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Will You Be Subject to a Federal Single Audit After Receiving COVID Assistance? Here’s What You Need to Consider

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: 

  • Know the program(s) – compliance requirements are different for each federal program; for example, some programs require an evaluation of whether individuals receiving financial assistance meet specific income or other eligibility requirements. Reviewing OMB’s Compliance Supplement and Subpart F of Uniform Guidance will provide additional information on the audit and compliance requirements relevant to your program(s). 
  • Document the process – for each federal award, the organization should develop and document control procedures for ensuring compliance with the grant requirements. OMB’s Compliance Supplement includes an appendix with examples of controls which can help satisfy each compliance requirement. 

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 | mdittmann@withum.com

If you are looking for additional information related to single audits, reach out to your funding source or contact the professionals at Withum.

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