The CARES Act will release billions of dollars in federal funding into the system to be administered by states and federal agencies. A significant portion of the funding, $150 billion, will be used to fund the COVID-19 Relief Fund (state stabilization fund). The state stabilization fund will provide direct aid specifically for COVID-19 related expenses to states, tribal governments, territories and local governments with populations greater than 500,000 people. Local governments with populations less than 500,000 people will be able to apply for pass-through funding from their state government.

Qualifying expenditures to be funded by the stabilization fund must be costs incurred that were necessary expenditures incurred due to the public health emergency resulting from the pandemic, were not accounted for in the budget most recently approved as of the date of enactment, and incurred from March 1, 2020 through December 30, 2020.

Some federal assistance may be additional funding on an existing federal grant award, or may otherwise have an assigned Catalog of Federal Domestic Assistance (CFDA) number. However, some funding may be assigned a new CFDA number. In addition, federal funding passed through by the Small Business Administration to qualifying small businesses and charitable organizations could be assigned a CFDA number.

Generally, when an organization expends at least $750,000 of federal funding within that entity's fiscal year, a single audit or program specific audit in accordance with the Uniform Guidance is required. The Uniform Guidance is simply a set of authoritative rules and regulations about federal grants from the Office of Management and Budget (OMB).

As of today, federal agency officials are working with the OMB to determine CFDA numbers for some financial assistance created by the CARES Act. If your organization is unsure about whether or not funding is subject to the Uniform Guidance, you should be mindful in tracking the receipt and use of such funding.

Here are some federal funding record keeping reminders:

• Segregate federal funds - The receipts and expenditures of federal funding should be segregated in the general ledger to allow for easier and more accurate reporting.
• Retain detailed records - Source documentation related to federal expenditures, such as vendor invoices, payroll records, and procurement files should be retained for at least three years.
• Keep sound documentation - internal discussions and decisions should be documented in a memo to memorialize the decisions made that might require judgement.
• Internal controls - Internal control procedures should be formally documented, to ensure they are followed as designed and are easily auditable. At a minimum, make sure transactions are reviewed and approved by someone other than the preparer or initiator.

The timeline of when states and local governments will receive these federal subsidies is still unknown. Some small businesses have already received loans from the Small Business Administration as expanded by the CARES Act. RubinBrown will continue to provide updates on the applicability of federal funding from the CARES Act to the Uniform Guidance as they become available.

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