New OMB 2021 Compliance Supplement Impacts Tribes and Gaming

The Office of Management and Budget (OMB) has published the 2021 Compliance Supplement and Addendum 1, affecting audits of fiscal years beginning after June 30, 2020.

Below are some key takeaways.

Program Guidance Applicability

The 2021 Compliance Supplement allows auditors to determine Tribal compliance with given requirements based on the applicable implementing guidance that was in effect at the time.

The Department of Treasury (Treasury) issued the final rule for the State and Local Fiscal Recovery Funds, also known as the Fiscal Recovery Funds, on January 6, 2022, but the Treasury has stated that guidance in the interim final rule will remain effective until adopting the final rule.

Risk-Designation Revisions

The OMB has established risk designations for certain programs causing more programs to be considered higher risk. More major programs could be identified for audits as a result.

Appendix IV in Part 8 of the Compliance Supplement details which programs federal agencies identified as higher risk and the resulting impacts on determining major programs.

Auditors and federal agencies may become more likely to test certain programs with COVID-19 funding as part of this process.

These higher risk programs include the following programs and Assistance Listing Numbers (ALNs):

  • Coronavirus Relief Fund (CRF) (21.019)
  • Education Stabilization Fund (84.425)
  • Emergency Rental Assistance (21.023)
  • Testing for the Uninsured (93.461)
  • Provider Relief Fund (93.498)
  • Federal Transit Cluster (20.500/20.507/20.525/20.526)

All new American Rescue Plan Act (ARP) programs, including the Fiscal Recovery Funds program (21.027), are considered higher risk, and this designation only applies to new programs created under the ARP Act and not existing programs that may have received ARP Act funds.

OMB has issued a list of all COVID-19 ARP Act funding.

Fiscal Recovery Funds

Addendum 1 includes guidance on the Fiscal Recovery Funds program. Fiscal Recovery Funds can be used in accordance with the Treasury’s final rule and FAQs but can’t be used for pension-fund deposits or contributions to rainy day funds, financial reserves, or similar funds.

Period of Performance

Costs charged to the Fiscal Recovery Funds must be incurred on or after March 3, 2021 through December 31, 2024. Tribes must liquidate all obligations by December 31, 2026.

No new costs can be charged to the Fiscal Recovery Funds in 2025 and 2026. Tribes should ensure that any potential add-ons be incorporated into the necessary contracts by December 31, 2024.

Subrecipients and Beneficiaries

OMB takes a similar approach to defining beneficiaries and subrecipients under the Fiscal Recovery Funds as described in a previous article.

If a Tribe provided Fiscal Recovery Funds assistance to its casino as an end user in response to the negative economic impacts of COVID-19, then the casino would be considered a beneficiary and thus not subject to the Single Audit Act and 2 CFR Part 200 Subpart F audit requirements.

If a Tribe provided Fiscal Recovery Funds to an entity for carrying out a program on behalf of the Tribe, then that entity would be considered a subrecipient and be subject to those audit requirements, and the Tribe would be subject to subrecipient monitoring requirements.

Revenue Replacement

OMB states that the revenue replacement calculations provided in the interim final rule aren’t subject to audit for fiscal year 2021.

Fiscal Recovery Funds expenditures reported in the Schedule of Expenditures of Federal Awards (SEFA) should only include costs incurred for eligible uses, not the results of the revenue loss calculation.

Extended Application of Federal Funding Accountability and Transparency Act (FFATA)

The Compliance Supplement includes special reporting for FFATA with expanded application compared to that of 2020. The FFATA requires Tribes and Tribal federal contractors that provide $30,000 or more in first-tier subawards or subcontracts to report monthly.

If a Tribe passes through federal program funds to a sub-recipient, FFATA reporting will now be required for most programs, including the following programs commonly operated by Tribal governments.

  • Indian Community Development Block Grant Program (14.862)
  • Indian Housing Block Grants (14.867)
  • Consolidated Tribal Government Program (15.021)
  • Tribal Self-Governance (15.022)
  • 477 Cluster (various ALNs)
  • Indian Law Enforcement (15.030)
  • WIOA Cluster (17.258, 17.259, 17.278)
  • Native American Employment and Training (17.265)
  • Temporary Assistance for Needy Families (TANF) (93.558)
  • Head Start Cluster (93.600)

Tribes don’t have any FFATA reporting requirements for two of the largest programs received during the pandemic: The Coronavirus Relief Fund (21.019) and the Fiscal Recovery Funds (21.027).

For the latter, Treasury is FFATA reporting on behalf of its recipients, including Tribes.

COVID-19 SEFA and DCF Reporting

The 2021 Compliance Supplement still requires Tribes to separately identify COVID-19 awards and expenditures on their SEFA and Data Collection Form (DCF). It also requires Tribes to disclose any donated personal protection equipment (PPE) received in notes to the SEFA, but not as amounts to be audited or presented as expenditures within the SEFA itself.

The Department of Health and Human Services clarified that federally provided vaccines to Tribes and other health care providers aren’t considered federal financial assistance and aren’t subject to PPE disclosures.

Next OMB Addendum

OMB is expected to release Addendum 2 in January 2022, which could include revisions to Child Care and Development Block Grant (93.575) and TANF (93.558).

We're Here to Help

For more information about how the 2021 Compliance Supplement and Addenda may affect your Tribal organization, contact your Moss Adams professional.

You can also learn more about our Tribal & Gaming Practice and additional topics affecting the Tribes.

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