OMB Adjusts COVID-19 Single Audit Extensions

On June 18, the Office of Management and Budget (OMB) released a new memo altering some of the existing flexibilities that agencies are able to provide to federal award recipients impacted by COVID-19. Two key areas of flexibility were extended with the intention to give organizations some continued administrative relief, particularly as states begin to reopen and federally funded projects begin to ramp up again. The memo also outlines additional guidance for organizations using federal funding during the pandemic.

Single Audit Deadline Changes (2 CFR § 200.512)

The blanket 6-month submission extension continues to be offered for single audits not yet submitted as of March 19, 2020, with normal due dates from March 30, 2020, through June 30, 2020. This applies to year ends from June 30, 2019, through September 30, 2019.

The blanket audit submission extension for audits with normal due dates from July 31, 2020, through September 30, 2020, has been reduced to 3 months. This applies to year ends October 31, 2019, through December 31, 2019.

The previous 6-month audit submission extension for year ends after December 31, 2019, and through June 30, 2020, year ends has been rescinded. This applies to 2020 years ends from January through June 2020. These single audits will have to be submitted to the Federal Audit Clearinghouse within the normal due date provisions of the Uniform Guidance.

Recipients and subrecipients do not need to seek approval to utilize these extensions. In addition, recipients and subrecipients who take advantage of these extensions would still qualify as a “low-risk auditee” under the criteria in 2 CFR 200.520(a). However, the memo continues the requirement that recipients and subrecipients should maintain documentation of the reason for the delayed filings if they opt to take advantage of the audit submission extensions that are still available. This indicates that while the OMB is providing short term flexibility, organizations should still carefully document any flexibilities they use, as these may come under review in the future.

Allowability of salaries and other project activities (2 CFR § 200.403, 2 CFR § 200.404, 2 CFR § 200.405)

OMB M-20-26 notes that awarding agencies may continue to allow the flexibilities outlined in the original memo it released in March and provides for an extension of these flexibilities through September 30, 2020. However, in light of limited funding resources provided for each Federal award to achieve its own public performance goals, OMB added restrictions to the flexibilities that are discussed below.

Additional Guidance

Double-Dipping Not Permitted: The memo clarifies that payroll costs paid with Paycheck Protection Program (PPP) loans or any other federal programs offered under the Coronavirus Aid, Relief, and Economic Security (CARES) Act programs must not be also charged to current federal awards, as it would result in the federal government paying for the same expenditures twice.

Exhausting Other Funding Sources: The memo states that awarding agencies must inform recipients to exhaust other available funding sources to sustain its workforce and implement necessary steps to save overall operational costs, such as rent renegotiations, during the pandemic period in order to preserve federal funds for the ramp-up effort. The memo also instructs federal agencies that recipients should retain documentation of their efforts to exhaust other funding sources and reduce overall operational costs.
Finally, the OMB states that in order to provide adequate oversight of the COVID-19 Emergency Acts funding and programs, recipients and subrecipients must separately identify the COVID-19 Emergency Acts expenditures on the Schedules of Expenditures of Federal Awards (SEFA) and in any audit findings reported. 
While this memo provides additional flexibility and clarification for federal award recipients, the actual implementation and what is required under this guidance is still unclear. The AICPA Governmental Audit Quality Center (GAQC) is working with OMB to obtain clarification. We’ll continue to provide updates as additional guidance is issued. Additionally, the 2020 OMB Compliance Supplement may provide additional clarification once issued.
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