Considerations for Single Audits of Recovery Act Funds
Q: How are the American Recovery and Reinvestment Act of 2009 (Recovery Act) funds different from the ongoing federal funds we currently receive?
A: Grant recipients will have to separately report expenditures of Recovery Act funds on both the Schedule of Expenditures of Federal Awards (SEFA) and the data collection Form SF-SAC. It is crucial that you establish and maintain reporting controls that enable you to separately track Recovery Act funds from the time they are received to the time they are spent.
The reason for the separate reporting is to ensure the transparency of the use of Recovery Act funds. The Recovery Accountability and Transparency Board (transparency board) is conducting oversight of the funds and will have two primary goals:
- To ensure that use of the money is transparent to the public, and the benefits of these funds are reported clearly, accurately, and in a timely manner
- To ensure that funds are used for authorized purposes, and instances of fraud, waste, error, and abuse are mitigated
To this end, funding received under the Recovery Act will be subject to additional reporting and compliance requirements and will likely be subject to strict scrutiny by the transparency board and the public. A Web site established by the transparency board, www.recovery.gov, will inform the public about who is receiving funding, the projects being funded, the completion status, and the impact the projects have on job creation and retention.
Q: How do I know if our organization has received Recovery Act funds?
A: Recovery Act reporting requirements will be included in your funding agreement with the federal awarding agency (if you are the prime recipient) or in your agreement with a prime recipient (if you are a subrecipient).
Awarding agencies will identify Recovery Act funds using program numbers found in the Catalog of Federal Domestic Assistance (CFDA).These numbers will also be used for existing federal programs in cases where the Recovery Act calls for compliance requirements that are significantly different than typical compliance requirements.
For existing programs with compliance requirements not considered significantly different, agencies may or may not use new CFDA numbers for Recovery Act awards. Recipients are required to specifically identify Recovery Act funds, even if the funding is provided under an existing CFDA number.
Addendum #1 to the 2009 OMB Circular A-133 Compliance Supplement includes an updated Part 2, Matrix of Compliance Requirements (pages 2–1 to 2–11). This matrix shows new Recovery Act programs, new clusters of programs, and pre-existing programs that now have Recovery Act Funds associated with them under a pre-existing CFDA number. Additions are identified in bold, and the matrix identifies the applicable compliance requirements.
Make sure your organization thoroughly reviews all new funding agreements for references to Recovery Act funding requirements and to CFDA numbers. If you are not certain whether you have received Recovery Act funds, contact the federal awarding agency or the prime recipient.
Q: How do I identify specific compliance requirements that are applicable to Recovery Act funds?
A: Addendum #1 provides guidance for programs with Recovery Act expenditures and is effective for audits of fiscal years beginning after June 30, 2008.
Part 4 of the addendum identifies compliance requirements for Recovery Act programs and the Recovery Act compliance requirements for existing programs in bold lettering.
It should be noted that additional cross-cutting requirements imposed by the Recovery Act are discussed in the following sections of Part 3:
- A: Activities Allowed or Unallowed
- D: Davis-Bacon Act
- I: Procurement and Suspension and Debarment
- L: Reporting
- M: Subrecipient Monitoring
- N: Special Tests and Provisions
In addition, the Special Tests and Provisions section lists three new Recovery Act compliance requirements that apply to all programs with expenditures of Recovery Act awards. These requirements involve maintenance of records; identification of subrecipients, award numbers, CFDA numbers, and amounts of Recovery Act funds; and identification of Recovery Act awards in the SEFA and SF-SAC. Watch for future addendums to the compliance supplement.
Q: How will required reporting under section 1512 of the Recovery Act affect me?
A: Section 1512 of the Recovery Act requires electronic reporting of the use of Recovery Act funds on a quarterly basis through
www.federalreporting.gov. Reporting should be conducted by prime recipients and delegated subrecipients (i.e., those subrecipients to which the prime recipient has delegated reporting responsibility). The primary intent of the recipient reporting is transparency, as opposed to compliance management. However, federal agencies may use recipient reports to help assess compliance with terms and conditions of individual award agreements.
The submission timeline for Section 1512 information:
- 1–10 days after quarter end: Prime recipients and delegated subrecipients are to enter draft data by the 10th day after quarter end.
- 11–21 days after quarter end: Prime recipients review their draft data and that submitted by subrecipients; both make corrections to draft data as necessary.
- 22–29 days after quarter end: Federal agencies review submitted data; agencies may provide comments on submitted reporting information and may request prime recipients or delegated subrecipients to address comments if necessary.
- 30 days after quarter end: Detailed recipient reports are made available to the public on www.recovery.gov.
Q: How will Recovery Act reporting requirements affect the quarterly Federal Financial Reporting (FFR) process currently in place?
A: Recovery Act reporting requirements will not affect the quarterly FFR process, which is currently required for most federal grant recipients. Awardees will continue to report their expenditures on a grant-by-grant basis on the FFR.
However, the OMB has consolidated the two most common FFR reports, the Financial Status Report (SF-269/SF-269A) and the Federal Cash Transactions Report (FCTR or SF-272/SF272A), into a single form, Federal Financial Report (SF-425). OMB is requiring that federal agencies transition to SF-425 by September 30, 2009.
Q: Do I need to change any of our existing policies and procedures for the Recovery Act funds?
A: Yes, your policies and procedures will need to change. At a minimum, the OMB suggests recipients and subrecipients establish internal control policies to ensure data quality, completeness, accuracy, and timely reporting of Recovery Act funds. Some suggested control policies are:
- Compliance: Understand the additional compliance requirements and establish policies and controls to ensure compliance with those requirements.
- Reporting: Establish a policy for the internal review of quarterly control totals (e.g., total number of Recovery Act projects or total dollars allocated to Recovery Act projects) and verify that data reported at quarter end matches quarterly control totals.
- Subrecipients: In cases where the prime recipient has delegated reporting responsibilities to a subrecipient, a control policy should be established for the review of subrecipient data. The purpose of the review is to ensure the accuracy and integrity of the data and that the prime recipient does not “double count” funds or expenditures reported by the subrecipient.
Q: When does reporting of Recovery Act funds on recovery.gov begin?
A: The first data-submission reporting period begins October 1, 2009, and should cover the period from the date of the award through September 30, 2009. The Recovery Act requires reports no later than the 10th day after the end of each calendar quarter. This means reports due on October 10, 2009, will include funding from February 17, 2009 (the date the Recovery Act was enacted by Congress) through September 30, 2009.
Prime recipients and delegated subrecipients will begin reporting the quarter in which an award is made to them.
Reporting is cumulative. Reports due January 10, 2010, will include the data reported through September 30, 2009, and be updated to include data through December 31, 2009.
Q: What resources are available to assist our organization in understanding the various requirements?
A: Several government resources are available:
- The U.S. government’s official Recovery Act Web site: www.recovery.gov.
- The OMB Web site www.whitehouse.gov/omb provides information on Grants, Circular A-133, the Compliance Supplement (and future addendums), and the Recovery Act.
- The OMB’s memo to department heads and agencies (M-09-21) provides key information for carrying out the reporting requirements. The memo is called Implementing Guidance for the Reports on Use of Funds Pursuant to the American Recovery and Reinvestment Act of 2009, and it has two supplements. Supplement 1 is the List of Programs Subject to Recipient Reporting. Supplement 2 is the Recipient Reporting Data Model.