Government funding has provided for-profit businesses and nonprofit organizations with a lifeline during the coronavirus pandemic. Those funds kept many doors open for business and allowed scores of workers to keep their jobs, but federal aid comes with distinct, intricate compliance and reporting requirements. If your business or nonprofit received funding provided by relief programs established by the CARES Act and other legislation since the onset of COVID-19, you might be subject to a Single Audit for the first time this year.
If your organization is a non-federal entity and expended $750,000 or more in federal funds in one year, your organization may need a Single Audit. A Single Audit has two main components:
- A financial statement audit that delves deeper than an audit performed in accordance with U.S. generally accepted accounting principles (U.S. GAAP)
- A compliance audit that covers operations, internal controls over financial reporting, and compliance with provisions of laws, regulations, grant agreements, and contracts relating to federal awards
ARB is here to help your organization…
Determine which funding programs are subject to Single Audit requirements – Each awarding agency or pass-through entity will have its own grant agreement, terms, and Assistance Listing Program title and number that determine related reporting requirements. For example, funds distributed through the SBA’s Paycheck Protection Program (PPP) are not subject to Single Audit requirements. Funds distributed through the SBA’s Economic Injury Disaster Loan (EIDL) Program are subject to Single Audit requirements; however, EIDL emergency advances are not. In addition to many others, some funds that are subject include those from the Coronavirus Emergency Supplemental Funding Program, the Treasury’s Coronavirus Relief Fund, and the FCC’s COVID-19 Telehealth Program.
Determine the timing of your Single Audit – Not only do the due dates differ for nonprofit and for-profit organizations, but the OMB is also offering a three-month audit submission extension for Single Audits of 2020 year-ends through Sept. 30, 2020 year-ends. The extension only applies if your organization received certain COVID-19 funding.
Determine your entity type, governing standards, and recipient role – Uniform Guidance (UG) defines a “nonfederal entity” as “a state, local government, Indian tribe, Institution of Higher Education (IHE), or nonprofit organization that carries out a Federal award as a recipient or subrecipient.” But this does not exclude for-profit businesses from Single Audit requirements. Your organization may be subject to reporting in compliance with generally accepted government auditing standards (GAGAS), or Yellow Book requirements. Your organization may need a program-specific audit rather than a full-scope Single Audit. Additionally, your organization’s role as a recipient, subrecipient, or contractor has an impact, and it isn’t black and white. Your organization can actually be a recipient, a subrecipient, and a contractor simultaneously.
Remain in compliance – Noncompliance may lead to legal action or the Federal Government withholding, suspending, or terminating your organization’s award. The professionals at ARB understand the intricacies of Single Audit reporting requirements, and we’re here to help businesses and nonprofit organizations understand and comply with new and evolving legislation.
Contact me today to talk about your Single Audit reporting requirements this year.
Check out our PPP Loan Forgiveness Workbook and visit our COVID-19 Financial Resource and Tax Center for information on related matters.
by Jason LeBlanc, CPA
Jason LeBlanc joined ARB in 1997 and has been a principal for the firm since 2016. He is the Practice Leader for both ARB’s M&A Advisory Group and Nonprofit Advisory Services Group. Throughout his career in public accounting, Jason’s focus has been on M&A advisory services and providing accounting, compliance, and consulting services to clients in the nonprofit and automotive sectors. He works extensively with organizations subject to Single Audit reporting requirements.