Not-for-Profit Organizations Receive Reporting Guidance and Relief Amidst COVID-19
In the wake of the COVID-19 crisis, the Office of Management and Budget (OMB), Small Business Administration (SBA), and Department of Housing and Urban Development (HUD) have all provided guidance or relief to address reporting challenges and questions. The following provides a summary of recent updates for not-for-profit organizations.
Schedule of Expenditures of Federal Awards (SEFA)
The SBA recently received clarification on which loan programs are to be included in the schedule of expenditures of federal awards (SEFA). The SEFA is the basis for determining whether a not-for-profit entity is subject to a single audit under the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), as well as the extent of procedures performed.
Paycheck Protection Program (PPP) loans are not required to be reported on a not-for-profit entity’s SEFA as PPP loans are not subject to the audit requirements of the Uniform Guidance. The Economic Injury Disaster Loan program is subject to Uniform Guidance single audit requirements and should be treated as a direct loan program on an entity’s SEFA. In addition, the Educational Stabilization Fund and Coronavirus Relief Fund are also subject to Uniform Guidance single audit requirements, and related expenditures should be included on an entity’s SEFA. The Provider Relief Fund has also currently been identified as subject to Uniform Guidance single audit requirements; however, the U.S. Department of Health and Human Services is still evaluating this matter.
The OMB has also mandated that all recipients and subrecipients separately identify COVID-19 Emergency Acts funding on the SEFA.
It is important to remember that the same expenditure cannot be applied against two grants. As such, if an organization has received PPP funds to cover salaries, those salary expenditures can only be applied against the PPP loans; they could not also be applied to other federal grants received. In essence, the OMB has emphasized again that the concept of “double dipping” is not allowed with any of the COVID-19 Emergency Acts funds received.
Federal Audit Clearinghouse (FAC) Update
The OMB has issued a memorandum (M-20-26) that extends the filing date with the Federal Audit Clearinghouse (FAC) for single audit submission requirements for certain entities. For those with normal due dates from March 30, 2020, through June 30, 2020, the filing date is extended for up to six months beyond the normal due date. For entities with normal due dates from July 31, 2020, through Sept. 30, 2020, the filing date is extended for up to three months beyond the normal due date.
|Year Ended||Original Due Date||Extended Due Date|
|Sept. 30, 2019||June 30, 2020||Dec. 31, 2020|
|Dec. 31, 2019||Sept. 30, 2020||Dec. 31, 2020|
No action is required to enact the extension. Recipients and subrecipients are required to maintain documentation of the reason for the delay in submission of the single audit filing with the FAC and indicate an extension was applied in their single audit submission. Enacting the extension does not disqualify an entity from being considered a low-risk auditee in future audit periods.
Previously, the OMB had issued memorandum M-20-17 that extended the filing date with the FAC for single audit submission requirements to six months beyond the normal due date; however, this extension was subsequently rescinded.
Furthermore, the FAC is currently still accepting single audit submissions, but, due to the impact of the COVID-19 crisis, processing times of submissions and other support has been impacted. The FAC has stated any delay in processing will not impact the recorded acceptance date of the single audit submission.
HUD has provided deadline extensions to multifamily housing entities and public housing agencies as follows:
- HUD’s Real Estate Assessment Center (REAC) has extended the multifamily audit submission due dates to Sept. 30, 2020. Any submission with a due date before Sept. 30, 2020, will now be due on Sept. 30, 2020. This extension applies to both audited and unaudited submission types.
- For public housing agencies with year-ends of Dec. 31, 2019, and March 31, 2020, REAC has extended the deadline for unaudited submissions to Aug. 31, 2020, and Nov. 30, 2020, respectively. For public housing agencies with year-ends of June 30, 2019, Sept. 30, 2019, Dec. 31, 2019, and March 31, 2020, REAC has extended the deadline for audited submissions to Sept. 30, 2020, Dec. 31, 2020, March 31, 2021, and June, 30, 2021, respectively.
Entities need to consider whether any federal assistance received should be included on the SEFA and whether the amount of federal assistance included on the SEFA subjects the entity to a single audit under the Uniform Guidance. Entities should also consider whether to utilize a deadline extension discussed above, after evaluating other contracts requiring an audit and the needs of the users of the audited financial statements. If your organization needs assistance evaluating the options or navigating these issues, please reach out to your KSM advisor or complete this form.
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