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Treasury releases CSLFRF compliance and reporting guidance

Aug 25, 2021

The Treasury has issued guidance on compliance and reporting requirements for the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF).

The first deadline is approaching soon. Here’s what you should know:

On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, establishing the Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery Funds. This provides $350 billion to state, local and tribal governments to address the impact of COVID-19 on their communities.

In June, the Treasury provided “Compliance and Reporting Guidance” for CSLFRF funds, including reporting and uniform administration requirements. This article provides highlights and key reminders.

Interim report: First deadline

Reporting requirements for CSLFRF include an interim report, project and expenditure reports and a recovery performance plan report.

If your state, tribe, city or county received CSLFRF funds, your interim report is due August 31, 2021.

Recipient

Interim report

Project & expenditure report

Recovery plan performance report

States, U.S. territories, metropolitan cities and counties with population >250,000

By August 31, 2021, with expenditures by category

By October 31, 2021, and then 30 days after the end of each quarter thereafter

By August 31, 2021, and annually thereafter by July 31

Metropolitan cities and counties with population <250,000 and which received >$5million in funding

Not required

Tribal governments

Metropolitan cities and counties with population <250,000 and which received <$5million in funding

By October 31, 2021, and then annually thereafter

NEUs

Not required

Note that:

  • The interim report should provide an overview of funding status from date of the award (the day the recipient certifies the funding) through July 31, 2021.
  • Projects should be scoped to align to a single expenditure category (see Appendix 1), and expenditures and obligations are to be listed accordingly.
  • If you plan to have expenditures in revenue replacement, your estimate also belongs in this report.

Quarterly reports

The project and expenditure quarterly reports are due within 30 days of quarter-end. (The initial quarterly report will cover two calendar quarters, from the date of the award to September 30, 2021.)

Quarterly reports must include:

  • Project name, ID number, expenditure category, description (50-250 words) and completion status.
  • Details on obligations and expenditures — current period and cumulative.
  • Project status updates: Not started, completed <50%, completed >50%, completed.
  • Identify whether the project serves an economically disadvantaged community, such as programs or beneficiaries within a Qualified Census Tract, beneficiaries who earn less than 60% median income for the jurisdiction or more than 25% of beneficiaries are below the federal poverty line.
  • Details on obligations and expenditures for subawards (contracts, grants, loans, transfers and direct payments) greater than or equal to $50,000.
  • Recipients should pay attention to additional reporting requirements in the following noninfrastructure categories: payroll, household assistance, small business economic assistance, aid to travel or tourism industries, rehiring public sector staff, education assistance, premium pay and revenue replacement.

Covered period

Under the guidance, “costs incurred” includes contracts and awards that will require payment. Governments have until December 31, 2026, to expend the funds.

Restrictions

Generally, CSLFRF cannot be used to service debt, satisfy a judgement or settlement or contribute to a “rainy day” fund. Other restrictions stipulate funds cannot be deposited into a pension fund or used as a nonfederal match for a federal program.

Subrecipient monitoring

Subrecipients are those entities that receive a subaward from a recipient to carry out the purposes of the award (i.e., a program or project). Recipients are responsible for subrecipient monitoring.

You should notify the subrecipient that the award is a CSLFRF project with compliance and reporting requirements. Recipients should develop written policies and procedures for subrecipient monitoring, risk evaluation and document retention.

Uniform administration requirements

Per 2 CFR 200.303, your organization must develop and implement effective internal controls to ensure that funding decisions under the CSLFRF constitute eligible use of the funds. The Treasury guidance issued best practices to that effect:

  • Written policies and procedures (e.g., documented procedure for determining worker eligibility for premium pay)
  • Written standards of conduct (e.g., code of conduct/ethics for subcontractors)
  • Risk-based due diligence (e.g., enhanced review of subrecipient with imperfect performance history)
  • Risk-based compliance monitoring (e.g., greater monitoring for projects with a higher risk of fraud)
  • Record maintenance and retention (e.g., storage of all subrecipient payment information)

Further, recipients are responsible for ensuring that any procurement using CSLFRF funds, or payments under procurement contracts using such funds, are consistent with procurement standards. All procurement transactions must follow full and open competition, and documented procurement policies must be in place.

Cash management

Notably, CSLFRF payments are not subject to the Cash Management Improvement Act. Funds can be placed in interest-bearing accounts. That means governments do not need to remit interest to the Treasury, and recipients CAN use that interest for other uses beyond those eligible under the CSLFRF.

How Wipfli can help

If you have any questions about how to use money from the Coronavirus State Fiscal Recovery Fund or the Coronavirus Local Fiscal Recovery Fund, contact us. We’re here to help your government spend the funds appropriately, including properly tracking and reporting your spend.

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Author(s)

Matthew J. Schueler, CPA
Partner
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