The American Recovery and Reinvestment Act of 2009 (ARRA) will provide more than $780 billion of federal funds to U.S. state and local governments and nonprofit agencies to support various projects. Some of these funds were distributed in 2009, but the majority of organizations will begin receiving and expending the funds in their 2010 and 2011 fiscal years.
To recipients and subrecipients receiving ARRA funds, it will generally mean meeting additional compliance requirements; designing and implementing new internal controls to track and report the funds, including specifically identifying ARRA funds on the Schedule of Expenditures of Federal Awards (SEFA); and testing more programs as part of their single audits in accordance with the Office of Management and Budget’s (OMB) Circular A-133. The specifics of the new compliance requirements and implementation guidance relating to ARRA can be found in the memoranda issued by the OMB at the OMB’s ARRA website, http://www.whitehouse.gov/omb/recovery_default/.
With these ARRA funds comes increased scrutiny at the federal level, including the formation of the Recovery Act Accountability and Transparency Board to monitor the funds. As a recipient or subrecipient, you need to make sure that you are aware of the ARRA funds you are receiving and have plans to implement controls and processes to meet the additional requirements. Most importantly, make sure you are tracking the receipt and expenditure of the ARRA funds separately, even if they are part of an existing program or CFDA number. Try to stay ahead of the game and let your auditors know of these ARRA funds as soon as possible so that audits can be planned accordingly and help minimize surprises for both parties; identify them separately as ARRA funds on the SEFA provided to the auditors.
ARRA will benefit many organizations in the coming years, but problems will arise if the awards are expended, tracked and reported improperly. Make sure you are putting yourself in a position to avoid these problems.
Additional ARRA guidance can be found at www.recovery.gov.
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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.