Assurance Services • Published 3/17/2020 COVID-19: Financial Impacts & Initial Actions for Governmental Entities

This situation is fluid; we will update this information as needed. Last update: 3/18/2020, 11:00am CT

 

As our country and communities navigate the health and business implications of the COVID-19 virus, governmental entities must take appropriate measures to mitigate the financial impacts of this pandemic. These are some of the first actions to consider:

Initiate your disaster/business continuity plan

Work schedules, personnel availability, vendors and suppliers, and revenue streams will all experience disruptions. Update and walk through your plans to verify that the necessary financial resources and systems will be available for processing payroll, paying vendors, billing and collection, and other critical financial functions. Consult legal counsel and your organization’s policy for use of accrued leave during periods away from work.

Address short-term liquidity needs

Revenues may decrease and fund balance reserves may need to be drawn upon. Revisit cash reserve levels and project the timing of any additional reserves/sources of funds needed. Be proactive by contacting financial advisors, bond counsel, etc., if operating capital is needed. Stay tuned for updates on the state of federally-sponsored programs that may provide relief.

Contact your lenders

For governments with outstanding debt, contact your lender or bond counsel to inform them of financial concerns. If satisfying upcoming debt payment or lending covenants might be at risk, inform them so that solutions may be identified ahead of time.

Separate accounting

The COVID-19 pandemic has been identified as an emergency under the Stafford Act and therefore FEMA funding may be available. Employ methods to separately track and document all costs associated with the emergency, including payroll, overtime, supplies, special purchases, equipment use, etc.

Emergency purchases

Review procurement laws that may allow for local governments to expedite purchases that normally require a bid process. However, keep in mind that while these emergency purchase provisions allow for suspension of certain requirements, certain protocols are required when such purchases are made, especially when these purchases will be claimed for FEMA reimbursement. Visit the Louisiana Legislature website and the Legislative Auditor website to learn more about emergency exceptions to the public bid law (La. R.S. 38:2211-12).

Address reporting deadlines

The Louisiana Legislative Auditor allows for filing of extension requests when emergencies prevent completion of an engagement by the statutory deadline. If you foresee challenges in completing your audit or other engagement, consider filing an extension request with the Legislative Auditor. For those governments with continuing disclosure requirements under SEC Rule 15c2-12, audit filing extensions are not available. However, there may be alternative filing options.

Need help?

P&N stands ready to assist with the above actions or other needs your entity may have as you navigate this quickly-changing situation. Reach out to our governmental professionals to start a discussion.