COGR Suggests Delaying Further Compliance Supplement Guidance

Jerry Ashworth
October 15, 2020 at 09:15:19 ET
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As we wait for the Office of Management and Budget (OMB) to release its addendum to the 2020 OMB Compliance Supplement providing additional audit guidance related to emergency funding in response to COVID-19 through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136) and other supplemental packages, the Council on Government Relations (COGR) is essentially suggesting that this addendum is too late.

In a letter sent to OMB last week, the 190 members of COGR responded to the initial discussion about audits pertaining to COVID-19-related funding in Appendix VII of the 2020 Compliance Supplement, explaining that because its members already are already engaged in their fiscal year (FY) 2020 audits, it requested that all audit programs and corresponding guidance applicable to COVID-19 be deferred to the 2021 Compliance Supplement. “In the context of the national emergency declared by the president earlier in the year and the request by national leaders for research institutions to provide [personal protective equipment], personnel and other resources to support the federal efforts to combat the novel coronavirus, ‘business as usual’ audit activity would be entirely inappropriate,” COGR noted, adding that “final audit reports for FY2020 should be silent on all activities related to the novel coronavirus — and instead, a thoughtful and reasonable audit program can be proposed for the 2021 Compliance Supplement.”

COGR also touched on some other areas within the 2020 supplement about which it had concerns. Addressing the Part 3 Cash Management compliance requirement, it reiterated a consistent point of contention that better language about the meaning of “paid” would be helpful to auditors and grantees and would not place federal dollars at risk. It suggested that OMB use the following definition in the 2021 supplement: “’Paid’ is defined as the placement of the costs into the nonfederal entity’s accounts payable system, which then disburses cash in the normal course of business using the non-federal entity’s payment policies and procedures.”

COGR explained that this suggested definition would be more clear and would be more consistent with §200.305(b) of the uniform guidance. “Without this clarity in definition, timeliness is negatively impacted,” it said, adding the such clarity would “support OMB’s goals of reducing audit burden while still ensuring compliance and accountability for federal funds.”

The COGR letter also noted that in the 2019 and 2020 supplements, OMB required that each federal agency limit the number of compliance requirements subject to the audit to six, with the exception of the Research and Development (R&D) cluster, which has been permitted to identify seven compliance requirements. COGR asked OMB for an explanation as to why the R&D cluster requires an additional compliance requirement.

COGR brings up some interesting points in its letter. We’ll have to wait and see if any of these are addressed going forward.

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