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SLFRF Addendum 3 provides single audit flexibility

Apr 26, 2022

On April 8, 2022, the Office of Management and Budget posted a new alternative, titled Addendum 3, to Single Audit Act requirements for certain Coronavirus State and Local Fiscal Recovery Fund (SLFRF) recipients.

Under current guidance, recipients and subrecipients that expend more than $750,000 in federal awards during their fiscal year will be subject to an audit under the Single Audit Act and its implementing regulation at 2 CFR Part 200, Subpart F regarding audit requirements.

Addendum 3 changed this requirement for recipients that received less than $10 million in SLFRF recovery funds.

An alternative approach for SLFRF recipients

Addendum 3 provides an alternative audit approach for eligible SLFRF recipients that would otherwise not be required to undergo an audit if it were not for the expenditures of SLFRF funds directly awarded by the Treasury. This alternative is intended to reduce the burden of a full single audit or program-specific audit on eligible recipients (estimated at more than 10,000 entities) and practitioners, as well as uphold the Treasury’s responsibility to be good stewards of federal funds.

It also provides an update to the Supplement Part 8 Appendix VII to add the alternative compliance examination engagement in accordance with the Government Accountability Office’s Government Auditing Standards for eligible recipients of the SLFRF.

The updated addendum includes the following information:

  1. This alternative is intended to reduce the burden of a full single audit or program-specific audit on eligible recipients and practitioners.
  2. This alternative applies to fiscal year audits beginning after June 30, 2020.
  3. Attestation would result in an auditor’s opinion on compliance, which includes an assessment of two activities, specifically “activities allowed” and “unallowed/allowable cost.”
  4. Attestation is optional — any SLFRF direct recipient can decide to perform a single audit instead, even if they are eligible for attestation.
  5. Eligibility is limited:
    1. Attestation (instead of single audit) eligibility would only apply to direct recipients from the Treasury receiving under $10M in total.
    2. Attestation (instead of single audit) eligibility would apply to direct recipients only if other Federal award funds the recipient expended are less than $750,000 during the recipient’s fiscal year — not including their SLFRF award funds.
  6. Single audit would still apply if the recipient spends over $750K in any other federal funds
  7. Uniform Guidance still applies to all expended funds, whether the recipient performs an attestation or a single audit.

Need assistance? Wipfli can help

If you need help determining how this addendum impacts your organization or what your next steps should be, reach out to us for assistance.

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Josh M. Faivre, CPA
Manager, Audit
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