May 7, 2020

By Tricia Katebini, CPA, MBA, Senior Manager, Audit

On May 5, 2020 the Government Audit Quality Center (GAQC), issued an industry alert to professionals that serve organizations subject to Government Auditing Standards. Summarized below are two key items that impact the nonprofit community.

PPP loans are not subject to single audits

As many are well aware, SBA loans are administered under the 7(a) guaranty loan program and are being provided through local financial institutions. For the nonprofit community, particularly larger ones, or those teetering on the edge of hitting the $750,000 threshold for a single audit, there have been questions regarding whether PPP loan proceeds will be considered federal financial assistance and be subject to audit requirements under Uniform Guidance. In a recent discussion with SBA staff and the GAQC, SBA informed the GAQC that these loans will not be subject to a single audit.

However, it is worth mentioning that loans made to nonprofits under the Economic Injury Disaster Loan (EIDL) program are considered a direct loan program disbursed from the SBA to loan recipients, and therefore are considered federal financial assistance. Accordingly, these funds will be subject to Uniform Guidance single audit requirements and included on a nonprofit’s Schedule of Expenditures of Federal Awards should the single audit threshold of $750,000 be met.

Update on single audit extensions

As mentioned in GRF’s March blog post, extensions to complete and submit the Single Audit package are currently allowed up to six months beyond the normal due date for filers with fiscal year-ends through June 30, 2020. This is applicable to recipients and sub-recipients affected by the loss of operational capacity or increased cost due to the COVID-19 crisis, and have not filed their single audits with the Federal Audit Clearinghouse (FAC) as of March 19, 2020. Recipients are not required to seek approval for the extension, but should maintain documentation for the reason delaying filing (for example what the loss of operations are and how the award is affected).

In a recent announcement by the FAC, additional language was added that did not appear in the previously released OMB Memorandum M-20-17, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations (OMB Memo M-20-17). At the request of OMB, the FAC noted, “Individual recipients and sub-recipients…are requested to include a reference to the [OMB] memorandum in their audit reporting packages so that Federal agencies and pass-through entities are informed.” The GAQC currently believes the intent is for the auditee to add a statement in the reporting package when it has taken advantage of the 6-month extension due to the COVID-19 pandemic. The GAQC has reached out to OMB for confirmation on this, as well as where in the reporting package the notification should be included.

Next steps

PPP loan recipients should continue to follow industry alerts and future guidance to be provided by the SBA, as this is an ever-changing and continuously updated program. GRF CPAs & Advisors’ (GRF) COVID-19 Response task force is available to assist clients through the crisis, and the firm will distribute alerts and provide updates on the firm’s COVID-19 Response page as they develop.

For recipients and sub-recipients with year-ends through June 30, 2020 who are subject to a single audit and forced into a delay for their submission of their reporting package, we strongly encourage you to contact your audit service provider to discuss what criteria and support should be maintained for documentation purposes. To support good governance, it is important that the organization’s board and leadership understand the reasons for the delay as a best practice. For questions about the OMB memo and single audit extensions, contact Tricia Katebini, CPA, MBA, Audit Senior Manager, at or 301-951-9090.