On December 22, the Office of Management and Budget (OMB) released its long-awaited 2020 Compliance Supplement Addendum (Addendum), intended to be used in conjunction with the 2020 Compliance Supplement to provide additional guidance on COVID-19 expenditures. The Addendum includes guidance on fourteen COVID-19 funded programs and identifies compliance requirements that are subject to audit.
There are four changes to that are important to be aware of in the Addendum:
There will be an automatic three-month extension for submissions of single audits for those organizations with fiscal year-ends through September 30, 2020 that received COVID-19 funds. The extension is tacked on to the traditional nine-month due date. No formal approval is needed, but the organization will need to document why the single audit was not submitted by the original date. If it thought its COVID-19 program would be subject to single audit, it could document that as the reason it’s submitting with the extension. Note that the extension does not apply to organizations that did not receive COVID funds, and no other extensions are expected to be granted.
An additional reporting requirement has been added to the Compliance Supplement relating to the Federal Funding Accountability and Transparency Act (FFATA) that necessitates direct recipients of grants who make first-tier subawards of $25,000 or more to report that data through the FFATA Subaward Reporting System. The auditor must test FFATA for all COVID-19 programs in the Addendum when the reporting compliance requirement is subject to audit. This requirement is phasing in for all major programs testing for single audits of fiscal year-ends after September 30, 2020.
Organizations that received donated Personal Protective Equipment (PPE) should include a footnote to the Schedule of Federal Awards (SEFA) to indicate the fair market value of the PPE at the time of receipt. The footnote can be marked “unaudited.” Donated PPE should not be counted for purposes of determining the threshold for a single audit or determining type A/B program threshold for major programs and is not required to be audited as a major program. Also, organizations should also be aware of whether they received donated PPE from a state agency that may have originally come from a federal source and should consider this as part of their disclosure.
The Addendum clarifies when Provider Relief Funds (PRF) expenditures and lost revenues should be reported on the SEFA (December 31, 2020). If an organization has a June 30, 2020 year-end, no amounts will be recorded, which might change audit thresholds. If an organization has a December 31, 2020 year-end, the amounts will be included and will continue to report expenditures after this period. This adjustment was made in order to better line up with U.S. Department of Health and Human Services reporting requirements.
Finally, for all new and existing programs presented on the SEFA, all COVID-19-related awards are required to be separately identified with the leading “COVID-19” before the name. Organizations will need to override the program title and present a separate line on the Data Collection Form.
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