Accepting Stimulus Money Will Require Transparent Reporting
The decision to accept any of the $300 billion grant funds available through the American Recovery and Reinvestment Act of 2009 (ARRA or the Recovery Act) will require significant reporting and will increase compliance requirements for organizations generally subject to single audit, such as state and local governments, higher education institutions, and nonprofit organizations.
The first reporting deadline for organizations that accept stimulus grant money is October 10, 2009.
“The decision to accept ARRA funding should be made carefully because recipients will be subject to additional compliance and reporting requirements, and potential scrutiny from a special oversight board and the public,” says Chris Stanz, a nonprofit and government principal with LarsonAllen. “Complying with these requirements could be time consuming and costly.”
Transparency requirements
The Federal Audit Clearinghouse will now be required to make all single audit reports and findings publicly available for fiscal years ending September 30, 2009, and later. This will be accomplished through the Web site
www.recovery.gov.
Audit risk
Single audits will be affected due to the heightened transparency and increased compliance requirements. In accordance with OMB Circular A-133, all programs with expenditures of ARRA funds are to be considered “higher risk,” which will lead to increased testing by your auditors.
“It is imperative that organizations are aware of the reporting and compliance requirements in accepting ARRA funding, because all audit findings and instances of noncompliance will be available to the public, via the Web site,” Stanz says.
Recipient considerations
As a recipient or potential recipient of these funds, consider the following:
- ARRA grant recipients are expected to report expenditures of Recovery Act funds separately from other federal funding on both the Schedule of Federal Expenditures and the Data Collection Form. While these forms are not new, the ARRA fund reporting is different. Additional controls and accounting system requirements might be needed to enable your organization to properly report.
- Certain recipients and subrecipients of ARRA funds are required to report the use of funds on a quarterly basis through the Web site www.federalreporting.gov. Be aware of the specific items that need to be reported and the submission timelines. Your organization might need to establish additional controls to ensure reporting requirements are being met.
- In June 2009, the OMB issued Addendum #1 to the 2009 Compliance Supplement. This addendum includes additional guidance for programs with ARRA expenditures by updating Parts 2 through 6. ARRA award agreements from federal agencies will also contain detailed terms and conditions about compliance requirements. Your organization’s control procedures should be updated to ensure compliance with ARRA requirements. If you are passing ARRA funds down to subrecipients, your control procedures should be properly designed to ensure appropriate subrecipient monitoring.
“Appoint an individual at your organization to become familiar with the new compliance requirements, for example a program manager,” Stanz says. Also, develop a mechanism to communicate the requirements to everyone in the organization. This could be done by reviewing your organization’s policies and procedures manual and updating it to incorporate the new ARRA procedures,” Stanz continues. “Then communicate that information to employees so they can follow the policy.”
How we can help
LarsonAllen can help you understand the specific compliance requirements associated with your ARRA funding, both from a reporting and compliance standpoint. We can assist you in ensuring your organization has the proper controls in place to meet those requirements.
For more information, contact Chris Stanz at 320-203-5532 or cstanz@larsonallen.com, or your industry contact.
Additional resources