COVID Financial Management
CARES Act Funding: Guidance for State and Local Governments
- State and local governments are receiving much needed financial relief from the federal government.
- Focus on the grant application process, your internal control system, small business grant applications, monitoring of subrecipients, and preparing for a single audit.
- CLA’s experienced professionals can help you interpret and navigate the compliance requirements for CRF funding and administration.
Have questions about CARES Act compliance?
Let’s begin with great news: state, local, and tribal governments are beginning to disburse funds under the Coronavirus Relief Fund (CRF), which was established in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Local governments with a population over 500,000 and tribal nations can receive direct distributions from the U.S. Department of the Treasury. Remaining funds will then be passed along to state governments, with a portion to be allocated by each state to the local governments (subrecipients) that did not receive direct funding. These entities can use the funding for COVID-19-related medical needs, equipment, and other services.
While the CARES Act funding provides desperately needed economic relief, the accompanying rules and regulations demand strict compliance, and can potentially lead to resourcing issues within your organization. Administration of these funds can be daunting. Work through the five areas below to get started.
1. The grant application process
Because many states request that subrecipients submit grant applications to receive remaining funds, it’s critical to create a clear-cut allocation plan. Of course, this is easier said than done. A properly prepared grant application requires you to meet demanding deadlines, convey your organization’s accomplishments clearly, and organize data into relatable results.
Ultimately, this is all about compliance: you can only spend money based on the rules and regulations set forth by the CRF. For example, you must avoid double-dipping, a practice where an organization attempts to receive the same reimbursement from two different entities. A strong grant application plan, based on federal guidance, can help you avoid missteps and remain compliant throughout the entire process.
2. Your internal control system
To comply with federal requirements, subrecipients of CRF funds may need to change their internal control structure, which can be a complex endeavor. From adhering to Uniform Guidance to following the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), creating, implementing, and documenting your internal control system for grants requires time and manpower you might not have during the ongoing pandemic.
3. Grant applications for small businesses
Small businesses across the country have suffered due to stay-at-home orders and phased reopening plans, which vary from state to state. The influx of CRF funds puts local governments in a position to provide these small businesses with grants.
With so many small businesses desperate to survive the pandemic — looking for financial relief in any form — we expect governments to receive a rush of applications. Engage an experienced team to help you review grant applications and supporting documentation to help businesses meet the established criteria to receive grant funds.
4. Monitoring of subrecipients
Given the amount of grant award funding, local governments might pass funding to subrecipients to help administer programs — which means you’ll need to develop and appropriately monitor subawards. These complex rules can be tricky, since you have to determine what critical elements may be missing from your current subrecipient monitoring procedures and then make swift improvements.
You don’t have to do it alone. A professional services firm can help you:
- Remain compliant with Office of Management and Budget (OMB) regulations
- Develop risk assessment tools to monitor your COVID-19 funding recipients
- Provide feedback and strategy on reporting mechanisms of subrecipients
- Perform subrecipient monitoring in accordance with Uniform Guidance and grant agreements (to help determine whether subrecipients are reporting timely to the grantor)
- Perform necessary follow-up and grant closeouts
5. Preparation for the single audit
If you receive CRF funds, you may meet the criteria for a single audit — and it may be your first time undergoing this experience. Single audits can be complicated, so the more you can educate yourself about the requirements and expectations beforehand, the more prepared your organization will be.
If you’re a first-timer — or you’ve undergone a single audit but need additional support — seek a team to help you prepare. For example, ask for assistance with the schedule of federal awards or for help compiling the necessary documents, agreements, and support needed for program testing.
How we can help
CLA can help with every step above. We have the resources to ease the burden of grant compliance for state, local, and tribal governments. Our experienced professionals can provide guidance as you interpret and navigate the compliance requirements for CRF funding.