of a non-federal entity that expends $750,000 or more in federal funds in one year. A program-specific audit is an audit of an organization’s adherence to the compliance requirements that are direct and material to the individual federal program in which the company is enrolled (rather than a single audit, which includes an audit of an entity's financial statements and federal programs). The UG provides that when an organization expends federal awards under only one federal program (excluding research and development) and statutes, regulations, or the terms and conditions of the federal award do not require a financial statement audit, the organization may elect to have a program-specific audit performed in accordance with 2 CFR 200.507.
Late in December 2020, the OMB issued the Compliance Supplement Addendum to assist auditors and organizations in understanding the audit requirements for COVID-related programs. The Addendum added some considerations regarding the PRF funding to keep in mind when preparing the SEFA:
The Single Audit or Program Specific Audit are due to the government within 30 days of the financial statement audit or nine months after the final day of the audit period, whichever comes first. Due to the late issuance of the Compliance Supplement Addendum, if the entity received some form of COVID-19 funding, the OMB is providing a three-month extension for audits of 2020 year-ends through September 30, 2020. There is no requirement for an entity to seek approval for the extension, but the addendum advises that the entity should maintain documentation of the reason for the delayed filing.
The guidance related to certain CARES Act funding continues to evolve since the funds were distributed. Citrin Cooperman is ready and able to assist your organization in navigating the complexities of the UG regulations and compliance requirements and reporting.