Coronavirus state and local fiscal recovery fund

Congress has enacted approximately $5.2 trillion in COVID-19-related federal funding. Building upon prior waves of federal assistance, the American Rescue Plan Act (ARPA) includes several new streams of funding. One of the significant ARPA funding streams is the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF).

CSLFRF unlocks $350 billion in federal funding for state and local entities. The CSLFRF program assumes pre-existing compliance policies, processes, people and systems will be used to manage this new federal money. Each recipient of the funding must assess whether their pre-existing policies, processes, people and systems are sufficient to manage the requirements. If not, they must make the appropriate adjustments and investments. CSLFRF money also can be used for new administrative costs, for example, adding more compliance staff or creating new systems to help manage the CSLFRF program.

Accenture analysis of COVID-19 funding streams

The CSLFRF compliance requirements are extensive and complex, and guidance is spread across many documents, such as the ARPA, several regulations from the Code of Federal Regulations, Executive Orders, memos and forms from the Office of Management and Budget (OMB) and numerous publications from the U.S. Department of the Treasury. One source of guidance (such as a Treasury regulation) may reference other sources of guidance (such as a regulation from OMB).

The ARPA is the law which authorizes all the ARPA programs and appropriates corresponding funding. The Act directs the Treasury Department to publish a regulation to implement the CSLFRF. The regulation implementing the law is 31 CFR Part 35 is often referred to as the Interim Final Rule.

The Interim Final Rule provides additional guidance to all programs of federal assistance. This is 2 CFR part 200 entitled Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, often referred to as Uniform Guidance. The OMB issued this regulation and it is a key source of guidance for all recipient governments.

Of particular interest is Appendix XI, often referred to as the Compliance Supplement. This document includes detailed guidance and suggestions to auditors to help them plan and execute audits. It is useful for a recipient government, the auditee, to have awareness of the approach auditors will use when auditing the CSLFRF.

The relationship between law and regulations

In addition to the compliance framework outlined above, the CSLFRF reporting requirements are extensive and complex. The Act requires three types of reports:

1. All recipient governments, except local units of government (NEUs), must submit an Interim Report. This is a one-time-only report covering the period of the initial award to July 31, 2021. The report must include a summary of obligations and expenditures (if any) during this period. These numbers should be presented by the seven expenditure categories (with 66 subordinate expenditure categories).
2. All recipient governments must submit a Project and Expenditure Report. When designing one’s data collection and reporting systems, it is essential to capture and organize the data before money is spent, thereby creating the data elements and data structure necessary to subsequently include in the reports.
3. Based on the criteria, the amount of money and size of population, certain recipient governments must submit a Recovery Plan Performance Report. These reporting requirements include data from programmatic systems not typically found in administrative and financial systems. In other words, a mixture of data from programmatic systems and administrative systems is highly likely. Again, when designing one’s data collection and reporting systems, it is essential to capture and organize the data before money is spent, thereby creating the data elements and data structure necessary to subsequently include in the reports.