Skip to content


2023 Interim Final Rule Expands Uses for Coronavirus State and Local Fiscal Recovery Funds

The American Rescue Plan Act was signed into law in March 2021. This Act created a $1.9 trillion stimulus package. The majority of these funds were used to expand the funding of existing programs while the remainder created new programs such as Coronavirus State and Local Fiscal Recovery Funds (SLFRF).

A little bit of background on SLFRF:

  • $350 billion was delivered to state, local, territorial, and Tribal governments across the country.
  • Eligible uses included:
    • Response to the public health emergency or its negative economic impacts, including:
      • assistance to households, small businesses, and nonprofits,
      • aid to impacted industries such as tourism, travel, and hospitality, or
      • construction of affordable housing, childcare facilities, schools, and hospitals
    • Response to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers
    • The provision of government services to the extent of the reduction in revenue
    • Necessary investments in water, sewer, or broadband infrastructure

Under the 2023 Interim Final Rule, eligible uses were expanded to include:

  • Emergency relief from natural disasters or the negative economic impacts of natural disasters including:
    • temporary emergency housing
    • food assistance
    • financial assistance for lost wages
    • other immediate needs
  • Additional infrastructure projects including projects eligible under:
    • Surface Transportation projects administered by the Department of Transportation
    • Projects eligible under Title I of the Housing and Community Development Act of 1974

This brief background highlights the broad definition of “eligible uses” of these federal funds that have continued to expand in every year since the program’s inception.

With this background information, the next question one might ask is, “How does this pertain to my organization?” Well, have there been any new grants or programs available to apply for at the State and/or Local level? Has there been an increase in the amount of funds received for existing grants or programs? If the answer is “yes” to any of the questions, there is a good chance the source of those funds could be SLFRF, as the definition of eligible use has proven to be flexible.

With that said, the United States Department of Treasury has identified SLFRF as a high-risk program. As such, recipients may be subject to additional audit requirements under Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). As a reminder, if an organization expends more than $750,000 of federal awards, it can be subject to a Single Audit or Program-Specific Audit under the Uniform Guidance.

The key takeaway is to communicate with the awarding agency/organization to determine the true source of grant funds, as there could be significant implications in terms of the degree of audit burden.

If an organization is smaller or does not receive grants funds often, they also may be thinking, “Oh no – we didn’t budget for an audit let alone a compliance audit!” Rest assured, the U.S. Department of Treasury has recognized that many recipients of SLFRF had not received federal assistance before or the other federal assistance they expended did not exceed the $750,000 threshold. So, as to not put any additional burden on these recipients, the U.S. Department of Treasury has allowed an alternative approach: a compliance examination engagement in accordance with Government Auditing Standards and the AICPA’s Statements on Standards for Attestation Engagements. This is significantly less in scope than a Single Audit or a Program-Specific Audit.

To be eligible for an Alternative Compliance Examination Engagement, a recipient must meet both criteria below:

  • The total SLFRF award received is at or below $10 million.
  • Other federal award funds expended (exclusive of SLFRF award funds) are less than $750,000 during the recipient’s fiscal year.

Please contact us if you have questions about the information outlined above, our seasoned and experienced nonprofit professionals are here to help. You can also learn more about our Nonprofit services by visiting our website.

About the Author

Mark Welliver

Mark joined McKonly & Asbury in 2011 and is currently a Senior Manager with the firm. He works in the firm’s Audit & Assurance Segment focusing primarily on the areas of affordable housing and nonprofit organizations. Mark is a mem… Read more

Related Industries

Subscribe to Our Newsletter

Contact Us