Single Audit Implications of the American Rescue Plan Act

March 25, 2021 | Article

Recently, the American Rescue Plan Act of 2021 (ARPA) was signed into law. The ARPA provides additional relief to address the continued impacts of COVID-19 on the economy, public heath, state and local governments, individuals and businesses. The funding laid out in ARPA extends to a wide range of programs, including but not limited to, nutrition, schools and higher education institutions, childcare, COVID-19 testing and treatment, mental health, housing assistance, healthcare and transportation.

Funding under ARPA was for new programs, as well as existing programs that are subject to single audit. One of the new programs created under ARPA is related to the Coronavirus State and Local Fiscal Recovery Funds.

Coronavirus State and Local Fiscal Recovery Funds
These funds will provide over $350 billion to states, tribal entities, U.S. territories, and local governments. They can be used for the following:

  • Covering costs to respond to the public health emergency or its negative economic impacts.
  • Responding to workers performing essential services.
  • The provision of government services to the extent of the reduction in revenue due to COVID-19.
  • Making necessary investments in water, sewer, or broadband infrastructure.

Based on the funding allocation for the Coronavirus State and Local Recovery Funds, many local governments will receive direct funding. At this time the U.S. Treasury Department has not made any policy decisions about whether these funds will be subject to single audit.

Updates to Existing Programs Subject to Single Audit
Additionally, two of the most significant funding additions went to the following existing programs, which are subject to audit:

  • Emergency Stabilization Fund (ESF). This program is receiving approximately $165 billion in new funding with over $120 billion going to the Elementary and Secondary School Emergency Relief subprogram and $40 billion going to the HEERF subprogram (HEERF III).
  • Emergency Rental Assistance Program. This program is receiving over $21 billion in new funding.

At this time federal agencies have not made any policy decisions about whether any funds under the ARPA will be subject to single audit. However, as you will notice from the summary of Office of Management and Budget (OMB) Memo 21-20, there are indicators that some of these funds may be subject to single audit.

If the federal agencies determine these funds are subject to single audit requirements, there will be significant implications to recipients. We are closely monitoring policy decisions made by OMB and the federal agencies and will communicate decisions as they are finalized.

Other Single Audit Updates to Consider
OMB Memo M-21-20
The OMB issued Memo M-21-20 on March 19, 2021, that addresses considerations regarding the implementation of the ARPA. The following are highlights from the memo:

  • Single Audit Submission Extension: Recipients and subrecipients that have not yet filed their single audits with the Federal Audit Clearinghouse as of March 19, 2021, that have fiscal year-ends through June 30, 2021, have a six-month extension beyond the normal due date for the completion and submission of the single audit reporting package. Recipients and subrecipients must maintain documentation of the reason for the delayed filing. Although a six-month extension was provided, the “30 calendar days after receipt of the auditor’s report” aspect of the single audit due date continues to apply.
  • For-Profit Recipient Guidance. For purposes of ARPA implementation, federal awarding agencies are expected to follow the requirements as directed by OMB in 2 CFR part 200 for financial assistance awards to for-profit organizations to the maximum extent authorized by law. It states that agencies should consider whether single audit or some other audit is most appropriate for for-profit entities.
  • Higher Risk Program Identification. Federal agencies are required to perform a risk analysis for ARPA programs and request OMB to designate any higher risk programs as single audit major programs. OMB will use the 2 CFR Subpart F Compliance Supplement to notify auditors of compliance requirements that should be tested for ARPA programs.
  • Waivers, Flexibilities, and More. Encourages federal agencies to provide various waivers and flexibilities to reduce burden for federal financial assistance. There is also a strong emphasis on transparency of spending and performance.

HEERF II Guidance
The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) provided a second round of funding to HEERF (referred to as HEERF II), a subprogram of the ESF program, which established new requirements for the funding. Numerous questions have been raised about those changed requirements, especially about a change that would permit the charging of lost revenue. In response to the questions received, the Department of Education posted additional guidance that can found in a section titled HEERF II Grant Program FAQs and Documents at the bottom of their website.

Stay tuned for a further communication regarding specific clarifications on HEERF II.

Shuttered Venue Operating Grants
The Shuttered Venue Operators Grant (SVOG) program was signed into law under the Economic Aid Act. Additionally, the American Rescue Plan Act included amendments to the SVOG. This program will be provided to eligible governments, nonprofits, and for-profit entities that include, among others, live venue operators, movie theaters, museums, zoos, and aquariums. While the Small Business Administration has been clear from the beginning that this program will be subject to audit for governments and nonprofits, SBA recently clarified that for-profit SVOG grantees expending more than $750,000 in federal funding in one fiscal year will have the option of either providing a single audit or an audited financial statement for the fiscal year during the audit period.


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