On June 18, 2020, the Office of Management and Budget (OMB) issued Memorandum M-20-26, Extension of Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations, which will impact organizations that have received federal funds under the COVID-19 Emergency Acts and organizations that are subject to the single audit requirements under 2 CFR 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards.
Memorandum M-20-26 contains the following changes to prior Memorandums issued by the OMB:
- Changes to the single audit submission extensions and includes a reversal of positions by OMB on the 6-month extension for certain year-ends.
- Requirement for separate presentation of “COVID-19 Emergency Act funding” on the schedule of expenditures of federal awards (SEFA).
- A directive to inform recipients to use other funding sources to preserve the federal funds for the ramp-up effort.
- It allows for a continuation of provisions relating to the allowability of salaries and other project activities through September 30, 2020, and clarification that “double-dipping” of federal programs is not appropriate.
The OMB previously issued M-20-17 that provided a universal six-month extension for single audit submissions for organizations with fiscal years ending through June 30, 2020, that had not filed their single audit reports with the Federal Audit Clearinghouse (FAC) as of March 19, 2020. When M-20-17 was issued, OMB indicated that it would revisit the flexibilities provided in that Memorandum within 90 days. The issuance of M-20-26 represents OMB’s revisit of M-20-17.
M-20-26 Revised Due Dates for Single Audit Submissions Based on Organization’s Fiscal Year-End
If your organization’s fiscal year-end is June 30, 2019 – September 30, 2019:
- FAC Submission Due Dates: March 30, 2020 – June 30, 2020
- 6-month submission extension:September 30, 2020-December 31, 2020
If your organization’s fiscal year-end is October 31, 2019 – December 31, 2019:
- FAC Submission Due Dates: July 31, 2020 – September 30, 2020
- 3-month submission extension: October 31, 2020 – December 31, 2020
If your organization’s fiscal year-end is January 31, 2020 – June 30, 2020:
- FAC Submission Due Dates: October 31, 2020 – March 30, 2021
- Extension has been rescinded: October 31, 2020 – March 30, 2021
No further action is required to enact these extensions. However, individual recipients and subrecipients are required to maintain documentation of the reason for the delay and are requested to include reference to the Memorandum in their audit reporting packages so that federal agencies and pass-through entities are informed. Recipients and subrecipients taking advantage of these extensions will still qualify as a “low-risk auditee” under the criteria of 2 CFR § 200.520 (a) – Criteria for a low-risk auditee.
Memorandum M-20-26 also requires that the COVID-19 Emergency Acts funding and programs must be identified separately on the SEFA and in audit report findings. More details should be released about this requirement when the 2020 OMB Compliance Supplement is issued later this summer.
Due to the limited federal funding resources under each federal award to achieve its specific public program goals, awarding agencies must inform recipients to exhaust other available funding sources to maintain its workforce and implement necessary steps to save overall operational costs such as renegotiation of rent during the pandemic period in order to preserve federal funds for the ramp-up effort. Recipients are required to retain documentation of their efforts to exhaust other funding sources and reduce overall operational costs.
Memorandum M-20-26 also discusses the allowability of salaries and other project activities during the COVID-19 pandemic. The Memorandum states awarding agencies may allow recipients to continue to charge salaries and benefits to active federal award consistent with the organization’s policy of paying salaries under unexpected or extraordinary circumstances from all funding sources. The awarding agency may allow other costs to be charged to federal awards necessary to resume activities supported by the award, consistent with applicable federal award cost principles and the benefit to the project. Payroll cost paid with Paycheck Protection Program (PPP) loans or any other federal CARES Act program funding cannot also be charged to current federal awards as it would result in the federal government paying for the same expenditures twice. Organizations need to be cognizant that they are not double-dipping.
If you feel you would benefit from a discussion regarding your federal grants and items related to COVID-19 Emergency Acts funding, we would be happy to schedule a time to discuss any concerns. Please contact your local Blue & Co. advisor today.