OMB issues M-21-20: Administrative flexibilities, relief, and single audit extensions

On March 19, 2021, the Office of Management and Budget (OMB) issued memorandum M-21-20 to address the effective implementation of the American Rescue Plan (ARP) Act and stewardship of taxpayer resources. The memorandum provides federal agencies with authorization to take certain actions, including certain flexibilities that can be extended.

Among the administrative relief provided in the memorandum is a six-month extension for single audit submissions. The extension applies to any single audit that hasn’t been filed as of March 19, 2021, and will include all entities with fiscal year-ends through June 30, 2021. The memo emphasizes that individual recipients and subrecipients aren’t required to seek approval for the extension but should maintain documentation, including reasons for the delayed filing. This documentation is essential. It’s important to note that the extension won’t impact the entity’s ability to be considered a low-risk auditee.

Single audit submission extended due dates:

Even though an extension for single audit submission has been granted, we encourage you to continue with scheduled audits and only utilize the extension as a last resort.

In addition to the single audit extension included in M-21-20, below we highlight other areas of significance.

Even though an extension for single audit submission has been granted, we encourage you to continue with scheduled audits and only utilize the extension as a last resort.

Application of Title 2 of the Code of Federal Regulations, Grants and Agreements

M-21-20 strongly encourages federal agencies to apply the requirements of Title 2 of the Code of Federal Regulations, Grants and Agreements to federal financial assistance funded through ARP to the maximum extent authorized by law.

2 CFR 200 implementation plan

The memo states that federal agencies are required to submit their proposed implementation plan of 2 CFR 200 for approval by OMB, prior to program administration, including submitting an assistance listing, and award issuance.

ARP high-risk designation

Appendix 2, Achieving More Equity-Oriented Results for Financial Assistance OMB, instructs federal agencies to perform a risk analysis of ARP programs and to request OMB designate any higher risk programs as a single audit major program. OMB will use the 2021 compliance supplement to notify auditors of any high-risk designations as well as compliance requirements that should be tested for ARP programs.

Biennial physical inventory of equipment

Appendix 3, Disaster Relief Flexibilities to Reduce Burden for Financial Assistance, grants several relief flexibilities, including the fact that awarding agencies may provide grantees up to a 12-month extension for the biennial physical inventory of equipment purchased under a federal award. If an extension is granted, it will be important to maintain documentation of the agency’s decision.

For-profit implications

M-21-20 indicates that federal awarding agencies are expected to follow the requirements as directed by OMB in 2 CFR part 200 (Uniform Guidance) for financial assistance awards to for-profit organizations to the maximum extent authorized by law. Uniform Guidance, as adopted by the agencies, provides requirements for all federal awards from program design to closeout and includes audit requirements under the Single Audit Act of 1996. The memo also points out that agencies may consider deviations in areas, including audits. Ultimately, agencies will need to consider whether a single audit or some other audit is most appropriate for for-profit entities.

We encourage you to read the memorandum, M-21-20, in its entirety to gain a thorough understanding. If you have any questions about the administrative relief, please reach out to us.