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The Office of Management and Budget (OMB) released an addendum to the 2020 Compliance Supplement on December 22, 2020. This addendum provides important updates to COVID-19 related federal funding and the impact to Single Audits. This addendum is effective for fiscal years beginning after June 30, 2019 (i.e. June 30, 2020 fiscal years and later).

For audited entities whose Single Audits have been delayed, the addendum provides for a 3-month audit submission extension for Single Audits of 2020 year-ends through September 30, 2020. This extension is only available if the recipient entity received COVID-19 funding. There is no approval required for the extension, but documentation must be maintained for the reason of the delay. For those entities with June 30, 2020 year-ends, with COVID-19 funding, the deadline for submission of the Single Audit is now June 30, 2021 (as opposed to March 31, 2021).

The addendum answered other questions that single audit practitioners have been asking related to new COVID-19 funding, including those established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136.

Highlights of the OMB compliance supplement addendum

  • What happens if I completed a single audit prior to the addendums issuance and something in the addendum affects the report? Appendix VII in the August 2020 Supplement says “Reports issued prior to the publication of the addendum are not required to adhere to the requirements in the addendum”
  • Audit extensions, recipients and sub-recipients that received COVID-19 funding with original due dates from 10/1/20-6/30/21, have an automatic 3 month extension (FYEs 1/31/20- 9/30/20). These entities can still be considered low-risk auditees if they need extension
  • Federal Funding Accountability and Transparency Act (FFATA) reporting requirement –– will need to be tested for all COVID-19 programs, required for recipients of grants with direct awards who make subawards of $25,000 or more.  Does not apply to Treasury funding (CRF awards).  This requirement will be extended to all selected major programs for FYEs after 9/30/20 regardless whether COVID-19 funding was involved.
  • Schedule of Expenditures of Federal Awards (SEFA) will need to separately identify all COVID-19 awards and include a footnote disclosing the fair market value of any donated personal protective equipment (PPE) received from federal assistance
  • Provider Relief Fund (PRF) relates to healthcare entities only, PRF funding is not included on SEFAs until 12/31/20.  Any 6/30/20-12/30/20 year ends would report PRF on their 2021 SEFA (the SEFA is not GAAP).

Supplementary Part 2 matrix

This part of the addendum shows all new programs and updates/changes to existing programs (only 1 new non-COVID-19 related program Dept of Transportation cluster added):

  • New COVID-19 programs:
    • 034 Coronavirus Emergency Supplement
    • 019 Coronavirus Relief Fund
    • 006 Telehealth Program
    • 425 Education Stabilization Fund
    • 461 Uninsured Testing Portal
    • 498 Provider Relief Fund
  • Non COVID-19 additions:
    • 20.218/20.237 Federal Motor Carrier Safety Assistance cluster
  • Coronavirus Relief Fund (CRF) Matrix 21.019 – Only Governmental Entities and Tribes consider this funding subject to single audit, compliance requirements include:
    • Activities Allowed or unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting and Subrecipient Monitoring
  • CRF funds – Uniform Guidance cost principles do not apply and auditors should use Treasury’s guidance and FAQs
  • PRF funding Matrix 93.498– Only For-Profits, Not-for-Profits (NFPs) and Governmental Entities consider this funding subject to single audit, compliance requirements include:
    • Activities Allowed or unallowed, Allowable Costs/Cost Principles and Reporting
  • PRF reporting requirement – auditors are expected to test special reporting even though it will take place after 12/31/20.
  • Organizations must establish and maintain effective internal controls over all federal awards received

The Department of Health and Human Services (HHS) requires for-profit entities that receive $750,000 or more in federal funding to have an audit, there are two audit options available to for-profit entities. The company will need to determine which option is most beneficial.

HW&Co. is a member of the AICPA’s Governmental Audit Quality Center (GAQC), which is continuing to monitor this topic, and are awaiting additional guidance on this topic. We will provide any additional updates as they become available. Please contact your HW Advisor with any questions.

Rachel Smathers CPA