As part of the responses to the COVID-19 national emergency crisis, the federal government created the CARES Act to make additional funding available to States and Local Governments. Some of the most significant CARES Act funding for Minnesota businesses, municipalities, and schools are the following grants:
- Coronavirus Relief Fund (CRF) grant.
- Paycheck Protection Loan Program (PPP)
- Governor’s Emergency Education Relief (GEER)
- Elementary and Secondary School Emergency Relief (ESSER)
Is your head spinning with all of the new federal grants established in response to the COVID-19 public health emergency? MMKR has assembled the highlights of the four most common grants for your convenience in an easy to refer to grid, available on our website. So what does all of this additional federal funding mean for you? Read on to determine the potential impact to your single audit, required policies and procedures, as well as some action items for you.
Potential Impact to Single Audit
An increase in federal grant expenditures can have a significant impact to an entity's federal single audit as required under Uniform Guidance. For some entities, this may be the first time you will be required to have a federal single audit. For others, there is potential for an increase in the number of high-risk programs to be audited and increased sample sizes for internal control and compliance testing for these high-risk programs. It is imperative to determine how much and how you plan to utilize the funding provided through the CARES Act.
We encourage careful consideration and decision making for allocating and coding grant expenditures. As you prepare for your audit, tracking and coding expenditures will allow for compliance with federal single audit standards and the ability to meet state reporting guidelines.
Written Policies and Procedures
All governmental entities should consider the need to draft or update their Uniform Guidance (UG) written policies and procedures for any internal control changes they have made in response to the COVID-19 crisis and teleworking environment. We recommend they also ensure subrecipient monitoring is included in the written UG policies if the entity plans to provide economic support grants or loans. Other required elements of UG policy include:
- Written cash management procedures to implement the requirements which include payments for allowable costs charged to a federal program
- Written procedures for determining the allowability of costs
- Written budget to actual comparison of expenditures for each Federal awards.
- Written documented procurement procedures which reflect applicable State and local laws, provided they conform to applicable Federal law.
- Written standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts.
- For subrecipients:
- Written subrecipient monitoring policies and procedures.
- Written risk assessment of each subrecipient.
- Documentation of the monitoring of subrecipients.
- Cost Allocation Plan (CAP) – required documentation of the methods used by the entity to identify and accumulate these costs, and to allocate them or develop billing rates based on them.
Equitable Share to Nonpublic Schools
Through the CARES Act, Congress also requires Schools Districts receiving grant funding through the Education Stabilization Fund (CFDA 84.425) to provide equitable services to students and teachers in nonpublic schools. There are multiple ways to calculate the equitable share of entitlement for non-public schools in a manner similar to that of the federal Title I program. All School Districts with nonpublic schools within the District boundaries should consult with each nonpublic school to determine their intent to participate.
Action Items
- Begin making decisions on how to best allocate the additional CARES funding between programs and fiscal years.
- Consider the requirements for providing equitable services to non-public schools, as they will receive a share of the District’s CARES allocations. Obtain and utilize the budget allocation worksheet from SERVS.
- Consider the need to update your Uniform Guidance written policies and procedures for any internal control changes you’ve made in response to the COVID-19 crisis and teleworking environment. Click here for a previously issued MMKR memo from March 20, 2020 regarding internal controls.
- Collaborate with an MMKR team member today to better plan for and facilitate your Federal Single Audit.
