| Dear Center Members: |
| The purpose of this GAQC Alert is to provide you with single audit related developments regarding the Novel Coronavirus (COVID-19). It covers the following important information:
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OMB Memo
The issuance of the OMB memo has led to confusion, specifically as it relates to the memo's discussion of a potential extension of the single audit submission deadline by 12 months. Some that have reviewed the memorandum have come away with the mistaken belief that the single audit deadline extension can be applied to all recipients now. That is not the case.
Yesterday, we discussed the memo with OMB staff to ensure an appropriate understanding and are providing you with a summary of that discussion to ensure the audit community is aware for purposes of discussions with your clients.
OMB confirmed the following:
- The memo is intended to provide guidance to federal agencies relating to areas where relief may be provided to certain recipients.
- The memo is not instructing federal agencies to provide a blanket waiver for all recipients impacted by COVID-19. Instead, its guidance primarily relates to recipients receiving funds disbursed from the approximately $9 billion in emergency supplemental appropriations for coronavirus preparation and response (H.R.6074). Note that there could be cases where agencies may decide to apply the guidance in the memorandum for existing awards that are deemed by the agency to be for continued research and services necessary to carry out the emergency response relating to COVID-19.
- Federal agencies are expected to issue their own guidance implementing the provisions of the OMB memo. The Department of Health and Human Services is the primary funder of awards made under H.R. 6074.
- OMB understands that other recipients that are not receiving H.R.6074 funds may have operations that have been adversely impacted by COVID-19. OMB is working on additional guidance to address these situations, including whether any flexibility will be given on single audit submissions that are late due to these circumstances.
We know that March 31, 2020, is the final deadline for June 30, 2019, single audit submissions to the Federal Audit Clearinghouse. We have also heard from members in certain parts of the country whose clients have closed offices or where staff are being encouraged to work from home. This has caused practice challenges that may result in late filings. Until such time as OMB issues formal guidance that would apply to the broader population of recipients, our advice is for entities and auditors that are concerned about meeting the upcoming deadline to contact the National Single Audit Coordinator at the cognizant or oversight agency for audit (see contact listing in Appendix III of the 2019 OMB Compliance Supplement). The OMB memo does remind agencies that they can issue exemptions on a case-by-case basis under section 200.102 of the Uniform Guidance.
ED Memo
If you audit institutions that participate in the SFA program, you should be aware of a new ED memo which addresses concerns that higher education leaders have expressed regarding how they should comply with Title IV, Higher Education Act policies for students whose activities are impacted by COVID-19, either directly because the student is ill or quarantined, or indirectly because the student was recalled from travel-abroad experiences, can no longer participate in internships or clinical rotations, or attends a campus that temporarily suspended operations. The memo provides flexibilities for schools that are working to help students complete the term in which they are currently enrolled. It also addresses areas such as enrollment disruptions, distance learning, length of academic year, and return of Title IV funds. In addition to this memo, ED is encouraging institutions to frequently visit the Department's Coronavirus Web page for the latest information.
Looking Forward
The current situation will clearly have an impact on 2020 single audits, particularly as it relates to entities receiving federal awards to support the continued research and services necessary to carry out the emergency response relating to COVID-19. However, the impact will also likely be broader due to operational disruptions and other related challenges. A determination will also have to be made in terms of how auditors will ultimately have to audit compliance in light of the compliance requirement flexibilities being issued, as well as how those revised requirements will be communicated. Based on our discussions with OMB, it is not likely that OMB will hold up the issuance of the 2020 OMB Compliance Supplement to address these matters. While we do not have all the answers at this time, the GAQC will continue to monitor current developments and communicate updates via future GAQC Alerts to keep our members apprised.
We wish you the best at this challenging time and hope all members are taking the necessary precautions to ensure your health and safety.
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Sincerely,
AICPA Governmental Audit Quality Center
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