The CARES Act Division A Title VI created the Coronavirus Relief Fund and appropriated $150 billion that is administered by the Department of the Treasury to allocate to states and local governments for reimbursment of costs associated with COVID-19. Division B of the CARES Act appropriated billions of dollars that expanded funding for existing or newly-created federal programs to respond to COVID-19.
If your organization will receive additional grant funds for existing programs or for one of the newly-created programs, it is important to review your processes and procedures and determine whether to change them or implement new ones to properly administer and account for these federal grants. New general ledger accounts or identification of cost centers, new directors or staff to administer the program, specific or amended policies and procedures for administering the federal grants, new compliance requirements, or new audit requirements may need to be considered.
If you currently administer federal grants, then you should be aware of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly referred to as Uniform Guidance (UG). If you are a new recipient of federal awards, you are encouraged to get a copy of the UG as it contains guidelines that are required before, during, and after receiving a federal grant. The UG is a lengthy document, so a few of the important areas to focus on related to new or expanded funding from the CARES Act are summarized below:
This additional or new funding may need to be accounted for in new fund(s) or cost center(s) in order to segregate these costs and reimbursements separately from all other grant activity. Guidance on the allowable costs and activities for CARES Act funding is still being developed.
New staff or outside resources may be necessary to administer CARES Act funding. In order to achieve compliance, it is important for staff to have an understanding of all grant requirements. This includes adopting policies and procedures for determining allowable costs, and developing and implementing internal controls to make sure the grant requirements are being achieved and documented.
With all this additional or new funding, federal departments may also implement new compliance requirements in order to make sure the funds are used in response to COVID-19. New information is released periodically to help clarify what these funds can reimburse. It is important to continuously monitor for updates to spot new requirements that must to be implemented in order to continue to qualify for the grants.
Depending on the amount of funding you receive from these new or expanded grants, your auditor may need to audit these as major programs. There may be additional or expanded audit requirements for these grants, but additional guidance from federal departments is needed in order to determine this. Continued monitoring for new requirements will be crucial. In addition, make sure your current auditor has experience in single audit requirements. The auditor should be familiar with the auditor section of the Uniform Guidance and the compliance supplement. If the audit is not completed properly, the federal department could request for it to be re-performed, which could result in additional costs or even a demand for return of the grant funds.
P&N has extensive experience in governmental accounting, auditing, and grants administration services. As additional guidance is released, P&N will provide updates to help you navigate grant tracking and compliance. If you have questions about CARES Act funding, please contact us for assistance.