Many for-profit, nonprofit, and governmental organizations are receiving new federal and state grants funds during the pandemic.  In some instances, organizations receive the funds in their bank account with limited information on how to use such funds.  In addition to limited or vague information on how and when to use these federal and state funds, the guidance that is provided changes on a consistent basis. 

Throughout history, most federal grants required funds to be spent on specific programs or items, which is referred to as allowable costs.  New concepts are included in the pandemic related funding, including a concept of lost revenue. The calculation for lost revenue for Provider Relief Funds has changed several times in the past few months.

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. 

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.

            Please reach out to the compliance professionals at Ketel Thorstenson, LLP to answer questions and for additional guidance.