The impact of COVID-19 has altered the operating procedures and systems of organizations to entities struggling to provide needed services in a remote working environment. Among the myriad of challenges impacting those receiving federal funds is how to still comply with terms and conditions of the awards during these uncertain and unprecedented times. This month, the Office of Management and Budget (OMB) issued two memos, M-20-11 and M-20-17, to help with this compliance. They later issues M-20-26, which extends flexibilities and provisions of previously issued memos through September 30, 2020.
M-20-11 was relatively narrow in scope and issued to entities performing essential research and response to COVID-19. M-20-17 greatly expands the scope of M-20-11 and is intended to provide administrative relief for all entities affected by the loss in operational capacity due to COVID-19. M-20 includes the following:
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Here are some key items from these memos for federal agencies to consider. Note: The memos are directives to federal agencies and do not provide an automatic exemption of these items to non-federal entities. Although, given the directives, non-federal entities can reach out to their cognizant agency or grantor for appropriate exemptions.
In general, federal agencies have been directed to grant extensions for active registrations in the System for Award Management (SAM), provide flexibility with application deadlines, provide truncated notice of emergency funding opportunities, and grant no cost-extensions where necessary. In general, OMB is directing federal agencies to allow for maximum flexibility to keep business going and cut through red tape.
Many entities that receive federal funds have found themselves in situations where they are continuing to pay staff salaries during mandated closures. This has raised questions about whether the entities may continue to pay employees during COVID-19 closures and charge those costs to a federal program. There is not a definitive answer that can be applied to all entities; however, federal agencies may allow entities to charge payroll to active federal awards if it is consistent with their emergency policies and procedures. Although employees may not be working as normal, funding may still be available for payroll. Recipients will be required to maintain records and cost documentation to substantiate charging of salaries and other project activities costs related to interruption of operations or services.
Costs due to closure of events or other unexpected costs as a result of COVID-19 may be recouped and charged to the federal award with federal approval. However, entities should not assume that additional funding will later be provided (i.e. this may be a budget transfer). Costs that previously required prior written approval may now be allowable without approval if they are consistent with other Uniform Guidance cost principles. In addition, federal agencies may waive two procurement requirements: geographical preferences and contracting with disadvantaged businesses.
Like the administrative extensions discussed above, OMB has provided an avenue for federal agencies to provide extensions to financial, performance, and special reports, negotiated indirect cost rate plans and award closeout. Required reports may be granted a three-month extension. Entities may continue to use their current (or prior negotiated) indirect rate. With proper approvals and notification, award closeout may be delayed by up to one year. Again, this is an effort to provide federal agencies with the ability to loosen administrative requirements in this new operational environment.
COVID-19 has impacted how organizations conduct financial reporting.
M-20-17 also provides the following information about single audit submissions for recipients and subrecipients that have not filed their single audit with the Federal Audit Clearinghouse as of March 19, 2020, and that have fiscal year-ends through June 30, 2020. While M-20-17 is technically directed to federal agencies as noted above, this provision of the memo effectively provides an extension for single audit filing requirements.
Single Audit Submission
Submissions to the Federal Audit Clearinghouse (FAC) are still required. However, recipients and subrecipients that have not yet filed their single audit with the Federal Audit Clearinghouse as of March 19, 2020, and that have fiscal year-ends through June 30, 2020, are allowed to delay the completion and submission of the single audit reporting package to six months beyond the normal due date. No further action by awarding agencies is required to enact this extension. 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.
Staying Informed in the Wake of COVID-19
The above exceptions are time-limited and will be reassessed by OMB within 90 days of March 19, 2020. It’s important to stay up to date as regulations and guidance is ever changing in light of these uncertain times.
Do you have questions about how this guidance will impact your organization?