Compliance Supplement 2024 — Coronavirus State and Local Fiscal Recovery Funds (Treasury, 21.027)
Summary
The May 2024 Compliance Supplement section for the Department of the Treasury's Assistance Listing 21.027, Coronavirus State and Local Fiscal Recovery Funds, written for audits of the program. It states that SLFRF provides $350 billion for payments to eligible entities, including $195.3 billion reserved for the 50 states and the District of Columbia, $20 billion for Tribal governments and $65.1 billion for counties. It sets out the program objectives, the source of governing requirements and a matrix of compliance requirements marked Y or N. The text closes with an Appendix VII advisory on the 2024 revisions to OMB's Guidance for Federal Financial Assistance, 89 FR 30046 (Apr. 22, 2024), stating that the revisions increased the audit threshold to $1,000,000 for auditee fiscal years beginning on or after October 1, 2024.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Compliance Supplement 2024 — Coronavirus State and Local Fiscal Recovery Funds (Treasury, 21.027).”
Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/department-of-the-treasury-2024-slfrf-compliance-supplement-home-treas-27f26066fd/
, SHA-256 8f88a5e6dd37ec7a51ba4871968e2657dd7bb9376fe1a58db3d839b49e74a32d.Full text
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
DEPARTMENT OF THE TREASURY
ASSISTANCE LISTING 21.027 CORONAVIRUS STATE AND LOCAL FISCAL
RECOVERY FUNDS
This Compliance Supplement section is broken down into two sections. The first section below
is relevant to audits of the Coronavirus State and Local Fiscal Recovery Funds performed under
subpart F, Audit Requirements, of the Uniform Guidance. The second section (beginning on
page 4-21.027-16) describes an alternative audit approach for certain eligible recipients.
Section 1 – Audits Performed Under the Uniform Guidance
I. PROGRAM OBJECTIVES
Note: This program is considered a “higher risk” program for 2024, pursuant to 2 CFR section
200.519(c)(2). Refer to the “Programs with Higher Risk Designation” section of Part 8,
Appendix IV, Internal Reference Tables, for a discussion of the impact of the “higher risk”
designation on the major program determination process.
Note: Per Part IV, “Other Information,” certain Coronavirus State and Local Fiscal Recovery
Funds (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.
The purpose of the SLFRF program is to provide direct payments to states (defined to include all
50 states and the District of Columbia), US territories (defined to include Puerto Rico, US Virgin
Islands, Guam, Northern Mariana Islands, and American Samoa), Tribal governments,
metropolitan cities, counties, and (through states) non-entitlement units of local government
(NEUs) (collectively the “eligible entities”) to:
1. Respond to the public health emergency with respect to Coronavirus Disease 2019
(COVID-19) or its negative economic impacts, 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;
3. Provide government services, to the extent of the reduction in revenue of the eligible
entities due to the COVID-19 public health emergency relative to revenues collected in
the most recent full fiscal year of the eligible entities prior to the emergency;
4. Make necessary investments in water, sewer, or broadband infrastructure;
5. Provide emergency relief from natural disasters or the negative economic impacts of
natural disasters including temporary housing, food assistance, financial assistance for
Compliance Supplement 2024 4-21.027-1
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
lost wages, and other immediate needs. Please see pages 4 - 8 of the Overview of the
2023 Interim Final Rule (SLFRF Overview of the 2023 IFR) for a list of such eligible
uses;
6. Use funds for Surface Transportation projects under certain programs administered by the
U.S. Department of Transportation. Please see pages 9 - 15 of the SLFRF Overview of
the 2023 IFR for a list of such eligible uses; and
7. Use funds for projects eligible under the programs established in Title I of the Housing
and Community Development Act of 1974 (“Title I projects”), subject to certain
requirements and limitations. Please see pages 16 - 19 of the SLFRF Overview of the
2023 IFR for a list of such eligible uses.
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), codified at 42
USC sections 802 and 803, and as amended by the Consolidated Appropriations Act,
2023 (“2023 CAA”), Pub. L. No. 117-328 (Dec. 29, 2022), authorized the Coronavirus
State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery Fund, respectively
(referred to collectively as the “Coronavirus State and Local Fiscal Recovery Funds” or
“SLFRF”). SLFRF is administered by the U.S. Department of the Treasury (“Treasury”)
and provides assistance in the form of direct payments for specified use. SLFRF provides
$350 billion for payments to eligible entities.
The total allocations to the eligible entities under SLFRF are as follows:
(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 US 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 NEUs.
Amounts paid to eligible states and local governments were based on 2019 population
data from the US Census Bureau as well as latest available data from the Bureau of Labor
Statistics at the time of the issuance of Treasury’s 2021 Interim Final Rule on May 17,
2021. Treasury made a determination to allocate payments to Tribal governments based
Compliance Supplement 2024 4-21.027-2
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
on enrollment reported to the Bureau of Indian Affairs 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 well as the certification
required at 42 USC 802(d)(1). Tribal and local governments are not required to provide
such certification as a condition of receiving an award under SLFRF. Eligible entities are
required to use their award funds as set forth at 42 USC sections 802(c) and 803(c) and the
SLFRF regulations set forth at 31 CFR Part 35, Subpart A, to meet pandemic response needs
and rebuild a strong, more equitable economy as the country recovers.
Source of Governing Requirements
The SLFRF 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 at 42 USC sections 802 and 803, and as amended by the 2023 CAA. The U.S.
Department of the Treasury (Treasury) has implemented the statutory provisions applicable to
FY 2024 through the 2021 Interim Final Rule, the 2022 Final Rule, the 2023 Interim Final Rule,
and the Obligation Interim Final Rule at 31 CFR Part 35, Subpart A.
On January 6, 2022, Treasury adopted the 2022 Final Rule to implement the requirements of the
SLFRF program. The 2022 Final Rule responded to comments Treasury received on the
2021Interim Final Rule and took effect on April 1, 2022. Until that time, the 2021 Interim Final
Rule remained in effect. Auditors should note that if a recipient obligated funds in accordance
with the 2021 Interim Final Rule, then the expenditures follow the requirements of the 2021
Interim Final Rule.
Treasury issued the Statement Regarding Compliance with the Coronavirus State and Local
Fiscal Recovery Funds 2021 Interim Final Rule and 2022 Final Rule (“the Statement”) that
clarifies the transition from compliance with the Interim Final Rule to compliance with the Final
Rule. Recipients must comply with the 2022 Final Rule beginning on April 1, 2022, when the
2022 Final Rule took effect. Prior to April 1, 2022, recipients may take actions and use funds in a
manner consistent with the 2022 Final Rule, and Treasury will not take action to enforce the
2021 Interim Final Rule if a use of funds is consistent with the terms of the 2022 Final Rule,
regardless of when the SLFRF funds were used. Please see pages 3-4 of the Statement for
specific guidance. For example, a recipient is not required to prepare or submit a written
justification as required under the 2022 Final Rule for capital expenditures under the public
health-negative economic impact eligible use category if the recipient (i) has taken significant
steps toward obligating SLFRF funds for that project prior to January 6, 2022, or (ii) has
obligated funds for such project prior to April 1, 2022.
Recipients must follow the requirements on award funds they expended for their fiscal year 2024
based on the requirements set forth at 42 USC sections 802 and 803, Treasury’s 2021 Interim
Final Rule, Treasury’s 2022 Final Rule, Treasury’s 2023 Interim Final Rule, obligation Interim
Final Rule, and Frequently Asked Questions (FAQs), as applicable.
Compliance Supplement 2024 4-21.027-3
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
Auditors should note that the Consolidated Appropriations Act, 2023 amended Sections 602 and
603 of the Social Security Act to provide state, local, Tribal, and territorial governments the
flexibility to use SLFRF funds for additional eligible uses. See Division LL, Section 102 of the
Consolidated Appropriations Act, 2021 for the original eligible uses. On September 20, 2023, the
2023 Interim Final Rule implementing these additional eligible uses was published in the Federal
Register and became effective. An additional resource that provides information on the 2023
Interim Final Rule is the Overview of the 2023 Interim Final Rule.
Treasury also issued an Interim Final Rule describing an amendment to the definition of
obligation in 31 CFR 35.3 and related guidance updates via the “Obligation IFR.” The
Obligation IFR was published in the Federal Register on November 20, 2023. See page 6 of the
Obligation IFR for the definition of an obligation. Section 17 of Treasury’s Frequently Asked
Questions (FAQs) also contains several important clarifications of the Obligation IFR’s
definition of an obligation.
Availability of Other Program Information
Additional information on the requirements for SLFRF 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.
SLFRF’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.
The Compliance and Reporting Guidance provides additional detail and clarification for each
recipient’s compliance and reporting responsibilities and should be read in concert with the
Award Terms and Conditions (Please refer to: https://home.treasury.gov/policy-
issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-
recovery-fund/request-funding), the authorizing statute, the 2021 Interim Final Rule, 2022 Final
Rule, and the 2023 Interim Final Rule, Obligation Interim Final Rule, as applicable, and other
regulatory and statutory requirements.
The SLFRF FAQs are available 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. This document addresses questions regarding
the eligible uses established under the 2022 Final Rule; new eligible uses established in the 2023
Interim Final Rule; and the definition of an obligation under the Obligation Interim Final Rule.
Treasury intends to update this document periodically in response to new questions received
from stakeholders.
Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds
2021 Interim Final Rule and 2022 Final Rule can be found at
https://home.treasury.gov/system/files/136/SLFRF-Compliance-Statement.pdf.
The Statement clarifies the transition from compliance with the 2021 Interim Final Rule to
compliance with the 2022 Final Rule. Recipients should also review the 2022 Final Rule for
Compliance Supplement 2024 4-21.027-4
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
additional information. Additionally, the Overview of the 2023 Interim Final Rule
provides information regarding the 2023 Interim Final Rule, and Obligation IFRII.
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.
A B C E F G H I J L M N
Matching, Procurement and
Equipment and
Cash
Period
Activities Allowable
Level of Effort, Suspension and Subrecipient Special
Real Property
Eligibility Reporting
Allowed or Costs/Cost Of Program Tests and
Unallowed Principles Management Management Earmarking Performance Debarment Income Monitoring Provisions
Y Y N N N Y Y Y N Y Y N
A. Activities Allowed or Unallowed
Recipients may use SLFRF 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 at 42 USC sections 802 and 803, and as
amended by the 2023 CAA. Recipients may also use payments subject to the restrictions
set forth in the 2021 Interim Final Rule (i.e., Auditors should note that if a recipient
obligated funds in accordance with the 2021 Interim Final Rule, then the expenditures
follow the requirements of the 2021 Interim Final Rule), 2022 Final Rule, 2023 Interim
Final Rule, and Obligation Interim Final Rule at 31 CFR Part 35, and FAQs available at
https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-FAQ.pdf.
Compliance Supplement 2024 4-21.027-5
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
1. Activities Allowed – In general, recipients may use payments from SLFRF for one
or more of the purposes described below. For full details on eligible uses, see 31
CFR 35.6, Overview of the 2022 Final Rule, 2023 Interim Final Rule, Obligation
IFR, and SLFRF FAQs:
a. Respond to the public health and negative economic impacts of the
pandemic, by supporting the health of communities, and helping
households, small businesses, non-profits, impacted industries, and the
public sector recover from economic impacts of the pandemic.
b. 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. Note:
Recipients can use SLFRF funds under the revenue loss eligible use
category for any service traditionally provided by a government regardless
of how the recipient previously budgeted, with documentation that
sufficiently supports their funding determinations. This may include
services currently or previously provided by the recipient, an expansion of
existing services, or new services or programs.
c. 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. The SLFRF statute and the
2022 final rule provide that recipients can use SLFRF funds to provide
premium pay to eligible workers performing essential work during the
COVID-19 public health emergency. The Public Health Emergency and
National Emergency declarations terminated effective April 10, 2023.
Therefore, recipients may not use SLFRF funds to provide premium pay to
essential workers for work performed after April 10, 2023. Recipients may
continue to make payments retroactively for premium pay for work
performed between the start of the pandemic and April 10, 2023. The
obligation to provide such premium pay must not have been incurred by
the recipient prior to March 3, 2021.
d. 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.
e. Provide emergency relief from natural disasters or the negative
economic impacts of natural disasters including temporary emergency
housing, food assistance, financial assistance for lost wages, and other
immediate needs. Please see pages 4 - 8 of the Overview of the 2023
Interim Final Rule (“SLFRF Overview of the 2023 IFR”) for a complete
list of eligible uses.
Compliance Supplement 2024 4-21.027-6
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
f. Fund projects eligible under certain programs administered by the
U.S. Department of Transportation (“Surface Transportation projects”)
through three pathways. Please see pages 9 - 15 of the SLFRF Overview
of the 2023 IFR for a full list of programs; and
g. Fund projects eligible under the programs established in Title I of the
Housing and Community Development Act of 1974 (“Title I projects”),
subject to certain requirements and limitations. Please see pages 16 - 19
of the SLFRF Overview of the 2023 IFR for a list of eligible Title I
projects.
2. Activities Unallowed – The following costs are ineligible uses, restrictions, or
limitations. For full details on the general restricted uses, see the Overview of the
2022 Final Rule (page 41).
a. Offset a reduction in net tax revenue (applicable to states and territories)
b. Deposits into pension funds (applicable to all recipients except Tribes)
c. Debt service or replenishing financial reserves (e.g., “rainy day funds”)
(applicable to all recipients)
d. Satisfaction of settlements and judgments (applicable to all recipients)
e. 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)
Under the 2022 Final Rule, recipients can elect a one-time “standard allowance” of $10
million (not to exceed the recipient’s award amount) to spend on the “provision of
government services” during the period of performance. Alternatively, recipients can
calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula
provided in the 2022 Final Rule to determine the amount of SLFRF funds that can be
used for the “provision of government services.” In calculating revenue loss, recipients
can choose whether to use calendar or fiscal year dates but must be consistent throughout
the period of performance. If calculating revenue loss, recipients must provide auditors
with evidence supporting their revenue loss calculation. Treasury has determined that
there are no subawards under this eligible use category. The definition of subrecipient in
the Uniform Guidance provides that a subaward is provided for the purpose of “carrying
out” a portion of a federal award. Recipients’ use of revenue loss funds does not give rise
to subrecipient relationships.
The dollar amount of the revenue loss determines the limit for the amount of SLFRF
funds that can be used to “provide government services” (which is one of seven eligible
uses of SLFRF funds). For Schedule of Expenditures of Federal Awards (SEFA)
reporting purposes, the aggregate expenditures for all seven eligible use categories are
Compliance Supplement 2024 4-21.027-7
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
reported on the SEFA and not just the result of the revenue loss calculation or standard
allowance. See the IV, “Other Information” section below for guidance on the related
Schedule of Expenditures of Federal Award reporting.
B. Allowable Costs/Cost Principles
SLFRF is considered “other financial assistance” per 2 CFR section 200.1 and is
administered as direct payments for specified use.
The auditor is not expected to determine whether the recipient exceeded the maximum
limits for specified eligible use categories. Treasury will evaluate that the recipient was
within the limits for the eligible use categories through reviewing the recipient’s
reporting, which is subject to audit.
For the Surface Transportation projects eligible use category, recipients using SLFRF
funds for projects eligible for Urbanized Formula Grants (ALN: 20.507), Fixed
Guideway Capital Investment Grants (ALN: 20.500), Formula Grants for Rural Areas
(ALN: 20.509), State of Good Repair Grants (ALN: 20..525), or Grants for Buses and
Bus Facilities (ALN: 20.526) may not use SLFRF funds for operating expenses of these
projects. Operating expenses are those costs necessary to operate and manage a public
transportation system, including costs such as driver salaries, the cost of fuel, and the cost
of equipment and supplies having a useful life of less than one year. Operating expenses
do not include preventive maintenance activities. The limitation on operating expenses
does not apply to other Surface Transportation projects or to other uses of SLFRF funds,
including under the revenue loss eligible use category.
The 2 CFR Part 200, Subpart E is applicable to expenditures under SLFRF unless stated
otherwise. Given the purpose and very broad scope of eligible uses of the revenue
replacement funds, only a subset of the requirements in 2 CFR Part 200, Subpart E apply
to recipients’ use of such funds, as follows:
• 2 CFR 200.400(a) - (c), and (e) Policy guide;
• 200.403(a), (c), (d), (g), and (h) Factors affecting allowability of costs; and
• 200.404(e) Reasonable costs.
Per the SLFRF and CPF Supplementary Broadband Guidance (II.A.6.), Pages 2 – 3,
internet service provider (ISP) subrecipients that receive fixed amount subawards are not
required to comply with Subpart E Cost Principles of the Uniform Guidance. See
https://home.treasury.gov/system/files/136/SLFRF-and-CPF-Supplementary-Broadband-
Guidance.pdf. Please see the SLFRF and CPF Supplementary Broadband Guidance for
further explanation on what constitutes a “fixed amount award” for broadband
infrastructure projects under SLFRF and CPF.
The Uniform Guidance permits agencies to provide an exception from the cost principles
in the case of fixed amount subawards (See 2 CFR 200.1, 200.201(b), and 200.333).
Treasury has provided that recipients may issue fixed amount subawards for broadband
Compliance Supplement 2024 4-21.027-8
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
infrastructure projects without further Treasury approval regardless of whether the value
of the subaward exceeds $250,000 and that recipients are not required to apply the cost
principles of the Uniform Guidance to ISPs receiving such fixed amount subawards.
Please see the SLFRF and CPF Supplementary Broadband Guidance for further
explanation on what constitutes a “fixed amount award” for broadband infrastructure
projects under SLFRF and CPF.
G. Matching, Level of Effort, Earmarking
1. Matching
Generally, SLFRF recipients may use funds available under the revenue loss
eligible use category to satisfy non-federal matching requirements. Funds under
any other eligible use category, except as discussed below, may not be used to
satisfy non-federal matching requirements.
Funds available under the revenue loss eligible use category (sections
602(c)(1)(C) and 603(c)(1)(C) of the Social Security Act) generally may be used
to meet the non-federal cost-share or matching requirements of other federal
programs. However, note that SLFRF funds may not be used as the non-federal
share for purposes of a state’s Medicaid and Children’s Health Insurance
Programs (CHIP) because the Office of Management and Budget has approved a
waiver as requested by the Centers for Medicare & Medicaid Services pursuant to
2 CFR 200.102 of the Uniform Guidance and related regulations.
If a recipient seeks to use SLFRF funds to satisfy match or cost-share
requirements for a federal grant program, it should first confirm with the relevant
awarding agency that no waiver has been granted for that program, that no other
circumstances enumerated under 2 CFR 200.306(b) would limit the use of SLFRF
funds to meet the match or cost-share requirement, and that there is no other
statutory or regulatory impediment to using the SLFRF funds for the match or
cost-share requirement. SLFRF funds beyond those that are available under the
revenue loss eligible use category may not be used to meet the non-federal match
or cost-share requirements of other federal programs, other than as specifically
provided for by statute. As an example, the Infrastructure Investment and Jobs
Act provides that SLFRF funds may be used to meet the non-federal match
requirements of authorized Bureau of Reclamation projects and certain broadband
deployment projects. Recipients should consult the 2022 Final Rule for further
details if they seek to utilize SLFRF funds as a match for these projects.
Under the Surface Transportation projects eligible use category, recipients may
use SLFRF funds to satisfy non-federal share requirements for certain programs
under Pathway Three. Under the Title I projects eligible use category, recipients
may use SLFRF funds to satisfy the non-federal share requirements of a federal
financial assistance program in support of activities that would be eligible under
Compliance Supplement 2024 4-21.027-9
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
the Community Development Block Grant (ALN: 14.218), and Indian
Community Development Block Grant (ALN: 14.862).
Per the 2023 IFR, recipients may use SLFRF funds to provide emergency relief
from natural disasters with a Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5121 et seq.) (Stafford Act) declaration under the emergency relief
from natural disasters eligible use category. If a recipient uses SLFRF funds to
cover Stafford Act disaster losses under the emergency relief from natural
disasters eligible use category, the Stafford Act’s prohibition on duplication of
benefits applies. However, emergency relief from natural disasters eligible use
category does not permit recipients to use SLFRF funds for non-federal matching
requirements for FEMA programs.
2. Level of Effort
Under the Surface Transportation projects and Title I projects eligible use
categories, recipients must supplement, and not supplant, other federal, state,
territorial, Tribal, and local government funds (as applicable) otherwise available
for such uses. Recipients may not: 1) de-obligate funds and replace those
previously obligated amounts with SLFRF funds under this eligible use category
or 2) use SLFRF to replace federal or non-federal funds identified in a federal
commitment, such as an award agreement. This supplement, not supplant
requirement does not apply to the eligible use categories described in the 2022
final rule or the emergency relief from natural disasters eligible use category. See
the Overview of the 2023 Interim Final Rule for more information.
3. Earmarking
Recipients may use payments from SLFRF to 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.
Under the 2022 Final Rule, recipients can elect a one-time “standard allowance”
of $10 million (not to exceed the recipient’s award amount) to spend on the
“provision of government services” during the period of performance.
Alternatively, recipients can calculate lost revenue for the years 2020, 2021, 2022,
and 2023 based on the formula provided in the 2022 Final Rule to determine the
amount of SLFRF funds that can be used for the “provision of government
services.”
In calculating revenue loss, recipients can choose whether to use calendar or fiscal
year dates but must be consistent throughout the period of performance. If
calculating revenue loss, recipients must provide auditors with evidence
supporting their revenue loss calculation.
Compliance Supplement 2024 4-21.027-10
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
Under the Surface Transportation projects and Title I projects eligible use
categories, the total amount of SLFRF funds that a recipient may use for Surface
Transportation projects and Title I projects, taken together, cannot exceed the
greater of $10 million and 30% of a recipient’s SLFRF allocation. However, the
auditor is not expected to determine whether the recipient exceeded the maximum
limits for specified eligible use categories. Treasury will evaluate that the
recipient was within the limits for the eligible use categories through reviewing
the recipient’s reporting, which is subject to audit.
H. Period of Performance
For eligible use categories described in the 2022 Final Rule, recipients may only use
funds to cover costs incurred during the period beginning on March 3, 2021 and ending
on December 31, 2024, pursuant to the 2022 Final Rule at 31 CFR section 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,
program obligations or costs must be incurred from the period beginning on March 3,
2021 and ending on December 31, 2024. No new obligations or costs may be incurred
during the period beginning January 1, 2025 and ending on December 31, 2026. During
this two-year period from January 1, 2025, through December 31, 2026, recipients are
only permitted to expend funds to satisfy obligations incurred by December 31, 2024.
For eligible use categories described in the 2023 Interim Final Rule, recipients may use
SLFRF funds for the three new eligible uses for costs incurred beginning December 29,
2022. Consistent with the existing eligible uses, recipients must obligate SLFRF funds for
the new eligible uses by December 31, 2024. An ‘‘obligation’’ continues to include an
order placed for property and services and entry into contracts, subawards, and similar
transactions that require payment. However, under the revised definition, a recipient is
also considered to have incurred an obligation by December 31, 2024, with respect to a
requirement under federal law or regulation or a provision of the SLFRF award terms and
conditions to which the recipient becomes subject as a result of receiving or expending
SLFRF funds per the Obligation Interim Final Rule. Recipients must expend SLFRF
funds obligated to provide emergency relief from natural disasters by December 31,
2026. Recipients must expend SLFRF funds obligated for Surface Transportation projects
and Title I projects by September 30, 2026. Costs for projects described in the 2023
Interim Final Rule that are incurred by the recipient prior to December 29, 2022 are not
eligible under these three eligible use categories.
I. Procurement and Suspension and Debarment
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 42 USC
sections 802(c) and 803(c) and Treasury’s 2021 Interim Final Rule, and 2022 Final Rule,
Compliance Supplement 2024 4-21.027-11
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
and 2023 Interim Final Rule. As such, except as noted in the next paragraph, recipients
are expected to have procurement policies and procedures in place that comply with the
procurement standards outlined in the Uniform Guidance.
In July 2022, Treasury released Final Rule FAQ 13.15, which explains that only a subset
of the requirements in Subparts D and E of the Uniform Guidance apply to recipients’ use
of award funds under the revenue loss eligible use category. The requirements of 2 CFR
sections 200.318 through 200.327 are not included in the list of requirements applicable
to such funds.
Recipients may also refer to section 13 of the Final Rule FAQs, which includes FAQs
related to procurement and other Uniform Guidance-related topics.
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
Title of Report: Project and Expenditure Report
PRA Number: 1505-0271
Reporting Cycle: Quarterly and Annual for more details see section B.1-B.2 in
the SLFRF Compliance and Reporting Guidance (pages 18-19).
Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c)
Reporting and requests for other information
Recipient Compliance and Reporting responsibilities 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.-
----------------------------
Report Instructions is located at: Reporting guidance is on pages 16 through 34 of
https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-
Guidance.pdf.
Report Corrections: Recipients will have an opportunity to reopen and provide
edits to their submitted Project and Expenditure Reports any time before the
reporting deadline. Recipients will then be required to re-certify and submit the
report again to properly reflect any edits made. After the reporting deadline,
Compliance Supplement 2024 4-21.027-12
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
unless prompted by Treasury staff, recipients will not be able to edit their
submitted report, any changes or revisions will need to be reflected in the next
Project and Expenditure report.
The Office of Recovery Program’s (ORP) reporting portal has built-in
functionality to reopen a report and allow recipients to make edits after the
reporting deadline. However, it is ORP’s policy that recipients may only make
revisions if authorized by Treasury staff for a period of up to 60 days after the
reporting deadline. After the revision period ends, the report is final. A
resubmitted report becomes a recipient’s final report within ORP’s reporting
portal. Recipients can generate PDFs of reports at any time.
Key Line Item(s)- The following line items contain critical information:
1. Obligations and Expenditures- Quantifiable Objective Criteria:
Reported obligations and expenditures. (See pages 16 and 17 of the above
links.)
a. Current period obligation
b. Cumulative obligation
c. Current period expenditure
d. Cumulative expenditure
Revenue loss calculation validation – Note-Recipients may elect a
“standard allowance” of up to $10 million to spend on government
services through the period of performance instead of using the full
formula specified in the final rule. The standard allowance is available to
all recipients. See page 30 for when recipients may modify their revenue
loss election. Quantifiable Objective Criteria: Recipient’s application of
the revenue loss calculation is accurate if they did not elect the standard
allowance. Specific information regarding the revenue loss formula can be
found in paragraph (d)(2) of 31 CFR § 35.6.
2. Capital Expenditures- Quantifiable Objective Criteria: The recipient has
the required written justification in their grant file if the total of the capital
expenditures costs for a project within the public health and negative
economic impact eligible use category described in the 2022 Final Rule is
greater than or equal to $1 million and less than $10 million; or, the
recipient submitted the required justification to Treasury if (1) a project
has total capital expenditures costs greater than $10 million for capital
expenditures enumerated by Treasury in the 2022 Final Rule; or (2) the
total of a project’s capital expenditures costs is greater than $1 million for
capital expenditures not enumerated by Treasury in the 2022 Final Rule.
The recipient has submitted the required written justification to Treasury if
the total of the capital expenditure costs for a project that is a mitigation
activity within the emergency relief from natural disasters eligible use
Compliance Supplement 2024 4-21.027-13
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
category described in the 2023 interim final rule is greater than $1 million.
Note: Capital expenditures paid for using revenue replacement funds are
not subject to this requirement. Tribal governments are not required to
complete the written justification. (See 31 CFR section 35.6(b)(4))
3. Special Reporting
Not Applicable
4. Special Reporting for Federal Funding Accountability and Transparency Act
(FFATA)
Not Applicable
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 CSLFRF.
b. Although reporting on subaward information is applicable to SLFRF
recipients pursuant to the award term set forth in Appendix A to 2 CFR
Part 170, which is incorporated by reference in the SLFRF Financial
Assistance Agreement, SLFRF recipients’ compliance with FFATA
reporting requirements is not subject to audit.
M. Subrecipient Monitoring
See Part 3, Section M, “Subrecipient Monitoring” for a general description of the
compliance requirements, the related audit objectives, and suggested audit procedures.
Note that subrecipient monitoring is not required for entities deemed to be beneficiaries.
Because NEUs are considered by Treasury to be direct recipients of SLFRF (and not
subrecipients or beneficiaries), states have no subrecipient monitoring responsibilities
related to the funds distributed to NEUs.
Subrecipient monitoring is required by pass-through entities for all SLFRF funded
projects. For broadband infrastructure investment projects, auditors should refer to
Treasury’s SLFRF and CPF Supplementary Broadband Guidance for special applicability
considerations of the following 2 CFR 200 requirements to ISP subrecipients
implementing broadband projects:
• Program income
• Cost principles, procurement practices and fixed amount subawards
• Ownership of Infrastructure
• Audit and monitoring requirements
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
CFR Part 200, Subpart F, but funding provided to subrecipients is subject to those audit
Compliance Supplement 2024 4-21.027-14
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
requirements. For example, when recipients of SLFRF provide award funds to entities to
respond to the negative economic impacts of COVID-19 as end users, and not for the
purpose of carrying out program requirements, the entities receiving such funding are
beneficiaries of SLFRF. Alternatively, when recipients of SLFRF provide award funds to
an entity to carry out a program on behalf of the SLFRF recipient, the entities receiving
such funding are subrecipients.
Recipients may permit for-profit subrecipients to submit a consolidated audit that reflects
their SLFRF expenditures across subawards and programs.
Also as discussed in SLFRF FAQ 13.14, Treasury has determined that there are no
subawards under the revenue loss eligible use category because a recipients’ use of
revenue loss funds does not give rise to subrecipient relationships given that there is no
federal program or purpose to carry out in the case of the revenue loss portion of the
award. Therefore, subrecipient monitoring is not applicable to Expenditure Category
Group 6 “Revenue Replacement.” However, projects undertaken via revenue loss do not
lose their federal character. FAQ 13.15 specifies which requirements of the Uniformed
Guidance apply to revenue loss funds.
Treasury has determined that there are no subawards under this eligible use category. The
definition of subrecipient in the Uniform Guidance provides that a subaward is provided
for the purpose of “carrying out” a portion of a federal award. Recipients’ use of revenue
loss funds does not give rise to subrecipient relationships.
IV. OTHER INFORMATION
Please refer to the section entitled “Source of the Governing Requirements” above.
Schedule of Expenditures of Federal Awards (SEFA)
As noted above in Activities Allowed or Unallowed, the dollar amount of the revenue loss
determines the limit for the amount of SLFRF funds that can be used to “provide government
services” (which is one of seven eligible uses of SLFRF funds). For SEFA reporting purposes,
the aggregate expenditures for all seven eligible use categories are reported on the SEFA and not
the result of the revenue loss calculation or standard allowance.
Additionally, because NEUs are considered direct recipients under SLFRF, NEUs that do not
elect or are not eligible for the alternative compliance examination engagement 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.
The dollar amount of the revenue loss determines the limit for the amount of SLFRF funds that
can be used to “provide government services” (which is one of seven eligible uses of SLFRF
funds). For Schedule of Expenditures of Federal Awards (SEFA) reporting purposes, the
aggregate expenditures for all seven eligible use categories are reported on the SEFA and not the
Compliance Supplement 2024 4-21.027-15
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
result of the revenue loss calculation or standard allowance. See the IV, “Other Information”
section below for guidance on the related Schedule of Expenditures of Federal Award reporting.
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.
Section 2: Engagements Performed Under the Alternative Approach
I. ALTERNATIVE APPROACH OBJECTIVES
Treasury recognizes that many recipients of 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 direct federal financial assistance before, or the
other federal financial assistance they expended did not exceed the $750,000 audit threshold
set forth at 2 CFR 200.501(a). This section describes an alternative approach for SLFRF
recipients permitted by OMB that would otherwise not be required to undergo an audit
pursuant to 2 CFR Part 200, Subpart F, if it was not for the expenditures of SLFRF funds
directly awarded by Treasury as further described in the 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.
A. 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 a good steward of federal funds. This balance of burden reduction
and Treasury responsibility to be a good steward is achieved in several ways as
follows:
1. A financial statement audit is not required for those eligible recipients
that expend award funds from other Federal programs.
2. A compliance examination engagement simplifies the engagement for
Compliance Supplement 2024 4-21.027-16
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
both recipients and practitioners.
3. A formal schedule of expenditures of federal awards is not required as
the practitioner opines directly on compliance for a single program.
4. 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.
5. 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.
6. The engagement reporting is simplified as compared to the 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. 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 an NEU is at or below $10 million; and
2. Other federal award funds the recipient expended (not including their
direct SLFRF award funds) are less than $750,000 during the recipient’s
fiscal year.
Compliance Supplement 2024 4-21.027-17
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
C. Program Objectives
SLFRF provides direct payments to states (defined to include the District of Columbia),
US territories (defined to include Puerto Rico, US Virgin Islands, Guam, Northern
Mariana Islands, and American Samoa), Tribal governments, metropolitan cities,
counties, and (through states) NEU (collectively the “eligible entities”) to:
1. Respond to the public health emergency with respect to COVID-19 or its
negative economic impacts, 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;
3. Provide government services, to the extent of the reduction in revenue of the
eligible entities due to the COVID-19 public health emergency relative to
revenues collected in the most recent full fiscal year of the eligible entities prior
to the emergency;
4. Make necessary investments in water, sewer, or broadband infrastructure;
5. Provide emergency relief from natural disasters or the negative economic impacts
of natural disasters including temporary emergency housing, food assistance,
financial assistance for lost wages, and other immediate needs. Please see pages 4
- 8 of the Overview of the 2023 Interim Final Rule (SLFRF Overview of the 2023
IFR) for a complete list of eligible uses;
6. Use funds for projects eligible under 26 programs administered by the U.S.
Department of Transportation (“Surface Transportation projects”). Please see
pages 9 - 15 of the SLFRF Overview of the 2023 IFR for a full list of programs;
and
7. Use funds for projects eligible under Title I of the Housing and Community
Development Act of 1974 (“Title I projects”). Please see pages 16 - 19 of the
SLFRF Overview of the 2023 IFR for a list of eligible Title I projects.
Compliance Supplement 2024 4-21.027-18
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
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),
codified at 42 USC 802 and 803, and as amended by the Consolidated Appropriations
Act, 2023 (“2023 CAA”), Pub. L. No. 117-328 (Dec. 29, 2022), authorized the
Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery
Fund, respectively (referred to collectively as the “Coronavirus State and Local Fiscal
Recovery Funds” or “SLFRF”). SLFRF is administered by the U.S. Department of the
Treasury (Treasury) and provides assistance in the form of direct payments for
specified uses. SLFRF provides $350 billion for payments to eligible entities.
The total allocations to the eligible entities under SLFRF are as follows:
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 US 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 NEUs.
Amounts paid to eligible states and local governments were based on 2019 population
data from the US Census Bureau as well as latest available data from the Bureau of
Labor Statistics at the time of the issuance of Treasury’s 2021 Interim Final Rule on
May 17, 2021. Treasury made a determination to allocate payments to Tribal
governments based on enrollment reported to the Bureau of Indian Affairs 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 well as the
certification required by 42 USC 802(d)(1). Tribal and local governments are not
required to provide such certification as a condition of receiving an award under
SLFRF. Eligible entities are required to use their award funds as set forth in 42 USC
sections 802(c) and 803(c) and the SLFRF regulations set forth at 31 CFR Part 35, Subpart
A, to meet pandemic response needs and rebuild a strong, more equitable economy as
the country recovers.
Compliance Supplement 2024 4-21.027-19
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
Source of Governing Requirements
The SLFRF 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 at 42 USC sections 802 and 803, and as amended by the 2023 Consolidated
Appropriations Act (2023 CAA). The U.S. Department of the Treasury (Treasury) has
implemented the statutory provisions applicable to FY 2024 through the 2021 Interim Final Rule,
2022 Final Rule, 2023 Interim Final Rule at 31 CFR Part 35, Subpart A, as well as the
Obligation Interim Final Rule.
On January 6, 2022, the Treasury adopted the 2022 Final Rule to implement the requirements of
the SLFRF program. The Final Rule responded to comments Treasury received on the 2021
Interim Final Rule and took effect on April 1, 2022. Until that time, the Interim Final Rule
remained in effect. Auditors should note that if a recipient obligated funds in accordance with the
2021 Interim Final Rule, then the expenditures follow the requirements of the Interim Final Rule.
Treasury issued the Statement Regarding Compliance with the Coronavirus State and Local
Fiscal Recovery Funds 2021 Interim Final Rule and 2022 Final Rule (the Statement) that
clarifies the transition from compliance with the 2021 Interim Final Rule to compliance with the
2022 Final Rule. Recipients must comply with the 2022 Final Rule beginning on April 1, 2022,
when the 2022 Final Rule took effect. Prior to April 1, 2022, recipients may take actions and use
funds in a manner consistent with the 2022 Final Rule, and Treasury will not take action to
enforce the 2021 Interim Final Rule if a use of funds is consistent with the terms of the 2022
Final Rule, regardless of when the SLFRF funds were used. Please see pages 3-4 of the
Statement for specific guidance. For example, a recipient is not required to prepare or submit a
written justification as required under the 2022 Final Rule for capital expenditures under the
public health-negative economic impact eligible use category if the recipient (i) has taken
significant steps toward obligating SLFRF funds for that project prior to January 6, 2022, or (ii)
has obligated funds for such project prior to April 1, 2022.
Recipients must follow the requirements on award funds expended for their fiscal year 2024
based on the requirements set forth in 42 USC sections 802 and 803, Treasury’s 2021 Interim
Final Rule, Treasury’s 2022 Final Rule, and Frequently Asked Questions (FAQs), as applicable.
Auditors should note that the Consolidated Appropriations Act, 2023 amended Sections 602 and
603 of the Social Security Act to provide state, local, and Tribal governments the flexibility to
use SLFRF funds for additional eligible uses. See Division LL, Section 102 of the Consolidated
Appropriations Act, 2021 for the original eligible uses. On September 20, 2023, the 2023
Interim Final Rule was published in the Federal Register and became effective. An additional
resource that provides information on the 2023 Interim Final Rule is the Overview of the 2023
Interim Final Rule.
Treasury also issued an Interim Final Rule describing an amendment to the definition of
obligation in 31 CFR 35.3 and related guidance updates via the “Obligation IFR.” The
Obligation IFR was published in the Federal Register on November 20, 2023. See page 6 of the
Obligation IFR for the definition.
Compliance Supplement 2024 4-21.027-20
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
Availability of Other Program Information
Additional information on the requirements for SLFRF is available through the program
webpage on Treasury’s website at Coronavirus State and Local Fiscal Recovery Funds | US
Department of the Treasury.
SLFRF’s Compliance and Reporting Guidance can be found at Recipient Compliance and
Reporting Responsibilities | US Department of the Treasury.
The Compliance and Reporting Guidance provides additional detail and clarification for each
recipient’s compliance and reporting responsibilities and should be read in concert with the
Award Terms and Conditions. (Please refer to: https://home.treasury.gov/policy-
issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-
recovery-fund/request-funding), the authorizing statute, the 2021 Interim Final Rule, 2022 Final
Rule, and the 2023 Interim Final Rule, as applicable, and other regulatory and statutory
requirements.
SLFRF FAQs are available 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.
The FAQ documents include existing FAQs that address questions regarding the 2022 final rule,
existing FAQs that have been updated to address the new eligible uses discussed in the 2023
interim final rule and the guidance in the Obligation IFR, and new FAQs that address the new
eligible uses discussed in the 2023 interim final rule.
See https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-FAQ.pdf.
Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds
2021 Interim Final Rule and 2022 Final Rule can be found at
https://home.treasury.gov/system/files/136/SLFRF-Compliance-Statement.pdf.
The Statement clarifies the transition from compliance with the 2021 Interim Final Rule to
compliance with the 2022 Final Rule. Recipients should also review the 2022 Final Rule for
additional information.
Additionally, the Overview of the 2023 Interim Final Rule provides information regarding the
2023 Interim Final Rule.
III. COMPLIANCE REQUIREMENTS
Preconditions for the Compliance Examination Engagement- ACEEs should be performed
consistent with, and in addition GAO’s Government Auditing Standards, AT-C 205,
Examination Engagements, and AT-C 315, Compliance Attestation. As a precondition to this
compliance examination engagement, the practitioner should determine that:
1. management can provide evidence to the practitioner that it meets the recipient
Compliance Supplement 2024 4-21.027-21
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
eligibility criteria for the alternative compliance examination engagement as
outlined in Section A, “Recipient Eligibility”;
2. management accepts responsibility for the entity's compliance with the
compliance requirements below and the entity's internal control over compliance;
and
3. 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, Procurement
Equipment/
Cash
Period
Activities Allowable
Level of Effort, Subrecipient Special
Eligibility Reporting
Allowed or Costs/Cost Real Property Of Suspension & Program Tests and
Unallowed Principles Management Management Earmarking Performance Debarment Income Monitoring Provisions
Y Y N N N N N N N N N N
A. Activities Allowed or Unallowed
Examination Objective: Determine whether the recipients used SLFRF funds for
ineligible uses. For full details on the general restricted uses, see SLFRF Final Rule
Overview (page 41) and Overview of the 2023 Interim Final Rule (pages 11, 13, and 19).
Recipients may use SLFRF 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, as codified by 42 USC sections 802 and 803, and
as amended by the 2023 CAA. Recipients may also use payments subject to the
restrictions set forth in the 2021 Interim Final Rule, 2022 Final Rule, and 2023 Interim
Final Rule at 31 CFR Part 35, and FAQs available at
https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-FAQ.pdf.
1. Activities Allowed – Suggested Examination Procedures
a. Obtain an understanding of the design of relevant portions of internal
control over compliance regarding unallowable activities by performing
Compliance Supplement 2024 4-21.027-22
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
some or all of the following:
(1) Inquiries of appropriate management, supervisory, and staff
personnel
(2) Inspection of the entity's relevant documents
(3) Observation of the entity's activities and operations
b. Review a sample of SLFRF expenditures to determine if recipients used
SLFRF funds for ineligible uses. For full details of eligible uses, see 31
CFR 35.6 and the 2022 Final Rule FAQs.
2. Activities Unallowed – The following activities are ineligible uses, restrictions,
or limitations. For full details on the general restricted uses, see the Overview
of the 2022 Final Rule (page 41).:
a. Offset a reduction in net tax revenue (applicable to states and territories)
b. Deposits into pension funds (applicable to all recipients except Tribes)
c. Debt service or replenishing financial reserves (e.g., “rainy day funds”)
(applicable to all recipients)
d. Satisfaction of settlements and judgments (applicable to all recipients)
e. 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)
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.
2022 Final Rule FAQ 13.15 outlines that given the purpose and very broad scope of
eligible uses of the revenue replacement funds, only a subset of the requirements in 2
CFR part 200, Subpart E apply to recipients’ use of such funds, as follows:
• 2 CFR 200.400(a) - (c), and (e) Policy guide;
• 200.403(a), (c), (d), (g), and (h) Factors affecting allowability of costs; and
Compliance Supplement 2024 4-21.027-23
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
• 200.404(e) Reasonable costs.
Examination Objective – Determine whether the recipient significantly deviated from
its established practices and policies regarding the incurrence of costs.
1. Suggested Examination Procedures
a. 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:
(1) Inquiries of appropriate management, supervisory, and staff
personnel
(2) Inspection of the entity's relevant documents
(3) Observation of the entity's activities and operations
b. Test a sample of SLFRF expenditures to determine that the recipient
treated costs consistently with its established practices and policies.
L. 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 Government Auditing Standards.
IV. OTHER INFORMATION
COMPLIANCE EXAMINATION ENGAGEMENT SUBMISSION
INSTRUCTIONS
The submission deadlines for the alternative compliance examination engagement
(ACEE) 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 by the auditee 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. The repository of the alternative compliance examination
is expected to eventually be the Federal Audit Clearinghouse at www.fac.gov.
However, at the time of this Supplement’s issuance, the FAC is unable to accept the
alternative compliance examination engagement submissions. Treasury will be posting
Compliance Supplement 2024 4-21.027-24
May 2024 Coronavirus State and Local Fiscal Recovery Funds Treasury
additional instructions for where and how to submit the results of the ACEE on the
Coronavirus State and Local Fiscal Recovery Funds’ website. The FAC will also
include updates on its ability to accept the ACEE on the FAC Web site.
Also, please refer to the related SLFRF certification statement on page 13 of the Single
Audit Checklist, Instructions, and Form located at
https://facides.census.gov/Files/2022%20Checklist%20Instructions%20and%20Form.
pdf.
Compliance Supplement 2024 4-21.027-25
May 2024 Higher Risk Designation
APPENDIX IV
HIGHER RISK DESIGNATION
INTRODUCTION
This Appendix includes a listing of programs with a “higher risk” designation and describes how that
designation impacts the major program determination process.
PROGRAMS WITH “HIGHER RISK” DESIGNATION
Uniform Guidance section 200.519(c)(2) states that “Federal agencies, with the concurrence of
OMB, may identify Federal programs that are higher risk. It also states that OMB will provide
this identification in the Compliance Supplement.”
As a result of the COVID-19 pandemic, many new federal programs were established and
funding was added to existing federal programs from the following Acts:
• Coronavirus Preparedness and Response Supplemental Appropriations Act
• Families First Coronavirus Response Act
• Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
• Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA)
• American Rescue Plan Act (ARP)
Funding arising from these sources is referred to as “COVID-19 funding,” or “COVID-19
programs”.
On November 15, 2021, the Infrastructure Investment and Jobs Act (IIJA) was signed into law.
It established new programs and provided additional funding for existing programs. Funding
arising from the IIJA is referred to as “IIJA funding” or “IIJA program”. The 2024 higher risk
list includes one program that includes IIJA funding.
The following table includes a complete list of programs that have been identified as “higher
risk” for audits subject to the 2024 Compliance Supplement either because of COVID-19
funding, IIJA funding, or because a Federal agency has identified the program to be higher risk.
Compliance Supplement 2024 8-IV-1 Appendix IV
May 2024 Higher Risk Designation
Agency Assistance Listing Number Title
(ALN)
HHS** 93.778/93.777/93.775 Medicaid Cluster
Treasury* 21.023 Emergency Rental Assistance
Treasury* 21.027 Coronavirus State and Local Fiscal Recovery
Funds
Interior** 15.252 Abandoned Mine Land Reclamation (AMLR)
Note:
* These programs were created by one of the laws cited at the beginning of this section and are
thus considered 100% COVID-19 funding.
** These programs were existing programs that received additional IIJA or COVID-19 funding
from one or more of the laws cited at the beginning of this section.
Impact of “Higher Risk” Status on Major Program Determination
Type A Program Considerations
A “higher risk” designation will often result in a Type A program or other cluster being audited
as a major program. However, an auditor is not precluded from determining that a “higher risk”
Type A program or other cluster qualifies as a low risk Type A program if both of the following
criteria are met:
1. the program otherwise meets the criteria for a low risk Type A program in section
200.518 of the Uniform Guidance; and
2. the percentage of COVID-19 funding or IIJA funding in the program or other cluster
during the non-federal entity’s fiscal year is not material to the program or other cluster
as a whole. For example, a recipient’s schedule of expenditures of federal awards may
include the Medicaid Cluster but the expenditures relevant to COVID-19 funding
included in the program during the June 30, 2024, fiscal year end is not material.
Alternatively, a recipient’s schedule of expenditures of federal awards may include
Emergency Rental Assistance expenditures for the June 30, 2024, fiscal year end, which
would be considered material because COVID-19 funding comprises the entire program.
Note that the inclusion of COVID-19 funding or IIJA funding within the Research &
Development (R&D) cluster does not create a “higher risk” designation for the R&D cluster.
Auditors should prepare audit documentation supporting the risk considerations and conclusions
for “higher risk” programs.
Compliance Supplement 2024 8-IV-2 Appendix IV
May 2024 Higher Risk Designation
Type B Program Considerations
Under section 200.518 of the Uniform Guidance, in certain circumstances the auditor must
identify Type B programs that are high risk using professional judgment and the criteria in section
200.519 of the Uniform Guidance, which includes consideration of whether a program has been
identified as “higher risk” by a Federal agency with the concurrence of OMB. Thus, there are no
changes to the normal risk assessment process for Type B programs identified as “higher risk.”
That is, the “higher risk” identification must be considered with the other factors in section
200.519.
Further, the auditor is not required to prioritize the assessment of risk for “higher risk” Type B
programs over other Type B programs.
Compliance Supplement 2024 8-IV-3 Appendix IV
May 2024 Other Audit Advisories
APPENDIX VII
OTHER AUDIT ADVISORIES
I. Novel Coronavirus (COVID-19)
This section provides guidance to the following areas affecting single audits arising due to
COVID-19:
• Definition of COVID-19 funding
• Treatment of donated personal protective equipment (PPE) on the Schedule of
Expenditures of Federal Awards (SEFA)
• Agency Guidance Document References
• Identification of COVID-19 related awards and single audit applicability
• Identification of COVID-19 related awards on the SEFA and SF-SAC
• Identification of COVID-19 related awards in audit findings
• Identification of compliance requirements for COVID-19 related awards
• Responsibilities for informing subrecipients
• Alternative Compliance Examination Engagement for Eligible SLFRF Recipients
Definition of COVID-19 Funding
As a result of the COVID-19 pandemic, many new federal programs have been established and
funding has been added to existing federal programs from the following Acts:
• Coronavirus Preparedness and Response Supplemental Appropriations Act
• Families First Coronavirus Response Act
• Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
• Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA)
• American Rescue Plan Act (ARP)
Funding arising from these sources, both to new and existing programs, is referred to as
“COVID-19 funding,” “COVID-19 programs,” or “COVID-19 related awards” throughout this
section. Refer also to Appendix IV, Higher Risk Designation, for a listing of programs with a
Compliance Supplement 2024 8-VII-1 Appendix VII
May 2024 Other Audit Advisories
“higher risk” designation, many of which involve COVID-19 funding, and for information about
how that designation impacts the major program determination process.
Donated Personal Protective Equipment (PPE)
During the emergency period of COVID-19 pandemic and as allowed under OMB Memorandum
M-20-20 (April 9, 2020), federal agencies and recipients can donate PPE purchased with federal
assistance funds to various entities for the COVID-19 response. The donated PPE were mostly
provided without any compliance or reporting requirements or Assistance Listing information
from the donors. As such, the non-federal entities that received donated PPE should provide the
fair market value of the PPE at the time of receipt as a stand-alone footnote accompanying their
SEFA. The amount of donated PPE should not be counted for purposes of determining the
threshold for a single audit or determining the type A/B threshold for major programs and is not
required to be audited as a major program. Because donated PPE has no bearing on the single
audit, the donated PPE footnote may be marked “unaudited.”
As a reminder, the above only relates to donated PPE provided without any compliance or
reporting requirements or assistance listing from donors. There could be some PPE that must
appear on the SEFA as a federal program (e.g., when the recipient uses funds provided under an
Assistance Listing to purchase PPE).
Agency Guidance Document References for COVID-19 Programs
The COVID-19 pandemic has led many federal agencies to issue implementing guidance (e.g.,
frequently asked questions, memos) outside of the normal regulatory process for new and
existing programs receiving COVID-19 funding. Such guidance is issued to communicate an
agency’s understanding of how the relevant statutes, regulations, or the terms and conditions of
the federal awards and apply to a particular circumstance, but it does not create new compliance
requirements. Due to the evolving nature of the pandemic environment, it has been common for
federal agencies to update, change, or delete their specific guidance over time.
The Part 4 sections for COVID-19 programs often refer auditors to agency guidance documents
to obtain a better understanding of statutory and regulatory compliance requirements subject to
audit. When evaluating a non-federal entity’s compliance, auditors must consider provisions of
federal statutes, regulations, and the terms and conditions of federal awards. However, auditors
may also consider guidance documents in effect during the period to understand the program
requirements. An auditor may conclude whether the non-federal entity is in compliance with a
type of compliance requirement based on consideration of applicable implementing guidance in
effect at the time of the activity or transaction.
When citing criteria for audit findings, 2 CFR 200.516(b)(2) states that the following information
must be included in finding detail: “The criteria or specific requirement upon which the finding
is based, including the Federal statutes, regulations, or the terms and conditions of the Federal
awards.” Therefore, auditors should refer to a statute, regulation, or term and condition as criteria
for the audit finding.
Compliance Supplement 2024 8-VII-2 Appendix VII
May 2024 Other Audit Advisories
Identification of COVID-19 Related Awards and Single Audit Applicability
Federal agencies may have incorporated COVID-19 funding into an existing program and
Assistance Listing number or set up a separate COVID-19 program with a unique Assistance
Listing number. Federal agencies are required to specifically identify COVID-19 related awards,
regardless of whether the funding is provided under a new or existing Assistance Listing number.
However, in the early days of the crisis caused by the COVID-19 pandemic with the need to
respond quickly, in some cases cash was sent to non-federal entities without application or
Assistance Listing number. The non-federal entity was required to either agree to the terms and
conditions or return the funds.
When COVID-19 funding is subawarded by a pass-through entity from an existing program, the
information furnished to subrecipients should distinguish the subawards of incremental COVID-
19 funding included in the subawards from non-COVID-19 funding.
In order to assist recipients and auditors in the identification of all the COVID-19 funds and their
related program Assistance Listing numbers, OMB has issued several summaries of federal
programs that were created by COVID-19 funding and also existing programs that received
COVID-19 funding. A summary of programs that received funding under the CARES Act (and
other earlier COVID-19 legislation) as of May 20, 2020, can be accessed at: M-20-
21_FAQ_07312020_UPDATED.pdf (cfo.gov). A summary of programs that received funding
under the ARP Act as of October 29, 2021, can be found at: Revised-American-Rescue-Plan-
Assistance-Listings_10-29-2021.pdf (cfo.gov). Each summary includes program Assistance
Listing numbers and an asterisk (*) next to Assistance Listing numbers denoting a new
Assistance Listing number.
Identification of COVID-19 Related Awards on the SEFA and SF-SAC
As described in 2 CFR section 200.510(b), auditees must complete the SEFA and include
Assistance Listing numbers when reporting their federal awards and subawards. To maximize
the transparency and accountability of COVID-19 related award expenditures, OMB M-20-26
(June 18, 2020) instructed recipients and subrecipients to separately identify the COVID-19
Emergency Acts expenditures on the Schedules of Expenditures of Federal Awards. Therefore,
non-federal entities should separately identify COVID-19 expenditures on the SEFA and SF-
SAC. For existing programs that have both COVID-19 expenditures and non-COVID-19
expenditures, this may be accomplished by identifying COVID-19 expenditures on the:
• SEFA – On a separate line by Assistance Listing number with “COVID-19” as a
prefix to the program name. For example:
o COVID-19 – Temporary Assistance for Needy Families – 93.558
$1,000,000
o Temporary Assistance for Needy Families – 93.558 – $3,000,000
o Total – Temporary Assistance for Needy Families – 93.558 – $4,000,000
• SF-SAC – On a separate row by Assistance Listing number with “COVID-19”
listed in the Additional Award Identification and Federal Program Name column.
Example:
Compliance Supplement 2024 8-VII-3 Appendix VII
May 2024 Other Audit Advisories
B C D E F
ALN (CFDA)
Federal Three Digit Additional Award
_Agency Prefix Extension Identification Federal Program Name Amount Expended Federal Program Total
93 558 TEMPORARY ASSISTANCE FOR NEEDY FAMI LIES $3,000,000 $4,000,000
93 '55g COVID-19 COVID-19 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES $1,000,000 $4,000,000
$0
$0
$0
$0
Identification of COVID-19 Related Awards in Audit Findings
Consistent with identifying COVID-19 expenditures on the SEFA, auditors should include the
COVID-19 identification for audit findings that are applicable to programs that are entirely
COVID-19 funded and existing programs with COVID-19 funding.
Identification of Compliance Requirements for COVID-19 Related Awards
As noted in OMB Memorandum M-20-26 (June 18, 2020), federal awarding agencies are
responsible for identifying COVID-19 related awards and communicating the applicable
compliance requirements to the recipient. Similarly, pass-through entities are responsible for
identifying COVID-19 related awards and communicating the applicable requirements to their
subrecipients. Normally, this information would be in the award terms and conditions. However,
for COVID-19 related awards, the compliance requirements may have been communicated
through an agency website and the compliance requirements may have been modified or
compliance requirements not included in original terms and conditions may have been added.
For COVID-19 related programs that are not included in this Supplement, the auditor must use
the framework provided by Part 7 of this Supplement. Part 7 includes procedures to determine
which of the compliance requirements to test.
Responsibilities for Informing Subrecipients
As noted in OMB Memorandum M-20-26 (June 18, 2020), pass-through entities agree to
separately identify to each subrecipient, and document at the time of subaward and at the time of
disbursement of funds, the federal award number, Assistance Listing number, and amount of
COVID-19 funds. When COVID-19 funds are subawarded for an existing program, the
information furnished to subrecipients should distinguish the subawards of incremental COVID-
19 funds from regular subawards under the existing program.
This information is needed to allow the pass-through entity to properly monitor subrecipient
expenditures of COVID-19 funds, as well as for oversight by the federal awarding agencies,
Federal Offices of Inspector General, and the Government Accountability Office.
Compliance Supplement 2024 8-VII-4 Appendix VII
May 2024 Other Audit Advisories
Alternative Compliance Examination Engagement for Eligible SLFRF Recipients
The US Department of the Treasury (“Treasury”) recognizes that many recipients of Coronavirus
State and Local Fiscal Recovery Funds (“SLFRF”) may now 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). As a result, Treasury has developed an alternative approach that is available for
SLFRF recipients that would otherwise not be required to undergo an audit pursuant to 2 CFR
Part 200, Subpart F, if it were not for the expenditures of SLFRF funds directly awarded by
Treasury.
The alternative compliance examination engagement is in accordance with the Government
Accountability Office’s Government Auditing Standards. It is also in lieu of a full single audit or
program-specific audit as required per 2 CFR 200, Subpart F. The alternative approach along
with the criteria for eligible recipients are detailed in the Part 4 – Section IV, “Other
Information” of assistance listing 21.027 – Coronavirus State and Local Recovery Funds.
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.
II. Effect of Changes to Compliance Requirements and Other Clusters
Removal of Compliance Requirement from Part 2 Matrix
In any instance in which a compliance requirement has been removed from a program/cluster, as
shown in the Part 2 matrix, if there was an audit finding related to that compliance requirement
in an audit conducted using the prior year’s Supplement that finding must continue to be reported
in the summary schedule of prior audit findings and considered in the major program
determination under 2 CFR section 200.518. The procedures to assess the reasonableness of the
summary schedule of prior year audit findings must include all prior audit findings included in
the summary schedule, regardless of whether the current Part 2 matrix identified a requirement
subject to audit. For example, if there was an audit finding relating to subrecipient monitoring in
the prior year but the current year Part 2 matrix identified “M. Subrecipient Monitoring” as not
subject to audit with a “No,” the auditor’s procedures to determine the reasonableness of the
summary schedule of prior audit findings must include subrecipient monitoring. In any instance
in which a compliance requirement was added to a program/cluster in the current year’s
Supplement, auditors are not expected to have tested for that requirement under the prior year’s
audit. This includes correction of an error, if any, as identified in Appendix V of the Supplement.
Addition of a New Program to an Other Cluster
One of the criteria for an “other cluster” to be considered a low-risk Type A program is that it
must have been audited as a major program in at least one of the two most recent audit periods
Compliance Supplement 2024 8-VII-5 Appendix VII
May 2024 Other Audit Advisories
(“2-year look back” under 2 CFR section 200.518(c)(1)). In the year that this Supplement adds a
new program to another cluster listed in Part 5, the determination of whether the resulting other
cluster meets the 2-year look back criterion requires additional consideration. During that year,
the other cluster cannot qualify as having been audited as a major program in one of the two
most recent audit periods unless the auditee’s current-year expenditures for the newly added
program were less than or equal to 25 percent (0.25) of the Type A threshold, or all of the
programs included in the resulting other cluster met the “2-year look back” criterion. The
additional criteria in 2 CFR section 200.518(c) must also be evaluated by the auditor to
determine if the other cluster can be considered a low-risk Type A program in the current year.
In years after this Supplement adds a program to another cluster, such addition in a prior year
does not require additional consideration for the 2-year look back criterion.
The following examples are intended to illustrate consideration of the addition of a new program
to another cluster. They are illustrative only and not based on the contents of the current
Supplement.
Background for Examples:
Type A threshold $750,000.
Human Services existing other cluster (93.123, 93.125, and 93.127) was audited in 2022 with no
audit findings.
Part 5 of the 2024 Compliance Supplement added Assistance Listing 93.129 to form the new
other cluster with the following federal awards expended in 2024:
93.123: $ 500,000
93.125: $ 300,000
93.127: $ 400,000
93.129: $ 300,000
Considerations for 2024 major program determination using these facts:
Example 1
The Human Services cluster was audited in 2022. However, the auditee’s current year
expenditures for newly added Assistance Listing 93.129 exceed 0.25 of the Type A threshold of
$750,000 or $187,500; therefore, the resulting other cluster fails the 2-year look back criterion
and cannot be considered a low-risk Type A program in 2024.
If, however, the auditee’s expenditures for newly added Assistance Listing 93.129 were equal to
or less than $187,500, the other cluster would pass the 2-year look back criterion and could be
considered to have been audited as a major program in one of the two prior years.
Compliance Supplement 2024 8-VII-6 Appendix VII
May 2024 Other Audit Advisories
Example 2
The Human Services cluster was audited in 2022. The newly added program Assistance Listing
93.129 was audited in 2023. If both the cluster and the newly added program met all criteria in 2
CFR section 200.518(c) to be considered low-risk programs for 2024, the other cluster would be
a low-risk Type A program in 2024.
III. Due Date for Submission of Audit Reports and Low-Risk Auditee Criteria
As provided in 2 CFR Part 200, Subpart F (2 CFR section 200.520), in order to meet the criteria
for a low-risk auditee in the current year, the two prior years’ audits must have met the specified
criteria, including report submission to the Federal Audit Clearinghouse (FAC) by the due date.
The auditor may consider using the following steps to identify FAC submissions that do not meet
the due date.
Suggested Steps
1. Inquire of entity management and review available prior-year financial reports and audits
to ascertain if the entity had federal awards expended of $750,000, in the prior two audit
periods and, therefore, was required to have an audit under the uniform guidance and file
with the FAC.
2. If the entity was below the $750,000 threshold in either of the prior two audit periods,
and an audit was not required under the uniform guidance obtain written representation
from management to this fact and no further audit procedures are necessary as the entity
does not qualify as a low-risk auditee.
3. If a prior-year audit was conducted, obtain a copy of the data collection form (Form SF-
SAC) and the reporting package.
a. Calculate the “Due Date” to file with the FAC as the earlier of (i) nine (9) months
after the end of the audit period or (ii) 30 calendar days after the entity received
the auditor’s report (under 2 CFR §200.512(a)(1)).
b. Access the FAC web page at The Federal Audit Clearinghouse
(fac.gov)https://www.fac.gov/.
• Select the “Search for audits” option and on the “Search Single Audits
reports” page, locate the FAC record for the entity. Verify correct record
by comparing both the entity name and Unique Entity Identification (UEI)
from the entity’s copy of the SF-SAC to the FAC web page.
• For the entity, compare the initial “FAC Accepted Date” to the earlier of
(i) the Nine Month Due Date or (ii) 30 days after the entity received the
auditor’s report(s) to determine if the Due Date was met.
Compliance Supplement 2024 8-VII-7 Appendix VII
May 2024 Other Audit Advisories
If the entity was not in compliance with the Due Date or Extended Due Date (if
applicable) or did not submit the required audit to the FAC for either of the prior
two audit periods, then the entity does not qualify as a low-risk auditee.
4. Contact the FAC Help Desk at The Federal Audit Clearinghouse (FAC.gov) if additional
information is needed on using the FAC website or determining the date the FAC
accepted the report submission as complete.
IV. Treatment of National Science Foundation and National Institutes of Health
Awards
National Science Foundation
All awards issued by the National Science Foundation (NSF) meet the definition of “Research
and Development” at 2 CFR section 200.1. As such, auditees must identify NSF awards as part
of the R&D cluster on the Schedule of Expenditures of Federal Awards (SEFA) and the auditor
must use the Research and Development cluster in Part 5 when testing any of those awards. NSF
recognizes that some awards may have another classification for purposes of reimbursement of
indirect costs. The auditor is not required to report this difference in treatment (i.e., the award is
classified as R&D for 2 CFR Part 200, Subpart F purposes, but non-research for indirect cost rate
purposes), unless the auditee is charging indirect costs at a rate other than the rate(s) specified in
the award document(s). This guidance complies with the NSF Proposal and Award Policies and
Procedures Guide (PAPPG), the current and prior versions of which may be found at
http://www.nsf.gov/bfa/dias/policy/.
National Institutes of Health
Effective for grants and cooperative agreements with budget periods beginning on or after
December 26, 2014, and awards that receive supplemental funding on or after December 26,
2014, all awards issued by the National Institutes of Health (NIH) meet the definition of
“Research and Development” at 45 CFR section 75.2. As such, auditees must identify NIH
awards as part of the R&D cluster on the SEFA, and the auditor must use the Research and
Development cluster in Part 5 when testing any of those awards. NIH recognizes that some
awards may have another classification for purposes of reimbursement of indirect costs. The
auditor is not required to report this disconnect (i.e., the award is classified as R&D for 2 CFR
Part 200, Subpart F, purposes, but non-research for indirect cost rate purposes), unless the
auditee is charging indirect costs at a rate other than the rate(s) specified in the award
document(s). (See the NIH Grants Policy Statement, the current and prior versions of which may
be found at http://grants.nih.gov/grants/policy/policy.htm.)
V. Exceptions to the Guidance in 2 CFR Part 200
OMB does not maintain a complete listing of approved agency exceptions to the uniform
guidance in 2 CFR Part 200.
For programs included in the Supplement, the auditor should review the program supplement
and, as necessary, agency regulations adopting/implementing the OMB uniform guidance in
2 CFR Part 200 to determine if there is any exception related to the compliance requirements that
Compliance Supplement 2024 8-VII-8 Appendix VII
May 2024 Other Audit Advisories
apply to the program. For programs not included in the Supplement that are audited using Part 7,
the auditor should review agency regulations adopting/implementing 2 CFR Part 200 to
determine if an exception applies to the program.
Questions about the agency-level rulemakings that adopt/implement 2 CFR Part 200 should be
directed to the federal agency key management liaisons specified in Appendix III to the
Supplement.
VI. Audit Sampling
Certain suggested audit procedures in this Compliance Supplement lend themselves to testing
using sampling. Auditors are reminded that when performing an audit under generally accepted
auditing standards (GAAS), including single audits, that AU-C section 530, Audit Sampling,
https://www.aicpa-cima.com/resources/download/aicpa-statements-on-auditing-standards-
currently-effective, provides auditor requirements and guidance related to an auditor’s use of
sampling. Failure to follow the standards, including the requirement to determine sample sizes
that are sufficient to reduce sampling risk to an acceptably low level, may result in the audit
being considered nonconforming by the federal cognizant agency for audit as part of a quality
control review.
The guidance in AU-C section 530 primarily addresses sampling considerations when
performing a financial statement audit. The AICPA Audit Guide, Government Auditing
Standards and Single Audits, contains auditor guidance for, among other things, designing an
audit approach that includes audit sampling to achieve both compliance and internal control over
compliance related audit objectives in a single audit or program-specific audit performed in
accordance with the Uniform Guidance. It also includes suggested minimum sample sizes for
tests of controls over compliance and tests of compliance based on certain engagement-specific
inputs.
Another AICPA Audit Guide, Audit Sampling also provides additional guidance and technical
background, which forms the basis of the practical application of audit sampling to Uniform
Guidance audits.
VII. Federal Audit Clearinghouse Transition from Census to GSA and Single Audit
Extensions
Federal Audit Clearinghouse Transition from Census to GSA
The provider of the Federal Audit Clearinghouse (FAC) changed from U.S. Census Bureau
(Census) to the U.S. General Services Administration (GSA) on October 1, 2023. At that time,
all submissions were to be made through the new FAC hosted by GSA, including all single
audits for entities with 2023 FYE dates.
For any 2023 submissions with fiscal periods ending between January 1, 2023 and September 30,
2023, the 2 CFR 200.512(a)(1) requirement for Single Audit report to be submitted to the
Federal Audit Clearinghouse 30 days after receipt of the auditor’s report(s), is waived. These
Compliance Supplement 2024 8-VII-9 Appendix VII
May 2024 Other Audit Advisories
audits will be considered on time if they are submitted within nine months after their fiscal
period end date.
Single Audit Extensions
In 2022, there were two extensions for audit submission.
Single audits with a fiscal period ending in 2022 were scheduled to be submitted to the GSA
FAC beginning on October 1, 2022. However, the transition to GSA was delayed for one year
and rescheduled to October 1, 2023. Due to the delay in transition, the SF-SAC Data Collection
Form used for the fiscal year 2022 audit submission was not available until October 6, 2022.
Therefore, single audits with a fiscal period ending in 2022 could not be submitted before that
date. The 2 CFR 200.512(1) states that single audits 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. For any 2022 submissions with fiscal periods ending between January 1, 2022 and
October 31, 2022, the requirement in 2 CFR 200.512(1) stating that single audits are due to the
Federal Audit Clearinghouse 30 days after receipt of the auditor’s report(s), is waived. These
audits will be considered on time if they are submitted within nine months after their fiscal
period end date.
For example, a March 31, 2022, fiscal year-end single audit that was issued on June 30, 2022,
would technically be due to the FAC on July 30, 2022 (i.e., 30 calendar days after the auditee’s
receipt of the auditor’s reports). Because the SF-SAC Data Collection Form was not available
until October 6, 2022, if the single audit was submitted to the FAC by October 31, 2022, it would
be considered timely and have no impact on the low-risk auditee status of the auditee.
Hurricanes Fiona and Ian, and the Alaska flood and landslide
In September and October 2022, the President made the major disaster and emergency
declarations under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42
U.S.C. 5121 et seq. (the “Stafford Act”) for the following: Hurricane Fiona (FEMA-4671-PR),
the Alaska storm, flooding, and landslides (FEMA-4672-AK) and Hurricane Ian (FEMA-DR-
4673-FL, FEMA-EM-3585-SC, FEMA-EM-3586-NC).
Consistent with these declarations and to assist the affected recipients during these emergencies,
OMB granted a six (6) month extension for all single audits that cover recipients in the affected
areas and had due dates between September 18, 2022 and December 31, 2022. The recipients in
the less affected areas were encouraged to submit their reports as soon as possible. The
extension is item 11 of the flexibilities listed in OMB Letter dated December 23, 2022 and
published on the CFO Council link at https://www.cfo.gov/ (Microsoft Word - 2022 Hurricanes
Fiona Ian Alaska Flood Admin Relief (cfo.gov).
VIII. 2024 Revisions to OMB’s Guidance for Federal Financial Assistance.
For this 2024 Supplement, auditors must also recognize that OMB recently updated its Guidance
for Federal Financial Assistance contained in 2 CFR, including 2 CFR part 200. See 89 FR
30046 (Apr. 22, 2024). Although the government-wide effective date for the 2024 revisions is
Compliance Supplement 2024 8-VII-10 Appendix VII
May 2024 Other Audit Advisories
not until October 1, 2024, federal agencies may elect to implement the revisions as early as June
21, 2024 to new awards and through amendments to existing awards. Because federal agencies
are not required to implement the revisions prior to October 1, 2024, there is likely to be some
variation on when federal agencies begin to make the 2024 revisions apply to federal awards. For
example, a non-federal entity with a fiscal year beginning on January 1, 2024 may receive an
award on June 21, 2024 made subject to the 2024 revisions by the federal agency. Consequently,
the auditor should perform reasonable procedures to ensure that compliance requirements
identified as subject to the audit are current and determine whether there are any additional or
modified provisions of federal awards based on the 2024 revisions. Auditors must not, however,
apply compliance requirements from the 2024 revisions in circumstances in which the federal
agency has not yet applied the 2024 revisions to the federal award subject to audit. (Note:
Among other things, the 2024 revisions increased the audit threshold to $1,000,000 for auditee
fiscal years beginning on or after October 1, 2024.)
Compliance Supplement 2024 8-VII-11 Appendix VII
File and source
- File
- department-of-the-treasury-2024-slfrf-compliance-supplement-home-treasury-gov-978af1cef0.pdf
- Size
- 1,167,482 bytes
- SHA-256
- 8f88a5e6dd37ec7a51ba4871968e2657dd7bb9376fe1a58db3d839b49e74a32d
- Our copy
- department-of-the-treasury-2024-slfrf-compliance-supplement-home-treasury-gov-978af1cef0.pdf
- Original
- home.treasury.gov