Many for-profit, nonprofit, and governmental organizations have received and will continue to receive new federal and state grants funds, because of Covid-19.  The information regarding how and when to use such grant funds has been limited, vague or not provided until months after funding is received or awarded.  Guidance is also continuously changing and being updated. 

Entities expending more than $750,000 of federal grant funding in a year are required to have a financial statement and compliance audit referred to as a Single Audit.  Organizations without prior audit requirements may now have an audit requirement due to federal funding received/spent during 2020.  As these federal funds are new and have limited or changing guidance, receiving organizations should work with their accounting firms and granting agencies to ensure compliance.  Proper documentation is also key in the future when granting agencies or auditors have questions.

Single Audits are conducted under Subpart F of the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).  OMB annually issues a Compliance Supplement, which identifies compliance requirements and suggests audit procedures for numerous federal grant programs.  The 2020 Compliance Supplement was provided in two parts.  The first part, issued in August 2020, was primarily developed prior to the Covid-19 pandemic, and the second part, or 2020 Compliance Supplement Addendum, was issued in December 2021 and addressed Covid-19 funding. 

Federal funding related to Covid-19 came in the form of new federal grant programs or increases in existing federal grant programs.  Existing federal grant programs have provided additional funding with increased award amounts, reduced matching requirements, and elimination or reduction of eligibility requirements.  Organizations report federal funding on the Schedule of Expenditure of Federal Awards (SEFA).  Covid related funding for new or existing programs needs to be identified separately from other federal grant programs on the SEFA.

Provider Relief Funds (PRF) were given to organizations providing healthcare services.  In addition to being used for Covid related expenditures, PRF may be used for lost revenues.  The calculation for lost revenue for Provider Relief Funds has changed several times over the past year.  The Department of Health and Human Services established a portal for recipients of PRF to register and provide additional information on the use of the funds.  Registration is allowed on the portal, but reporting requirements have been delayed. 

Other federal grants, such as the Coronavirus Relief Funds (CRF), have been provided to cities, schools, and nonprofits.  Each of the receiving organizations may have different requirements.  For some, specific expenditures must be identified and submitted to receive funding.  For other organizations, funding was based on a per unit allocation, and these subrecipient organizations were provided funds with no requirement to track expenditures.  CRF funds were provided to other organizations as the beneficiary and not as a subrecipient.  The Single Audit requirements do not apply to beneficiaries.

Numerous federal laws have been enacted to create new and additional Covid-19 related federal grant funding.  The most recent was the American Rescue Plan Act (ARPA) issued on March 11, 2021.  Some of the grant programs under ARPA may be used to cover costs incurred through December 31, 2024.  Thus, organizations may be expending Covid-19 related for several more years. 

The compliance professionals at Ketel Thorstenson, LLP can help you navigate the Uniform Guidance requirements.  Please contact us to answer questions and for additional guidance.