An Alternative Compliance Examination for Coronavirus State and Local Fiscal Recovery Fund Recipients

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The historic American Rescue Plan program provided $350 billion from the U.S. Treasury to well over 30,000 recipients.  Many of the recipients, which are primarily state, local, and tribal governments, are small entities that have not previously been required to have a single audit for federal grant funds. A single audit is triggered when an organization receives and spends more than $750,000 of Federal funds in a year. 

Because a single audit is demanding, there have been discussions for months between the Treasury and the Office of Management and Budget (OMB) about how to reduce the burden on these small entities.  In addition, there have been concerns about the capacity of qualified auditors available to perform the audits.  

The Treasury, OMB, the Government Audit Quality Center (GAQC), and the National Association of State Auditors, Comptrollers and Treasurers worked collaboratively to develop an alternative to a full single audit or program-specific audit under the Uniform Guidance for certain recipients that would be less burdensome, but would still meet the Treasury’s duty to be good stewards of federal funds. 

CSLFRF Reporting Resolution

The outcome was announced on April 8, 2022.  It is an alternative engagement that is a compliance examination which is to be performed in accordance with the AICPA Statements on Standards for Attestation Engagements and Government Auditing Standards.  The practitioners will test narrowly scoped compliance requirements related to A/B-Activities Allowed or Unallowed/Allowable Costs and Cost Principles.  The result of the examination is an opinion on compliance.

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CSLFRF Timeline
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Read the Federal Regulation
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Go to the updated CSLFRF section

How the Alternative Differs from a Single Audit or Program-Specific Audit

Under the alternative engagement, a financial statement audit is not required.

A Schedule of Expenditures of Federal Awards (SEFA) is not prepared.

The requirements for internal control in 2 CFR 200.514(c) are not required. However, AT-C 315, paragraph .15 still requires the practitioner to obtain an understanding of relevant portions of internal control over compliance sufficient to plan the engagement to assess control risk for compliance with specified requirements

Invoice testing is more narrowly scoped than a full single audit engagement.

The engagement reporting is simplified.

Who is Eligible

CSLFRF recipients that expend $750,000 or more during the recipient’s fiscal year in Federal awards, and which meet both criteria listed below have the option to follow the alternative CSLFRF compliance examination engagement:

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The recipient’s total CSLFRF allocation received directly from Treasury or received as a non-entitlement unit of local government is below the $10 million revenue loss standard allowance; AND
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Other Federal expenditures not from the CSLFRF allocation in #1 (to the left) are less than $750,000 during the recipient’s fiscal year.

If your organization has questions or needs assistance with the Alternative Engagement, please reach out to us. As members of the AICPA Governmental Audit Quality Center, each member of our governmental accounting team attends continuing education classes specific to governmental accounting to ensure they receive 24 hours of training specific to governmental auditing every 2 years as well as an additional 40+ hours of continuing education in audit and accounting topics as well as firm management.

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Rachel G. Young, CPA, CGMA

Rachel is a Shareholder & Strategic Consultant who is also the leader of our Assurance Department.  She has over 20 years of experience working side-by-side with clients in Avizo’s governmental niche.

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