Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing 21.027 (October 2021 – Updated) — Department of the Treasury

Summary

This October 2021 update of Assistance Listing 21.027 in the federal Compliance Supplement 2021 covers Treasury's Coronavirus State and Local Fiscal Recovery Funds. It says the Fund, created by the American Rescue Plan Act of 2021, provides $350 billion in direct payments to states, U.S. territories, tribal governments, metropolitan cities, counties and non-entitlement units of local government. Allocations include $195.3 billion for the 50 States and the District of Columbia, $4.5 billion for territories, $20 billion for Tribal governments, $45.57 billion for Metropolitan Cities, $65.1 billion for Counties and $19.53 billion for Non-entitlement Units of Local Government. Eligible uses are responding to COVID-19 and its economic impacts, premium pay for essential workers, government services lost to revenue reductions, and water, sewer or broadband investments.

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October 2021 - Updated Coronavirus State and Local Fiscal Recovery Funds Treasury

DEPARTMENT OF THE TREASURY

ASSISTANCE LISTING 21.027 CORONAVIRUS STATE AND LOCAL FISCAL
RECOVERY FUNDS

I. PROGRAM OBJECTIVES

The purpose of the Coronavirus State and Local Fiscal Recovery Funds ("the Fund") is to
provide direct payments to States (defined to include the District of Columbia), U.S. Territories
(defined to include Puerto Rico, U.S. Virgin Islands, Guam, Northern Mariana Islands, and
American Samoa), Tribal governments, Metropolitan cities, Counties, and (through States)
Nonentitlement units of local government (collectively the “eligible entities”), to:

1. Respond to the public health emergency, COVID-19 or its negative economic
impacts, including providing assistance to households, small businesses,
nonprofits, and impacted industries, such as tourism, travel, and hospitality;
2. Respond to workers performing essential work during the COVID-19 public
health emergency by providing premium pay to eligible workers of eligible
employers that have eligible workers who are performing essential work, or by
providing grants to eligible entities who perform essential work;
3. Provide government services, to the extent COVID-19 caused a reduction in
revenues collected in the most recent full fiscal year of the State, Territory, Tribal
government, Metropolitan city, County, or Non-entitlement units of local
government; or
4. Make necessary investments in water, sewer, or broadband infrastructure.

II. PROGRAM PROCEDURES

A. Overview

Sections 602 and 603 of the Social Security Act (the “Act”), as added by section 9901 of
the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (Mar. 11, 2021) authorized the
Coronavirus State Fiscal Recovery Fund (“CSFRF”) and Coronavirus Local Fiscal
Recovery Fund (“CLFRF”) respectively (referred to collectively as the “Coronavirus
State and Local Fiscal Recovery Funds” or “the Fund”). The Fund is administered by the
U.S. Department of the Treasury (“Treasury”) and provides assistance in the form of
direct payments for specified use. The Fund provides $350 billion for payments to
eligible entities.

The total allocations to the eligible entities under the Fund are as follows:

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(1) $195.3 billion reserved for making payments to the 50 States and the District of
Columbia;
(2) $4.5 billion reserved for making payments to the U.S. Territories;

(3) $20 billion reserved for making payments to Tribal governments;

(4) $45.57 billion reserved for making payments to Metropolitan Cities;

(5) $65.1 billion reserved for making payments to Counties; and

(6) $19.53 billion reserved for making payments to Non-entitlement Units of Local
Government (NEU).

Amounts paid to eligible States and Local governments were based on 2019 population
data from the U.S. Census Bureau, as well as latest available data from the Bureau of
Labor Statistics at the time of the issuance of Treasury’s Interim Final Rule. Treasury
made a determination to allocate payments to Tribal governments based on enrollment
and employment data, as well as consultation with Tribal leaders.

Prior to receipt of award funds, all eligible entities are required to execute a Financial
Assistance Agreement, which includes the Award Terms and Conditions that recipients
must comply with in carrying out the objectives of their award. As a condition of
receiving payment from the Fund, States, the District of Columbia, and U.S. Territories
executed a Financial Assistance Agreement that included the required section 602(d)(1)
certification. Tribal and Local governments are not required to provide such certification
as a condition of receiving payment under the Fund. Eligible entities are expected to use
the direct payments to meet pandemic response needs and rebuild a strong, more
equitable economy as the country recovers.

Please note that, as discussed in Part IV. Other Information, certain SLFRF recipients are
provided with an option to have an alternative compliance examination engagement in
lieu of a Single Audit or a Program-Specific Audit under 2 CFR Part 200, Subpart F.

Source of Governing Requirements

The Coronavirus State and Local Fiscal Recovery Funds program is authorized by sections 602
and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of
2021, Pub. L. No. 117-2 (Mar. 11, 2021), codified as 42 U.S.C. § 802 and 42 U.S.C. § 803
respectively; and as implemented by Treasury’s Interim Final Rule at 31 C.F.R. Part 35.
https://www.govinfo.gov/content/pkg/FR-2021-05-17/pdf/2021-10283.pdf).

Auditors must audit recipients on award funds they expended for their fiscal year 2021 based on
the requirements set forth in the Act and Treasury’s Interim Final Rule, and Frequently Asked
Questions (FAQs) that were in effect at the time of those expenditures.

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Auditors must audit recipients on award funds they expended after the Final Rule comes into
effect based on the Act and Treasury’s Final Rule and FAQs that are in effect at the time of those
expenditures. See the Other Information section below for auditor guidance relating to the
criteria auditors should use for compliance testing purposes.

Availability of Other Program Information:

Additional information on the requirements for the Fund is available through the program
webpage on Treasury’s website at https://home.treasury.gov/policy-
issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-
recovery-funds. The Fund’s Compliance and Reporting Guidance can be found at
https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-
governments/state-and-local-fiscal-recovery-funds/recipient-compliance-and-reporting-
responsibilities.

FAQs about the Fund are outlined on the program webpage on Treasury’s website at
https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-
governments/state-and-local-fiscal-recovery-funds. If there are specific questions regarding the
Fund, the Office of Recovery Programs may be contacted via telephone at (202)-622-2000 or by
e-mail at SLFRP@treasury.gov.

III. COMPLIANCE REQUIREMENTS

In developing the audit procedures to test compliance with the requirements for this Federal
program, the auditor must determine, from the following summary (also included in Part 2,
“Matrix of Compliance Requirements”), which of the 12 types of compliance requirements have
been identified as subject to the audit (noted with a “Y” in the summary matrix below), and then
determine which of the compliance requirements that are subject to the audit are likely to have a
direct and material effect on the Federal program at the auditee. For each such compliance
requirement subject to the audit, the auditor must use Part 3 (which includes generic details about
each compliance requirement other than Special Tests and Provisions) and this program
supplement (which includes any program-specific requirements) to perform the audit. When a
compliance requirement is shown in the summary below as “N,” it has been identified as not
being subject to the audit. Auditors are not expected to test requirements that have been noted
with an “N.” See the Safe Harbor Status discussion in Part 1 for additional information.

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A B C E F G H I J L M N

Matching,
Equipment/ Procurement
Cash
Period
Activities Allowable Subrecipient Special

Eligibility Reporting
Real Property Level of Effort, Of Suspension & Program
Allowed or Costs/Cost Tests and
Unallowed Principles Management Management Earmarking Performance Debarment Income Monitoring Provisions

Y Y N N N N Y Y N Y Y N

A. Activities Allowed or Unallowed

Recipients may use Fund payments for any eligible expenses subject to the restrictions
set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of
the American Rescue Plan Act of 2021 (codified as 42 U.S.C. § 802 and 42 U.S.C. § 803
respectively), Treasury’s Interim Final Rule at 31 C.F.R. §§ 35.7 and 35.8, and FAQs at
(https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf).

The following activities are not permitted under the Fund:

1) A recipient may not use funds for deposits into any pension fund.
2) A recipient may not use funds to contribute to rainy day funds, financial reserves,
or similar funds.
3) A State or Territory shall not use funds to either directly or indirectly offset a
reduction in the net tax revenue of the State or Territory resulting from a covered
change during the covered period.

Recipients may use payments from the Fund to:

• Support public health expenditures, by funding COVID-19 mitigation efforts,
medical expenses, behavioral healthcare, and certain public health and safety
staff;
• Address negative economic impacts caused by the public health emergency,
including economic harms to workers, households, small businesses, impacted
industries, and the public sector;
• Replace lost public sector revenue to provide government services; recipients
may use this funding to provide government services to the extent of the reduction
in revenue experienced due to the pandemic.
• Provide premium pay for essential workers, offering additional support to
those who have borne and will bear the greatest health risks because of their
service in critical infrastructure sectors; and
• Invest in water, sewer, and broadband infrastructure, making necessary
investments to improve access to clean drinking water, support vital wastewater
and stormwater infrastructure, and to expand access to broadband internet.
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B. Allowable Cost/Cost Principles

Revenue loss in and of itself is not an eligible use. Instead, recipients calculate lost revenue
based on the formula provided in the Interim Final Rule to determine the limit for the amount of
CSLFRF funds that can be used for the “provision of government services.” See the Other
Information section below for guidance on the related Schedule of Expenditures of Federal
Award reporting.

The Fund is considered “other financial assistance” per 2 C.F.R. § 200.1 and is administered as
direct payments for specified use. Refer to 2 C.F.R. Part 200, Subpart E regarding the Cost
Principles that apply to the use of funds under this program.

H. Period of Performance

The period of performance for the award under the Fund begins on the date the awards are issued
(i.e., the date funds are disbursed to recipients) and ends on December 31, 2026, pursuant to the
Financial Assistance Agreement.

Recipients may only use funds to cover costs incurred during the period beginning on March 3,
2021 and ending on December 31, 2024 per section 602(g)(1) of the Social Security Act as
added by section 9901 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 and
Treasury’s Interim Final Rule at 31 C.F.R. § 35.5(a). Recipients must liquidate all obligations
incurred by December 31, 2024 under the award no later than December 31, 2026, which is the
end of the period of performance. As such, auditors should test that recipients only used award
funds to cover costs incurred from the period beginning on March 3, 2021 and ending on
December 31, 2024. Auditors should also test that recipients did not incur and apply to their
award any new costs during the period beginning December 31, 2024 and ending on December
31, 2026. During this two-year period, recipients are only permitted to liquidate all obligations
they incurred by December 31, 2024.

I. Procurement, Suspension and Debarment

1. Procurement

Recipients may use award funds to enter into contracts to procure goods and
services necessary to implement one or more of the eligible purposes outlined in
sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule. As such,
recipients are expected to have procurement policies and procedures in place that
comply with the procurement standards outlined in the Uniform Guidance.
Specifically, a State must follow the same policies and procedures it uses for
procurements from its non-Federal funds and comply with 2 CFR §§ 200.321,
200.322, and 200.323. States must also ensure that every contract includes the
applicable contract clauses required by 2 CFR § 200.327. All other entities under
the program, including subrecipients of a State, must follow the procurement
standards in 2 CFR §§ 200.318 through 200.327, including ensuring that the
procurement method used for the contracts are appropriate based on the dollar
amount and conditions specified in 2 CFR § 200.320.
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2. Suspension and Debarment

Prior to enter in subawards and contracts with award funds, recipients must verify
that such contractors and subrecipients are not suspended, debarred, or otherwise
excluded pursuant to 31 CFR § 19.300.

L. Reporting

1. Financial Reporting

a. SF-270, Request for Advance or Reimbursement – Not Applicable

b. SF-271, Outlay Report and Request for Reimbursement for Construction
Programs – Not Applicable

c. SF-425, Federal Financial Report – Not Applicable

2. Performance Reporting

See Special Reporting below.

3. Special Reporting

a. There are three types of reporting requirements for the SLFRF program:
1. Interim Report: Provide initial overview of status and uses of funding.
The interim report will include a recipient’s expenditures through July
31, 2021 by category and at the summary level. The reporting
requirements vary by type of recipient, the total allocation amount, and
the date which the recipient first received its allocation. This is a one-
time report.
2. Project and Expenditure Report: Report on financial data, projects
funded, expenditures, and contracts and subawards over $50,000, and
other information. Project and Expenditure Reports are due on a
regular, recurring basis after the Interim Reports. The reporting
frequency and deadlines vary by type of recipient and total allocation
amount.
3. Recovery Plan Performance Report: The Recovery Plan Performance
Report (the “Recovery Plan”) will provide information on the projects
that large recipients are undertaking with program funding and how
they plan to ensure program outcomes are achieved in an effective,
efficient, and equitable manner. It will include key performance
indicators identified by the recipient and some mandatory indicators

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identified by Treasury. The Recovery Plan will be posted on the
website of the recipient as well as provided to Treasury.

The reporting threshold is based on the total allocation expected under
the SLFRF program, not the funds received by the recipient as of the
time of reporting. Treasury may extend reporting deadlines.

Reporting requirements include which reports a recipient must file, the
frequency at which the recipient must report, the covered period of
reporting, and the report deadlines. Reporting requirements for each
type and size of recipient can be found in Part 2, Section B of the
Compliance and Reporting Guidance.

b. Non-entitlement units of local government (NEUs) are recipients under
the Fund and are required to report their award expenditures on their
SEFA and data collection form. The States that distributed award funds to
the NEUs must not report the amounts provided to the NEUs on their
SEFA.

c. Key Line Items – The following line items contain critical information for
the Interim Report:

1. Obligations and Expenditures.
• Current period obligation
• Cumulative obligation
• Current period expenditure
• Cumulative expenditure

d. Key Line Items – The following line items contain critical information for
the Project and Expenditure Report:

1. Obligations and Expenditures.
• Current period obligation
• Cumulative obligation
• Current period expenditure
• Cumulative expenditure

2. Subawards.

3. Detailed information on any loans issued; contracts and grants
awarded; transfers made to other government entities; and direct
payments made by the recipient that are greater than $50,000. For
amounts less than $50,000, the recipient must report in the
aggregate for these same categories of loans issued; contracts and
grants awarded; transfers made to other government entities; and
direct payments made by the recipient.
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e. Key Line Items – The following line items contain critical information for
the Recovery Plan Performance Report:

1. Public Disclosure Link:
• The URL is publicly accessible.
• The URL is prominently displayed on the main page or the
main COVID response page of the recipient’s website

Please see Treasury’s Compliance and Reporting Guidance at (https://home.treasury.gov/policy-
issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-
recovery-funds/recipient-compliance-and-reporting-responsibilities) for more information.

4. Special Reporting for Federal Funding Accountability and Transparency Act
(FFATA)

a. Treasury received approval from the Office of Management and Budget
(OMB) to increase the subaward reporting threshold outlined in 2 CFR
Part 170 from $30,000 to $50,000 for the Fund.
b. Although FFATA reporting is applicable to CSLFRF, Treasury is making
all required FFATA reporting on behalf of recipients. Thus, compliance
with FFATA reporting requirements is not subject to audit.

M. Subrecipient Monitoring

Applicable.

Note that subrecipient monitoring is not required for entities deemed to be beneficiaries. Because
non-entitlement units of local government are considered by Treasury to be direct recipients of
CSLFRF (and not subrecipients or beneficiaries), States have no subrecipient monitoring
responsibilities related to the funding States were required to distribute to non-entitlement units
of local government.

The subrecipient or beneficiary designation is an important distinction as funding provided to
beneficiaries is not subject to audit pursuant to the Single Audit Act and 2 C.F.R. Part 200,
Subpart F, but funding provided to subrecipients is subject to those audit requirements. When
recipients of the Fund provide award funds to entities to respond to the negative economic
impacts of COVID-19 as end users, and not for purpose of carrying out program requirements,
the entities receiving such funding are beneficiaries of the Fund. Alternatively, when recipients
of the Fund provide award funds to an entity to carry out a program on behalf of the Fund
recipient, the entities receiving such funding are subrecipients.

IV. OTHER INFORMATION

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Auditors should rely on sections 602 and 603 of the Social Security Act as added by section
9901 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (Mar. 11, 2021), codified as
42 U.S.C. § 802 and 42 U.S.C. § 803 respectively, Treasury’s implementing Interim Final Rule
at 31 C.F.R. Part 35, Treasury’s guidance, and FAQs, as the criteria when performing audits on
the recipients and subrecipients of the Coronavirus State and Local Fiscal Recovery Funds, as
well as when reporting findings.

As noted in the Source of Governing Requirements section above, Treasury is still in the process
of adjudicating comments received on Treasury’s Interim Final Rule and a Final Rule was not
finalized at the time of the issuance of this program section of the 2021 Compliance Supplement.
Recipients must comply with the regulations in effect at the time of the expenditure. Therefore,
as it relates to the criteria used by auditors to determine compliance, auditors should test
compliance with the requirements that existed at the time of the expenditure.

Note that revenue replacement calculations for expenditures covered under Treasury’s Interim
Final Rule are not subject to audit for FY 2021.

Schedule of Expenditures of Federal Awards (SEFA)

As noted above in Activities Allowed or Unallowed, the dollar amount of the revenue loss
calculation determines the limit for the amount of CSLFRF funds that can be used to “provide
government services” (which is one of four eligible uses of CSLFRF funds). For SEFA reporting
purposes, the aggregate expenditures for all four eligible use categories are reported on the SEFA
and not the result of the revenue loss calculation.

Additionally, because NEUs are considered direct recipients under the Fund, NEUs are required
to report their award expenditures on the SEFA and data collection form as direct awards.
Further, States must not report award funds that were required to be distributed to the NEUs on
State SEFAs or data collection forms.

Requirements for an Alternative Compliance Examination Engagement for Recipients
That Would Otherwise be Required to Undergo a Single Audit or Program-Specific
Audit as a Result of Receiving SLFRF Awards

A. OVERVIEW

The U.S. Department of the Treasury (“Treasury”) recognizes that many recipients of
Coronavirus State and Local Fiscal Recovery Funds (“SLFRF”) may newly be required to
complete a Single Audit or a Program-Specific Audit pursuant to the Single Audit Act and its
implementing regulations, 2 CFR Part 200, Subpart F, due to their receipt of an SLFRF award
which may lead to them expending $750,000 or more during their fiscal year in Federal
awards. This may be because the recipient has not received federal financial assistance
before, or the other federal financial assistance they expended did not exceed the $750,000
audit threshold set forth 2 CFR 200.501(a). This section describes an alternative approach for
SLFRF recipients that would otherwise not be required to undergo an audit pursuant to 2 CFR
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Part 200, Subpart F, if it was not for the expenditures of SLFRF funds directly awarded by
Treasury. This alternative approach is permitted by OMB as further described in the 2021
OMB Compliance Supplement, PART 8, Appendix VII – Other Audit Advisories and as
detailed below. However, an SLFRF recipient may still elect to undergo a Single Audit or a
Program-Specific Audit under 2 CFR Part 200, Subpart F.

Recipient Eligibility

Recipient eligibility to use this alternative approach is as follows:

SLFRF recipients that expend $750,000 or more during the recipient’s fiscal year in Federal
awards and which meet both criteria listed below have the option to follow the alternative
SLFRF compliance examination engagement:

1. The recipient’s total SLFRF award received directly from Treasury or received
(through states) as a non-entitlement unit of local government is at or below $10
million; and
2. Other Federal award funds the recipient expended (not including their SLFRF award
funds) are less than $750,000 during the recipient’s fiscal year.

Alternative Compliance Examination Engagement

The alternative approach to a Single Audit or Program-Specific Audit under 2 CFR Part 200,
Subpart F, permits eligible recipients to engage a practitioner to perform a compliance
examination engagement in accordance with the Government Accountability Office (GAO)
Government Auditing Standards. The GAO Government Auditing Standards direct
practitioners to conduct these engagements in accordance with the American Institute of
Certified Public Accountants (AICPA) Statements on Standards for Attestation Engagements.
The AICPA attestation standards are codified in the AT-C section of the AICPA’s
Professional Standards and AT-C section 315, Compliance Attestation, which is the standard
to be followed. This engagement, which results in an opinion on compliance, is to be directed
at the compliance requirements described below in D. Compliance Requirements.
This alternative is intended to reduce the burden of a full Single Audit or Program-Specific
Audit on eligible recipients and practitioners, as well as uphold Treasury’s responsibility to
be good stewards of federal funds. This balance of burden reduction and Treasury
responsibility to be good stewards is achieved in several ways as follows:
• A financial statement audit is not required for those eligible recipients that expend
award funds from other Federal programs.
• A compliance examination engagement simplifies the engagement for both recipients
and practitioners.
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• A schedule of expenditures of federal awards is not required as the practitioner opines
directly on compliance for a single program.
• The requirements for internal control in 2 CFR 200.514(c) are not relevant to the
engagement, although AT-C 315, paragraph .15, still requires the practitioner to
obtain an understanding of relevant portions of internal control over compliance
sufficient to plan the engagement and to assess control risk for compliance with
specified requirements.
• The engagement still involves testing of the compliance requirements described below
and results in a related examination opinion which is similar to the compliance
opinion provided under 2 CFR Part 200, Subpart F.
• The engagement reporting is simplified as compared to audit report required by 2
CFR Part 200, Subpart F. One compliance examination opinion is issued (versus up
to 3 reports for a Single Audit or Program-Specific Audit) and the reporting allows for
reporting findings that are noted in a similar manner to how they are reported for
audits under 2 CFR Part 200, Subpart F.

The following subsections of this section align with normal OMB Compliance Supplement
presentation for a Federal program; however, practitioners performing the alternative
compliance examination engagement should use this “Other Information” section as a
standalone document. Practitioners should not use Part 3 of the OMB Compliance
Supplement or the full Part 4 section of the SLFRF Program Compliance Supplement
(designated for audits of the program performed under 2 CFR Part 200, Subpart F) when
testing compliance. Instead, the examination objectives and suggested examination
procedures below should be used on their own.

B. PROGRAM OBJECTIVES

The SLFRF (“the Fund”) provides direct payments to states (defined to include the District of
Columbia), U.S. territories (defined to include Puerto Rico, U.S. Virgin Islands, Guam,
Northern Mariana Islands, and American Samoa), Tribal governments, metropolitan cities,
counties, and (through states) non-entitlement units of local government (collectively the
“eligible entities”), to:

1. Respond to the COVID-19 public health emergency or its negative
economicimpacts, including by providing assistance to households, small
businesses, nonprofits, and impacted industries, such as tourism, travel, and
hospitality;

2. Respond to workers performing essential work during the COVID-19 public
health emergency by providing premium pay to eligible workers of the
recipient that perform essential work or by providing grants to eligible
employers that have eligible workers who are performing essential work;

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3. Provide government services, to the extent the COVID-19 public health
emergency caused a reduction in revenues relative to the revenues collected in the
most recent full fiscal year of the eligible entities; and,

4. Make necessary investments in water, sewer, or broadband infrastructure.

C. PROGRAM PROCEDURES

1. Overview

Sections 602 and 603 of the Social Security Act (the “Act”), as added by section 9901
of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (Mar. 11, 2021)
authorized theCoronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal
Recovery Fund, respectively (referred to collectively as the “Coronavirus State and
Local Fiscal Recovery Funds” or “the Fund” or “SLFRF”). The Fund is administered
by the Treasury and provides assistance in the form of direct payments for specified
uses. The Fund provides $350 billion for payments to eligible entities.

The total allocations to the eligible entities under the Fund are as follows:

1. $195.3 billion reserved for making payments to the 50 states and the District
ofColumbia;

2. $4.5 billion reserved for making payments to the U.S. territories;

3. $20 billion reserved for making payments to Tribal governments;

4. $45.57 billion reserved for making payments to metropolitan cities;

5. $65.1 billion reserved for making payments to counties; and

6. $19.53 billion reserved for making payments to states for distribution to Non-
entitlement Units of Local Government (NEU).

Prior to receipt of award funds, all eligible entities are required to execute a Financial
Assistance Agreement, which includes the Award Terms and Conditions that recipients
must comply with in carrying out the objectives of their award. As a condition of
receiving payment from the Fund, states, the District of Columbia, and U.S. territories
executed a Financial Assistance Agreement that included the certification required by
section 602(d)(1) of the Act. Tribal and local governments are not required to provide
such certification as a condition of receiving payment under the Fund. Eligible entities
are required to use their award funds as set forth in sections 602(c)(1) and 603(c)(1) of the
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Act and Treasury’s Final Rule, 31 CFR Part 35 to meet pandemic response needs and
rebuild a strong, more equitable economy as the country recovers.

2. Source of Governing Requirements

The Coronavirus State and Local Fiscal Recovery Funds program is authorized by
sections 602 and 603 of the Social Security Act as added by section 9901 of the
American Rescue Plan Act of 2021, Pub. L. No. 117-2 (Mar. 11, 2021) as implemented
by Treasury’s Interim Final Rule and Final Rule at 31 CFR Part 35.
On January 6, 2022, Treasury adopted a Final Rule to implement the requirements of
the SLFRF program. The Final Rule responded to comments Treasury received on the
Interim Final Rule and is effective as of April 1, 2022. Until that time, the Interim
Final Rule remains in effect.
Along with the Final Rule, Treasury published a Statement Regarding Compliance
with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and
Final Rule (the “Statement”) that clarifies the transition from compliance with the
Interim Final Rule to compliance with the Final Rule. Recipients should also review
the Final Rule for additional information. Recipients must comply with the Final Rule
beginning on April 1, 2022, when the Final Rule takes effect. Prior to April 1, 2022,
recipients may take actions and use funds in a manner consistent with the Final Rule,
and Treasury will not take action to enforce the Interim Final Rule if a use of funds is
consistent with the terms of the Final Rule, regardless of when the SLFRF funds were
used. This means that Treasury will not take action to enforce against uses of the
Interim Final Rule to the extent that the recipient wishes to change its planned uses of
SLFRF funds in a manner consistent with the Final Rule.

3. Availability of Other Program Information

Additional information on the requirements for the Fund is available through the
program webpage on Treasury’s website at Coronavirus State and Local Fiscal
Recovery Funds | U.S. Department of the Treasury.

The Fund’s Compliance and Reporting Guidance can be found at Recipient
Compliance and Reporting Responsibilities | U.S. Department of the Treasury.

The Final Rule, an overview of the Final Rule, and FAQs about the Fund are outlined on
the program webpage on Treasury’s website at https://home.treasury.gov/policy-
issues/coronavirus/assistance-for-state-local-and-tribal- governments/state-and-local-
fiscal-recovery-funds.

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October 2021 - Updated Coronavirus State and Local Fiscal Recovery Funds Treasury

If there are specific questions regarding the Fund, the Office of Recovery Programs
may be contacted by e-mail at SLFRP@treasury.gov.

D. COMPLIANCE REQUIREMENTS

Preconditions for the Compliance Examination Engagement

Consistent with, and in addition to the preconditions for an attestation engagement are outlined
in the AICPA’s attestation standards in AT-C 105, Concepts Common to All Attestation
Engagements, AT-C 205, Examination Engagements, and AT-C 315, Compliance Attestation.
As a precondition to this compliance examination engagement, the practitioner should determine
that:

a. management can provide evidence to the practitioner that it meets the recipient eligibility
criteria for the alternative compliance examination engagement as outlined in Section A,
“Recipient Eligibility;”
b. management accepts responsibility for the entity's compliance with the compliance
requirements below and the entity's internal control over compliance; and
c. management evaluates the entity's compliance with the compliance requirements in this
section.

Compliance Requirements Relevant to the Compliance Examination Engagement

The requirements noted with a “Y” in the “Matrix of Compliance Requirements” below are
subject to the compliance examination engagement.

A B C E F G H I J L M N

Matching,
Equipment/ Procurement
Cash
Period
Activities Allowable Subrecipient Special

Y Y N N N N N N N N N N

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October 2021 - Updated Coronavirus State and Local Fiscal Recovery Funds Treasury

A. Activities Allowed or Unallowed

Compliance Requirement: Recipients have considerable flexibility to use SLFRF
funds on activities to address the diverse needs of their communities. However, the
SLFRF Final Rule identifies specific restrictions. In-depth description of the unallowed
activities (referred to in the SLFRF Final Rule as ineligible uses) can be found in the
“Restrictions on Use” section of the Coronavirus State and Local Fiscal Recovery
Funds: Overview of the Final Rule. The ineligible uses are listed below:

• Offset a reduction in net tax revenue (applicable to states and territories)
• Deposits into pension funds (applicable to all recipients except Tribes)
• Debt service or replenishing financial reserves (e.g., “rainy day funds”) (applicable
to all recipients)
• Satisfaction of settlements and judgements (applicable to all recipients)
• Programs, services, or capital expenditures that include a term or condition that
undermines efforts to stop the spread of COVID-19 (applicable to all recipients)

Examination Objective: Determine whether the recipients used SLFRF funds for
ineligible uses.

Suggested Examination Procedures

• Obtain an understanding of the design of relevant portions of internal control over
compliance regarding unallowable activities by performing some or all of the
following:

a. Inquiries of appropriate management, supervisory, and staff personnel
b. Inspection of the entity's relevant documents
c. Observation of the entity's activities and operations

• Review a sample of SLFRF expenditures to determine if recipients used SLFRF
funds for ineligible uses

B. Allowable Cost/Cost Principles
Compliance Requirement: Recipients that are eligible for the alternative compliance
examination engagement may elect the standard allowance for revenue loss, pursuant
to which they could use the entirety of their allocation for the provision of government
services. Recipients are required to comply with 2 CFR 200.404(e) regarding
reasonable costs, and, as such, are required to not deviate from their established
practices and policies regarding the incurrence of costs.
Compliance Supplement 2021 21.027-15
October 2021 - Updated Coronavirus State and Local Fiscal Recovery Funds Treasury

Examination Objective: Determine whether the recipient significantly deviated from
its established practices and policies regarding the incurrence of costs.

Suggested Examination Procedures

• Obtain an understanding of the design of relevant portions of internal control over
compliance and established practices and policies regarding the incurrence of costs
by performing some or all of the following:

a. Inquiries of appropriate management, supervisory, and staff personnel
b. Inspection of the entity's relevant documents
c. Observation of the entity's activities and operations

• Test a sample of SLFRF expenditures to determine that the recipient treated costs
consistently with its established practices and policies.

E. REPORTING

As described in the GAO Government Auditing Standards, and elaborated upon in AICPA
standards, the practitioner issues the following reporting in the alternative compliance
examination engagement:

• Practitioner’s Examination Report prepared in accordance with AT-C 315 and
Government Auditing Standards.
• Schedule of Findings and Responses (if applicable) that includes findings required to
be reported under GAGAS and the related finding elements required by GAGAS.

F. COMPLIANCE EXAMINATION ENGAGEMENT SUBMISSION
INSTRUCTIONS

The submission deadlines for the alternative compliance examination engagement are the
same as those for Single Audits and Program Specific audits due in accordance with 2 CFR
Part 200, Subpart F. Therefore, the results of the alternative compliance examination
engagement must be submitted within the earlier of 30 calendar days after receipt of the
auditor's report(s), or nine months after the end of the audit period.

Per OMB Memorandum M-21-20, Promoting Public Trust in the Federal Government through
Effective Implementation of the American Rescue Plan Act and Stewardship of the Taxpayer

Compliance Supplement 2021 21.027-16
October 2021 - Updated Coronavirus State and Local Fiscal Recovery Funds Treasury

Resources, recipients that have not yet filed their Single Audits with the Federal Audit
Clearinghouse as of the date of OMB Memorandum M-21-20 (i.e., March 19, 2021) that have
fiscal year-ends through June 30, 2021, may delay the completion and submission of the
Single Audit reporting package, as required under 2 CFR 200.501, to six months beyond the
normal due date. This extension can also be applied to the completion and submission of the
alternative compliance examination engagement for the same periods as described in OMB
Memorandum M-21-20 for Single Audits.

Additional instructions for where and how to submit the results of the alternative compliance
examination engagement will be forthcoming and posted to the Coronavirus State and Local
Fiscal Recovery Funds’ website.

Compliance Supplement 2021 21.027-17

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