2020 was a year that brought a great many changes to how companies operate day-to-day. In addition, countless organizations found themselves applying for and receiving funding from new sources. This could result in an unexpected outcome in 2021: new audit requirements. Assistance programs offering relief from the COVID-19 pandemic through the Coronavirus Aid, Relief and Economic Security (CARES) Act are funded by the federal government and, therefore, may be subject to a single audit.
Overseen by the U.S. Office of Management & Budget (OMB), a single audit is a compliance audit, performed in conjunction with a financial statement audit, to provide assurance on the recipient’s compliance with the requirements of federal award programs from which it received funding. Most federal awards are assigned a Catalog of Federal Domestic Assistance (CFDA) number, which identifies the funding agency and award program. Annually, OMB issues a Compliance Supplement detailing the compliance requirements for each CFDA number.
A single audit is required once a nonfederal entity expends $750,000 or more of federal awards during their fiscal year. However, not all federal awards are received directly from the federal government. It is often the case that federal awards may be received indirectly, where funding is passed-through one or more organizations, such as state agencies, to subrecipient organizations before being spent. In addition to federal requirements, some states also require compliance audits related to state awards. Whenever applying for or accepting new funding, it is best to ask if you will be receiving any federal funds and, if so, the relevant program(s).
Once you have determined whether the organization has received any federal funding that may be subject to single audit requirements, here are a few tips to ensure you are prepared for a single audit:
Some of the new CARES Act programs subject to a single audit include:
|CFDA #||Program Title|
|16.034 (Justice)||Coronavirus Emergency Supplemental Funding Program|
|21.019 (Treasury)||Coronavirus Relief Fund (CRF)|
|32.006 (Federal Communications Commission or FCC)||COVID-19 Telehealth Program|
|59.008 (SBA)||Disaster Assistance Loans (Economic Injury Disaster Loans)|
|84.184C (Education)||CARES Act Project SERV|
|84.425 (Education)||Education Stabilization Fund|
|93.461 (HHS)||Uninsured COVID Testing and Treatment|
|93.498 (Health and Human Services (HHS))||Provider Relief Fund|
|93.527 (HHS)||Grants for New and Expanded Services under the Health Center Program|
|93.665 (HHS)||Emergency Grants to Address Mental and Substance Use Disorders During COVID-19|
|93.697 (HHS)||Rural Health Clinic Testing|
Funding received through the Payroll Protection Program (PPP) is not subject to the single audit requirement.
Author: Matthew Dittmann, CPA | email@example.com