Single Audit Requirements: Breaking Down the 2020 Compliance Supplement Addendum

Thoughtware Alert Published: Feb 04, 2021
Architectural Columns

In late December 2020, the Office of Management and Budget (OMB) released the 2020 Compliance Supplement Addendum (Addendum), which affects Single Audits for recipients with fiscal years beginning after June 30, 2019. 

Many organizations may be preparing for their first Single Audit due to increased funding related to COVID-19. If you have questions about preparing for a Single Audit, see our previous BKD Thoughtware® article.

Due Date Extension

In general, Single Audit reports are required to be filed with the Federal Audit Clearinghouse at the earlier of 30 calendar days after receipt of the auditor’s reports or nine months after year-end. The Addendum has extended the due date for organizations that have received funding related to COVID-19 by an additional three months. The revised due dates are:

Due Date Extension Chart

Although there’s no need to seek approval for the extension by a cognizant or oversight agency, recipients should maintain documentation for the reason for the delayed filing. The extension doesn’t apply to all recipients of federal awards. Organizations need to have received COVID-19 funding to be eligible for this extension.

Reporting Requirement

The Addendum has added to the reporting compliance requirement. Specifically, the Addendum requires auditors to consider reporting requirements under the Federal Funding Accountability and Transparency Act (FFATA) as a potential direct and material compliance requirement for any of the programs identified in the Addendum where the reporting compliance requirement has been marked “Y.” 

For organizations with years ending after September 30, 2020, auditors must consider FFATA for all programs, not just those included in the Addendum.

FFATA reporting requirements generally apply to organizations that are direct recipients, i.e., have received the grant award directly from a federal granting agency, and make first-tier subawards of $25,000 or more. If your organization has received funding from a federal agency and made subawards to other organizations, this requirement could apply. Auditors will still need to evaluate the materiality of those subawards to determine if testing is necessary.

New Programs & Cluster

The Addendum includes guidance for eight new programs:

  • CFDA 10.001 – Programs Impacted by COVID Waivers
  • CFDA 16.034 – Coronavirus Emergency Supplemental Funding
  • CFDA 21.019 – Coronavirus Relief Fund
  • CFDA 32.006 – COVID-19 Telehealth Program
  • CFDA 84.425 – ESF Education Stabilization Fund Under the Coronavirus Aid, Relief, and Economic Security Act
  • CFDA 84.425 – HEERF Education Stabilization Fund Under the Coronavirus Aid, Relief, and Economic Security Act Higher Education Emergency Relief Fund
  • CFDA 93.461 – COVID-19 Testing for the Uninsured
  • CFDA 93.498 – Provider Relief Fund

Each program has specific compliance requirements to be tested, and the Addendum often refers to specific additional resources for auditors to consider during testing. To become familiar with the requirements your auditors will use, consider reading the Addendum and the additional guidance referenced throughout that document. The requirements for three of the eight new programs are described below.

Coronavirus Relief Fund (CRF)

The purpose of the CRF is to provide direct payments to state, territorial, tribal, and certain local governments to cover:

  • Necessary expenditures incurred due to the public health emergency with respect to COVID-19
  • Costs that weren’t accounted for in the government’s most recently approved budget as of March 27, 2020
  • Costs that were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020 (extended to December 31, 2021)

The compliance requirements subject to audit for the CRF include:

  • Activities Allowed/Unallowed
  • Allowable Costs/Cost Principles
  • Period of Performance
  • Reporting
  • Subrecipient Monitoring

The U.S. Department of the Treasury’s guidance has now been codified in the Federal Register

As noted above, the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) extended the time period for spending to December 31, 2021. This spending extension applies to direct recipients of CRF monies. Organizations that received funding from a direct recipient should coordinate with the granting organization on any changes to the spending period that apply to the subawards.

Higher Education Emergency Relief Fund (HEERF)

The HEERF grant funds are to be used to prevent, prepare for, and respond to the coronavirus by providing grants to eligible institutions. The program used several methods of distribution, including funds for direct aid to students and funding to the institutions. Knowing which method of distribution funds relate to will be important for compliance. 

Because of the different methods of distributions, the program number includes several program designations in the CFDA number, e.g., 84.425E, 84.425F, etc. These designations must be displayed on the Schedule of Expenditures of Federal Awards (SEFA) and when submitting to the Federal Audit Clearinghouse on the Data Collection Form (DCF).

The compliance requirements subject to audit for HEERF include:

  • Activities Allowed/Unallowed
  • Allowable Costs/Cost Principles
  • Matching, Level of Effort, Earmarking
  • Period of Performance
  • Procurement, Suspension, & Debarment
  • Reporting

Several documents have been posted to the U.S. Department of Education’s HEERF website that contain frequently asked questions and other guidance.

The CRRSAA authorizes additional funding to support education, including HEERF II. The Department of Education has issued additional guidance for HEERF II funding that can be accessed on a separate page on the Department of Education’s website. 

Provider Relief Fund (PRF)

The PRF provides relief funds to hospitals and other healthcare providers, including supporting expenses or lost revenue attributable to COVID-19 and helping ensure uninsured Americans can get treatment for COVID-19.

The timing of reporting expenditures and lost revenues on the SEFA is provided in the Addendum for the PRF:

Addendum Provider Relief Fund Chart

The compliance requirements subject to audit for the PRF include:

  • Activities Allowed/Unallowed
  • Allowable Costs/Cost Principles
  • Reporting

Registration in the reporting portal is now open, and guidance on reporting requirements related to the CRRSAA has been updated. For more information, see the U.S. Department of Health & Human Services webpage.

New Cluster

The Addendum also added one new cluster, the Federal Motor Carrier Safety Assistance Cluster, which includes two programs: Motor Carrier Safety Assistance (20.218) and Motor Carrier Safety Assistance High Priority Activities (20.237). Make sure to properly reflect this as a cluster on your DCF and SEFA.

SEFA Preparation

The SEFA is a key document in the Single Audit. See our previous Thoughtware article on how to prepare a SEFA and common mistakes to avoid. 

During the pandemic, entities may have donated personal protective equipment (PPE) that was purchased with federal assistance funds. Nonfederal entities that received donated PPE should provide the fair market value of the PPE at the time of receipt as a separate footnote to their SEFA. The amount of the donated PPE isn’t counted for purposes of determining the threshold for a Single Audit or determining major programs. The donated PPE also isn’t required to be audited as a major program. The footnote disclosure may be marked “unaudited.”

Recipients also are required to separately identify COVID-19-related awards on the SEFA and DCF for both existing awards that had COVID-19-related award expenditures and new COVID-19-only programs. In a separate line on the SEFA and in a separate row on the DCF, recipients should indicate “COVID-19” at the beginning of the program name to identify the expenditures related to COVID-19.

How BKD Can Help

According to data compiled by the OMB via the Federal Audit Clearinghouse, BKD is a leading provider of Single Audits among CPA firms. Whether you’re preparing for your first Single Audit or you’ve had Single Audits for years, our trusted advisors can help you navigate the Uniform Guidance regulations and compliance requirements, develop internal controls, and gather the necessary information that will help your Single Audit go more smoothly.   

For years, BKD has used our expertise and insight in grant compliance to help organizations successfully expend or administer federal awards and prepare for Single Audits including SEFA preparation. We have the experience and real-time knowledge of federal awards to answer your questions and help guide you through the process. 

Reach out to your BKD Trusted Advisor™ or submit the Contact Us form below if you have questions.

Related Thoughtware

Kate & Ben — How can we help you? Contact Us!

How can we help you?