LGT's Profit Sense

On May 5, 2020, the Government Audit Quality Center (GAQC), issued an industry alert No. 404 to professionals that serve organizations subject to Government Auditing Standards. Below are the two key items that impact the not-for-profit entities (NFPs):

Single Audit Requirements: SBA loan Programs

In response to the COVID-19 pandemic, Small Business Administration (SBA) Paycheck Protection Program (PPP) loans, administered under the 7(a) guaranty loan program, are being provided through local financial institutions. While these loans have been made primarily to for-profit entities, some NFPs have also received PPP loans, and have been asking whether PPP loans will be subject to the Uniform Guidance Single Audit requirements. 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, the loans made to NFPs 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, if the total federal financial assistance including the EIDL program is greater than $750,000 in their fiscal year, they will be subject to Uniform Guidance single audit requirements. 

Update on single audit extensions

The 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 COVID-19 crisis, and have not filed their single audits with Federal Audit Clearinghouse (FAC) as of March 19, 2020.  Recipients are not required to seek further approval for the extensions, but should maintain documentation for the reason for delayed filing.