Sneak Preview: Treasury Working To Address SLFRF Single Audits

(The following was excerpted from a recent Thompson Grants Compliance Expert article.) The Government Accountability Office (GAO), in a recent report, acknowledged initial obstacles the Department of the Treasury faced when issuing management letters in response to findings in single audits submitted by Coronavirus State and Local Fiscal Recovery Fund (SLFRF) recipients, and will continue monitoring the agency’s progress.

According to GAO, Treasury has allocated $325.5 billion in SLFRF dollars to state and local governments. As of March 31, 2023, states reported obligating 60% and spending 45% of the SLFRF awards they received. Local governments had obligated 54% and spent 38% of their awards. Recipients have until Dec. 31, 2024, to obligate, and until Dec. 31, 2026, to spend their awards.

Although Treasury, since the start of the COVID-19 pandemic, has developed internal single audit policies and a dashboard to enable it to monitor data gleaned from SLFRF recipient audits, GAO found that the agency is facing technical challenges that limit its ability to monitor single audit report findings comprehensively. For example, in August 2023, Treasury officials stated that the dashboard may not be capturing all required reports, adding that they identified 1,907 SLFRF recipients that (1) had received more than $750,000 in funds from among all of the programs Treasury administers (not just SLFRF); (2) had not submitted a single audit report since 2019; and (3) reported spending more than $750,000 in SLFRF funds.

“Until Treasury enhances its process for identifying which SLFRF recipient reports are missing from the FAC, there is a risk that the agency’s monitoring process will not capture all single audit reports that Treasury is required to review as a federal awarding agency,” GAO explained. “As a result of such limitations, Treasury’s initial reviews of SLFRF recipients’ single audit reports could not provide reasonable assurance that the single audit report review process systematically addressed the full scope of the agency’s oversight responsibilities, including identifying and following up with all SLFRF recipients who had relevant single audit report findings.”

Office of Management and Budget (OMB) Memorandum M-21-20 enabled federal awarding agencies to allow program recipients and subrecipients with fiscal year-end dates through June 30, 2021, to delay completing and submitting their single audit reporting packages to the Federal Audit Clearinghouse (FAC) up to six months beyond the normal due date. Therefore, entities that received and spent SLFRF awards during a fiscal year ending on June 30, 2021, were required to submit their single audit reports to the FAC by Sept. 30, 2022. This extension gave Treasury more time to issue management decisions related to single audit report findings. For example, for recipients that submitted single audit reports to the FAC by Sept. 30, 2022, Treasury was required to issue management decisions by March 31, 2023.

(The full version of this story has now been made available to all for a limited time here.)

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