ProgramCOVID-19 Federal Assistance e311
TopicsCompliance & Reporting, Due Diligence & Fraud Protection
What is the audit period for federal funds?
The U.S. Department of the Treasury’s (“Treasury”) May 10, 2021 Interim Final Rule states “payments from the Fiscal Recovery Funds as a general matter will be subject to the provisions of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) (the Uniform Guidance), including the cost principles and restrictions on general provisions for selected items of cost.” Given this guidance, municipalities should review 2 CFR 200 in its entirety. Because Treasury has indicated that 2 CFR 200 applies to the American Rescue Plan (ARP), certain subsections may provide some insight regarding audit requirements and scope of audits.
2 CFR § 200.501 discusses audit requirements:
- (a) Audit required. A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part.
- (b) Single audit. A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single audit conducted in accordance with § 200.514 except when it elects to have a program-specific audit conducted in accordance with paragraph (c) of this section.
- (c) Program-specific audit election. When an auditee expends Federal awards under only one Federal program (excluding R&D) and the Federal program's statutes, regulations, or the terms and conditions of the Federal award do not require a financial statement audit of the auditee, the auditee may elect to have a program-specific audit conducted in accordance with § 200.507. A program-specific audit may not be elected for R&D unless all of the Federal awards expended were received from the same Federal agency, or the same Federal agency and the same pass-through entity, and that Federal agency, or pass-through entity in the case of a subrecipient, approves in advance a program-specific audit.
2 CFR § 200.514 discusses the scope of audits:
- (a) General. The audit must be conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS). The audit must cover the entire operations of the auditee, or, at the option of the auditee, such audit must include a series of audits that cover departments, agencies, and other organizational units that expended or otherwise administered Federal awards during such audit period, provided that each such audit must encompass the financial statements and schedule of expenditures of Federal awards for each such department, agency, and other organizational unit, which must be considered to be a non-Federal entity. The financial statements and schedule of expenditures of Federal awards must be for the same audit period.
2 CFR § 200.1 defines the “budget period” as “the time interval from the start date of a funded portion of an award to the end date of that funded portion during which recipients are authorized to expend the funds awarded, including any funds carried forward or other revisions pursuant to § 200.308.”
2 CFR § 200.514 indicates that the audit will cover “the entire operation,” providing some insight into the audit’s temporal scope. Presumably, the definition of “budget period” is relative to the “operations” an “auditee” would be conducting during grant programming. These provisions, among others, should be considered in preparing for any audit to determine the scope, or potential scope, of any audit.
The Interim Final Rule indicates a major risk for funding recipients, noting, “[u]nder the ARPA, failure to comply with the restrictions on use contained in sections 602(c) and 603(c) of the Act may result in recoupment of funds.”
Last Revised: June 8, 2021
 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 97, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.
 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 100, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.