GAQC Alert No. 430

• Updates for Revised Uniform Guidance. Updates have been made throughout Part 3 to reflect the August 2020 Uniform Guidance revisions (see the archived GAQC Web event, Uniform Guidance Revisions: What You Need to Know for more detail about these revisions). Two provisions of the new Uniform Guidance became effective immediately and the remainder was effective for awards after November 12, 2020. The OMB's approach in Part 3 is different than that taken for the prior Uniform Guidance implementation. That is, old and new requirements are not separately identified in a Part 3.1 and 3.2. Instead, OMB takes an approach that is ultimately more challenging for auditors by instructing auditors to check the proper and applicable versions of the Uniform Guidance and the award terms and conditions depending on the occurrence date of the transactions reviewed.
• Procurement Threshold Changes. The 2020 Uniform Guidance revisions include changes to certain purchase thresholds for procurement. Unfortunately, some federal agencies have been late in adopting the new Uniform Guidance into their regulations or had not adopted them as of the date of the 2021 Supplement. The Procurement and Suspension and Debarment type of compliance requirement section was revised to provide a waiver related to this situation. It states that "due to the challenge and burden for an entity of adopting increased purchase thresholds policies for awards provided by certain agencies, but not for awards provided by other agencies, auditors are not expected to develop audit findings for entities that have implemented increased thresholds for all awards after November 12, 2020."
• Reporting Requirement Additions. Two key changes were made in the Reporting type of compliance requirement section. First, the Federal Funding and Accountability and Transparency Act (FFATA) requirements which were originally included in the 2020 Addendum, have been incorporated into 2021 Reporting section, along with guidance on when auditors must test FFATA. Second, clarifications have been made in the Performance and Special Reporting section in response to GAQC comments over the last several years regarding agencies that are not providing enough guidance for auditors to properly test such reports. As it relates to programs that do not identify key line items for a performance or special report in Part 4, Agency Program Requirements, and Part 5, Clusters of Programs, the new Part 3 guidance instructs auditors to only test that the report was submitted in a timely manner. No other procedures are required. Additionally, if key line items are outlined for a program for a performance or special report that would not be quantifiable and capable of evaluation against objective criteria (e.g., narratives, futuristic information, information that would require verification at the program beneficiary level, etc.), the new guidance states that auditors are not required to perform testing of such items. It will be important for auditors to document their consideration of these problematic performance and special reporting situations when they are encountered and to link the auditor response to the guidance in Part 3 to support not testing such items.

• Education Stabilization Fund (ESF). ESF is identified as a higher risk program (see Appendix IV section below) and continues to be broken down into two sections covering the various ESF subprograms. Numerous changes and updates have been made throughout the ESF section. The most important thing to note is that Section 1 was only updated for the implications of the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) but has not been updated for implications of ARP. Therefore, Education states that needed updates to Section 1 for ARP (relevant to 84.425U and 84.425X) will be provided in a future Addendum. On the other hand, Section 2 which includes numerous detailed Higher Education Emergency Relief Fund (HEERF) subprograms has been updated for the implications of both CRRSAA and ARP (i.e., HEERF II and HEERF III). Auditors will need to carefully consider whether they can proceed with single audits of entities where ESF is a major program. For example, for clients that expend funding only under the Section 2 subprograms, auditors can proceed with the single audit using the first release. The same would be true for clients that expend funding under Section 1 subprograms excluding 84.425U or 84.425X. However, for clients that have significant expenditures under 84.425U or 84.425X and where ESF is a major program, the GAQC recommends waiting for the Addendum for this program (see the "Future Addenda" section below for more about this GAQC recommendation).
• Coronavirus Relief Fund (CRF). This program, which is identified as a higher risk program, was updated to reflect provisions of CRRSAA that extended the CRF spend date from December 30, 2020, to December 31, 2021. Updates were also made to change program requirement references to the January 2021 Treasury Federal Register notice, Coronavirus Relief Fund Program Guidance. The CRF section also clarifies that FFATA does not apply to this program.
• Provider Relief Fund (PRF). PRF is also identified as a higher risk program. The "Other Information" section of PRF was revised to clarify the amount of PRF expenditures and lost revenue to be reported on the Schedule of Expenditures of Federal Awards (SEFA) and the timing of when such expenditures and lost revenue are to be reported. See GAQC Alert #429 for more details on this change. Further, the Reporting section has been expanded to include a detailed list of key line items in the PRF Reporting Portal submission that auditor will focus on and the Special Tests and Provisions requirement has been made subject to audit (i.e., the matrix changes from a "N" to a "Y") because a new special test is added that relates to Out-of-Network Patient Out-of-Pocket Expenses.

• A reminder that, generally, new ARP Type A programs will not have been audited in one of the two most recent audit periods subject to the 2021 Supplement and must be audited as a major program.
• For non-ARP type A programs, the higher risk designation will often result in the type A program being audited as major. However, the appendix provides that the auditor is not precluded from determining that a higher risk non-ARP type A program or other cluster qualifies as low risk if certain criteria are met (those criteria are further described in the appendix).
• For type B ARP and non-ARP programs and other clusters, there are no changes to the normal risk assessment process for higher risk type B programs. That is, the higher risk identification must be considered with other factors in section 200.519 of the Uniform Guidance. Further, the auditor is not required to prioritize the assessment of risk for higher risk type B programs over other type B programs.

• Single Audit Due Dates. The appendix includes information about the current single audit extensions provided in OMB Memorandum M-21-20 (see GAQC Alert #424).
• Donated Personal Protective Equipment (PPE). The guidance remains the same as the prior year (i.e., donated PPE provided without compliance or reporting requirements or assistance listing is not counted for purposes of determining the threshold for a single audit or determining the type A/B threshold for major programs). However, emphasis is added that some PPE 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 Documents. In a section discussing the proliferation of agency guidance documents during the pandemic, the prior year guidance remains advising that auditors may consider guidance documents in effect during the period to understand the program requirements but that auditors should refer to a statue, regulation, or term and condition as criteria for audit findings.
• Identification of COVID-19 Awards. New information added to this section of the appendix states that OMB is currently working to issue a new summary to identify new ARP programs, as well as which existing federal programs received COVID-19 funding from ARP. OMB states it will post this information on https://www.cfo.gov/ as soon as it is available.
• Separate Identification of COVID-19-Related Awards. The appendix again includes instructions for how recipients should separately identify COVID-19-related awards on the SEFA and the Data Collection Form. The appendix also states that auditors should include the COVID-19 identification for audit findings.
• ARP Programs. The appendix includes a listing of programs that are expected to be made available later. Although Appendix VII states it is providing a complete list of programs, it is important to know that this list may not be a complete list. See the "Future Addenda" section below for more information.
• Identification of Compliance Requirements for COVID-19-Related Awards. This section explains that the first release of the Supplement does not include new COVID-19 related programs funded under ARP or CRRSAA or information on modified compliance requirements relevant to the types of compliance requirements in Part 3 that are unique to COVID-19 for existing programs. It states that for new COVID-19 related programs that will not be included in the Addendum that the auditor must use the framework provided by Part 7, Guidance for Auditing Programs Not Included in This Supplement. It also states that for existing programs with incremental COVID-19 funding, the auditor must perform reasonable procedures to ensure that the compliance requirements are current and suggests what reasonable procedures may include.

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