This article was written by Gregg H. Evans, CPA, Partner & Heidi K. Bresler, CPA, MBA, Principal.
Background:
The U.S. Treasury Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program (Assistance Listing 21.027) created by the American Rescue Plan Act (ARPA) was provided to an estimated 30,000 recipients. The recipients are mostly comprised of state and local governments as well as many small entities that have not previously been required to have a compliance audit.
A single or program-specific audit under the Uniform Guidance is normally required if an entity spends $750,000 or more of federal funds. However, an alternative to a single audit or program-specific audit has been created upon issuance of a Federal Register notice for certain recipients that would be less intensive than the traditional compliance audit. See the FAQ below which explains the alternative compliance examination engagement in more detail.
Frequently Asked Questions:
What are the Criteria an Entity Must Meet to be Applicable for a Compliance Examination?
CSLFRF recipients that expend $750,000 or more during the recipient’s fiscal year in federal awards, and who meet both criteria listed below have the option to follow the alternative CSLFRF compliance examination engagement:
- The recipient’s total CSLFRF award received directly from Treasury or received (through states) as a non-entitlement unit of local government is at or below $10 million; and
- Other Federal award funds the recipient expended (not including their CSLFRF award funds) are less than $750,000 during the recipient’s fiscal year.
How does the Alternative Compliance Examination Differ from a Single Audit?
In the alternative compliance examination, a financial statement audit is not required and a schedule of expenditures of federal awards (SEFA) is not prepared; however, these two elements are required during a Single Audit. Additionally, while the compliance examination does require testing of the CSLFRF compliance requirements, this testing is more narrowly scoped than in a Single Audit.
What Reports are Issued?
An examination report is issued in accordance with Government Auditing Standards. If applicable, findings would be reported in accordance with Government Auditing Standards and may include significant deficiencies and/or material weaknesses in internal control, noncompliance that could be material to the examination, or instances of fraud.
How Can I Learn More?
Contact the Government Auditing and Accounting experts at The Bonadio Group for more information!
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.