On December 22, 2020, the Office of Management and Budget (OMB) issued the 2020 Compliance Supplement Addendum (Supplement Addendum). The Supplement Addendum provides guidance on auditing Coronavirus Aid, Relief, and Economic Security (CARES) Act money and other COVID-19 relief programs. The addendum has the same effective date as the original August 2020 Compliance Supplement for audits of fiscal years beginning after June 30, 2019. The Supplement must be used in conjunction with the August 2020 Compliance Supplement in determining the appropriate audit procedures. Below is guidance on important aspects of the Supplement Addendum and extensions granted.
Donated Personal Protective Equipment
The Supplement Addendum indicates that non-federal entities that received donated Personal Protective Equipment (PPE) should include the fair market value of the PPE at the time of receipt in a stand-alone note to the Schedule of Expenditures of Federal Awards (SEFA). This note can be marked as unaudited. The amount of donated PPE will not be used in determining the threshold for a single audit and is not required to be audited as a major program.
Compliance Requirement Added Relating to Federal Funding Accountability and Transparency Act (FFATA) Reporting
The Supplement Addendum also added a new requirement to Part 3 Compliance Requirements, under the Reporting type compliance requirement relating to the FFATA reporting. The auditor will be required to test FFATA reporting for all COVID-19 programs (except for the Coronavirus Relief Fund program) where:
- The Reporting type of compliance requirement is marked as a “Y” in the Part 2 Matrix and Reporting is determined by the auditor to be direct and material; and
- The recipient receives the funds directly from the federal government and makes a first-tier subaward of $25,000 or more to report subaward data through the FFATA Subaward Reporting Systems (FSRS).
The Supplement Addendum indicates that auditors will have to address this reporting requirement for all major programs for audits of fiscal years ending after September 30, 2020, regardless of whether COVID-19 funding is involved.
Extensions Granted
With the late issuance of the Supplement Addendum related to the audit guidance for COVID-19 programs, the OMB has extended the audit submission deadline for the Single Audit Reporting Packages for three (3) months for recipients and subrecipients receiving COVID-19 funding and that have original due dates ranging from October 1, 2020 to June 30, 2021.
This extension does not require individual recipients and subrecipients to seek approval for the extension by the cognizant or oversight agency for audit; however, recipients and subrecipients should maintain documentation of the reason for the delayed filing. Recipients and subrecipients taking advantage of this extension would still qualify as a “low-risk auditee” under the criteria of 2 CFR section 200.520(a) – Criteria for a low-risk auditee.
If you feel you would benefit from a discussion regarding your federal grants and items related to COVID-19 funding, we would be happy to schedule a time to discuss any concerns. You can contact Joseph Duruttya or your local Blue & Co. advisor.
