Sneak Preview: SLFRF Offers Opportunity To Better Prepare for Next National Disaster
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) As recipients prepare to expend their final dollars under the Department of the Treasury’s State and Local Fiscal Recovery Funds (SLFRF) by the Dec. 31, 2026, expenditure deadline, they should consider using closeout data under this program to assist in preparing for future national disasters, members of financial associations told attendees at the National Grants Management’s recent Annual Grants Training conference.
Treasury required that SLFRF recipients obligate this funding by Dec. 31, 2024, obligation deadline, but some grantees still are attempting to define “obligation” when spending these funds, said Emily Brock, federal liaison for the Government Finance Officers Association. Treasury defines the term only as “an order placed for property and services and entering into contracts, subawards and similar transactions that require payment.” Some recipients “are still trying to nail down the vocabulary of what they’ve already spent,” she said. “They need to come into alignment with their accounting function, because if the accounting function defined obligation as an encumbrance or expenditure in another way, they should make sure everything they do is in alignment according to the definition they have used along the way for spending all award funds.”
Brock explained that once the SLFRF grant is closed out, these recipients should develop written policies and procedures, including those pertaining to subrecipient monitoring, for future potential disaster funding “to move seamlessly in the future to prevent fraud, waste and abuse” if such funding becomes available.
She added that auditors will be conducting desk reviews on SLFRF funding. However, because many smaller recipients receiving such funding had never had to undergo a single audit, but now, after receiving SLFRF funds, their receipt of federal funds will have met the single audit threshold, they will have to do so, and will be unfamiliar with the desk review process. “They should have known when they received federal funds that they were going to get audited,” she explained, adding that these entities should determine if they have procurement policies in place, a point person to contact and identified performance metrics, as well if they have maintained documentation if they submitted reports to the federal government.
Brock was asked to react to a recently proposed Treasury Department Privacy Act System of Records on financial assistance programs, which would manage information regarding recipients of federal financial aid and centralize data for oversight, compliance and auditing of COVID programs such as SLFRF. Brock said that when you “wrap a collection of data inside the Privacy Act, that means that that collection system can request personal protected information down to the beneficiary level.”
SLFRF established a $50,000 threshold for recipient obligation/expenditure reporting, and Treasury previously provided reporting policies and guidance based on this threshold to assist states in spending SLFRF funds. Therefore, such information required to be kept under the new Treasury proposal may not be available for the earlier time period. Therefore, if the proposal takes affect now for the rest of SLFRF, “you’re only taking about March 2026 through December 2026, and many recipients have already closed out their SLFRF programs,” according to Brock. “A retroactive collection of information might not be possible.”
(The full version of this story has now been made available to all for a limited time here.)
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