Since the beginning of the COVID-19 crisis and subsequent CARES Act and Paycheck Protection Program (PPP) loan program, nonprofit leaders have asked questions regarding receiving funding from federal sources, as well as operating programs with federal funds. When is my Single Audit package due? How do I account for funds, if I received a Payroll Protection Program (PPP) loan and also receive federal funding? What do the answers to those questions mean, and how do they impact my compliance and reporting?
New guidance is issued regularly, so it can be hard to stay on top of the information. At BPM, we are here to help you work through these issues. Here are some of the answers to help answers the questions you may have.
Summary of Submission Extensions per M-20-26 :
|Fiscal Year End||Normal Due Date||Extended Due Date|
|June 30, 2019||March 31, 2020||September 30, 2020|
|July 31, 2019||April 30, 2020||November 2, 2020|
|August 31, 2019||May 31, 2020||November 30, 2020|
|September 30, 3019||June 30, 2020||December 30, 2020|
|October 31, 2019||July 31, 2020||November 2, 2020|
|November 30, 2019||August 31, 2020||November 30, 2020|
|December 31, 2019||September 30, 2020||December 31, 2020|
|January 31, 2020||November 2, 2020||N/A|
|February 29, 2020||November 30, 2020||N/A|
|March 31, 2020||December 31, 2020||N/A|
|April 30, 2020||February 1, 2021||N/A|
|May 31, 2020||March 1, 2021||N/A|
|June 30, 2020||March 31, 2021||N/A|
- The extension does not require individual recipients and subrecipients to seek approval, but they should maintain documentation of the reason for the delayed filing.
Allowability of Salaries and Other Project Activities:
- Salaries, Benefits, and Other Costs to Federal Awards – The Office of Management and Budget (OMB) memorandum M-20-26 clarifies that awarding agencies will allow entities to charge salaries and benefits to active federal awards consistent with the entities policy of paying salaries and benefits. In addition, funders may allow other costs that are necessary to resume activities supported by the award, consistent with cost principles and the benefits to the project. You must maintain appropriate records and cost documentation to substantiate the charging of any salaries and other project activities costs related to interruption of operations or services.
- No “Double Dipping” of Costs – OMB memorandum M-20-26 also provides clear guidance that payroll costs paid with PPP loans or any other Federal CARES Act program must not also be charged to current Federal awards, as it would result in the Federal government paying for the same expenditures twice.
- Exhaust Other Funding Options – Due to limited funding under each federal award, the funders ask recipients to exhaust other available funding sources to sustain the recipient’s workforce and implement other necessary steps to save operational costs (i.e. rent renegotiations). You should retain documentation of these efforts, related to use of other funding sources and to help reduce operation cost.
Presentation on Schedule of Expenditures of Federal Awards:
- To provide adequate oversight the COVID-19 Emergency Acts funding and programs, recipients and subrecipients must separately identify those COVID-19 Emergency Act expenditures on the SEFA and audit findings.
2020 OMB Compliance Supplement Two Parts:
- Part One – Compliance guidance developed prior to the COVID-19 pandemic, and it will include limited information related to COVID-19 programs. The OMB plans to release this first part in late June or early July 2020.
- Part Two – This will be a detailed addendum for new COVID-19 programs. The OMB plans to issue part two in late summer or early fall 2020.
- Testing of Major Programs – The two-part supplement affects entities that received changes in funding for both COVID-19 programs and federal awards before COVID-19, as auditors will need to determine major programs for testing and any changes to testing new compliance requirements. A summary of those programs can be found on the AICPA website.
- Prepare for Potential Delays – In addition, the unknown compliance requirements for COVID-19 funding may impact the timing of completion of Single Audits, as audit firms may need to wait until the OMB issues guidance from Part Two of the Compliance Supplement to know if they are impacted. Begin conversations now with your audit firm and federal funding agencies, if you have deadlines that could be impacted by these delays.
BPM for Nonprofits
BPM is one of the largest California-based accounting and consulting firms, ranking in the top 50 in the country. Our Nonprofit Industry Group, one of BPM’s most established practice groups, consists of over 60 professionals across our tax, assurance and consulting practices. One of our founding goals is to make a difference in the manner nonprofits are served by our profession. Each member of our group brings differing expertise from our tax, audit, consulting and accounting departments. Together we provide a comprehensive understanding of the functions needed to operate a nonprofit organization. For more information, visit https://www.bpmcpa.com/Nonprofit.