In response to the COVID-19 pandemic, the federal government has passed a range of legislation, including the Coronavirus Preparedness and Response Supplemental Appropriations Act, Families First Coronavirus Response Act and the CARES Act. The appropriations made under these laws have resulted in at least 15 new federal programs, and the CARES Act provided many existing federal programs with additional funding.
Organizations that received COVID-19-related funding need to understand the sources of funding received and the impact on their 2020 audits. The following considerations will help you determine the impact of COVID-19-related funding to your applicable audit requirements.
Who is required to have a single audit?
The Single Audit requirements, which require a compliance audit in addition to a financial statement audit, apply to state and local governments, Indian tribes, institutions of higher education, and nonprofit organizations that expend greater than $750,000 in federal awards. The Single Audit requirements typically do not apply to for-profit organizations (at least Subpart F of the Uniform Guidance), but federal and pass-through funding sources may establish procedures to monitor compliance for federal awards received by for-profit organizations, including monitoring during the period of the agreement or post-award audits.
Therefore, all organizations that receive COVID-19-related funding must understand the source of the funds and possible audit and/or monitoring implications.
How do I know what requirements apply to my funding?
The 2020 OMB Compliance Supplement — a guide issued by the Office of Management and Budget — is to be used in auditing federal programs. The 2020 Supplement applies to single audits of organizations with fiscal year-ends of June 30, 2020, and after.
It is anticipated that the 2020 Supplement will be issued in two parts. The first part, expected to be issued in July 2020, will contain content that was primarily developed prior to the COVID-19 pandemic. An addendum to the Supplement, expected to be issued in late summer or early fall 2020, will cover COVID-19-related matters, including new programs, additions to existing programs’ compliance requirements and flexibilities allowed by the federal agency related to COVID-19 funding.
It’s important for organizations with fiscal year-ends occurring during the pandemic period (generally April 30, 2020, and after) to work with their auditors during audit planning to determine the possible audit impact of COVID-19-related funding received. Organizations that were previously not subject to single audits may be required to have such an audit this year, and there will be implications for the audits of organizations that in the past have typically had single audits. The uncertainty of the timing and content of the COVID-19 compliance supplement addendum may change the timing of audit testing and issuance of your audit report. It is important to note that the single-audit requirements do not apply to all COVID-19 funding.
The following chart indicates the applicability of the single audit for significant sources of new COVID-19 funding. This information is current as of June 30, 2020 and is subject to change.
| Program name | Catalogue of Federal Domestic Assistance (CFDA) number | Federal agency | Do Uniform Guidance/ Single Audit requirements apply? | Notes |
| Paycheck Protection Program (PPP) | 59.073 | Small Business Administration (SBA) | No | |
| Provider Relief Fund | 93.498 | Health and Human Services (HHS) | Yes | HHS is discussing audit requirements applicable to for-profit entities that received these funds. |
| Coronavirus Relief Fund | 21.019 | Treasury | Yes | Funds were provided to states/local/tribal governments. The proceeds may have been passed through these entities to your organization. |
| Education Stabilization Fund | 84.425 | Education | Yes | |
| Economic Injury Disaster Loan Emergency Assistance | 59.072 | SBA | No | These are the advances of up to $10,000 for economic relief. The Economic Injury Disaster Loans are subject to single audit. |
| Economic Injury Disaster Loan Emergency Loans | 59.008 | SBA | Yes | This does not include the advances of up to $10,000 for economic relief. |
| Coronavirus Food Assistance Program (CFAP) | 10.130 | Agriculture | No | |
| Coronavirus Emergency Supplemental Funding Program | 16.034 | Justice | Yes | |
| Coronavirus Relief - Pandemic Relief for Aviation Workers | 21.018 | Treasury | No | |
| COVID-19 Telehealth Program | 32.006 | Federal Communications Commission | No | |
| Office of Entrepreneurial Development (OED) Resource Partners Training Portal (RPTP) | 59.074 | SBA | No | |
| Uninsured COVID Testing and Treatment | 93.461 | HHS | Yes | |
| Grants for New and Expanded Services under the Health Center Program | 93.527 | HHS | Yes | |
| Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 | 93.665 | HHS | Yes | |
| Rural Health Clinic Testing | 93.697 | HHS | Yes |
Uh oh, I think I might need a single audit. Now what?
The first step is understanding the auditee requirements under Part 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Auditee responsibilities are outlined in Subpart F – Audit Requirements in in Sections 200.508 through 500.512.
You should also obtain a comprehensive understanding of your federal awards, what the specific compliance requirements are based on the compliance supplement and federal award document, and work with your service provider to determine if they have the capacity/competencies to conduct a single audit. You will need time to implement internal controls over compliance with the federal awards, prepare adequate documentation to support your compliance with federal award requirements, and provide your auditor with documentation to support their audit work.
If you’re still unsure of where to start, join us for our webinar “Introduction to Single Audits – How to Prepare for Your First Single Audit” on August 10, 2020. Click here to register.
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Sample RFP for nonprofits
