By: Craig E. Witmer, CPA, CGFM
Member of the Firm

Over 30,000 recipients are expected to benefit from the $350 billion U.S. Treasury Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program. Many of the recipients, which are comprised primarily of state, local, and tribal governments, are small entities that have not previously been required to undergo a single audit.

For several months, U.S. Treasury and Office of Management and Budget (OMB) have discussed reducing the audit burden on these small entities and addressing concerns about the capacity of qualified auditors available to perform the audits.

A collaborative effort was undertaken between Treasury, OMB, the Government Audit Quality Control (GAQC), and the National Association of State Auditors, Comptrollers, and Treasurers (NASACT) to develop an alternative to full single audit or program-specific audit under the Uniform Guidance for certain recipients that would be less burdensome, but still uphold Treasury's responsibility to be good stewards of federal funds. 

The alternative is a compliance examination engagement that is to be performed in accordance with the AICPA Statements on Standards for Attestation Engagements (i.e., AT-C section 315, Compliance Attestation) and Government Auditing Standards. The engagement will focus on two narrowly scoped compliance requirements related to Activities Allowed and Unallowed and Allowable Cost/Cost Principles. In addition to the narrow focus on specific compliance requirements, a full financial statement audit and testing of internal control over compliance will not be required. It is important to note that this alternative is only available to certain eligible recipients as follows:

• 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.
     

We are here for you!

If you appear to be eligible for this alternative, you should discuss the advantages and disadvantages with your auditors to determine if this is a good approach for your organization. Please contact us or complete the form below for assistance!