The CARES Act created the Paycheck Protection Program (PPP) to provide loans to assist businesses and not-for-profit (NFP) organizations through the current crisis. However, many NFPs were concerned that if they received a loan and it was forgiven, the funds would be considered a government grant and would cause them to cross the Single Audit threshold, subjecting them to more rigorous and costly audit and reporting requirements.*
Some clarification was recently provided on these matters. The SBA has concluded that PPP Loans issued to nonprofits do not represent federal financial assistance as contemplated by Uniform Guidance (UG). Therefore, these loans will not be presented on the Schedule of Expenditures of Federal Awards (SEFA) and will not be subject to Single Audit requirements. However, SBA loans issued under the EIDL program will be considered as federal financial assistance and are required on the SEFA.
These updates were issued in response to a letter issued by AICPA’s Governmental Audit Quality Center (GAQC) to the U.S. Office of Management and Budget (OMB) that included common questions regarding Single Audits.
Nonprofits with any questions about PPP loans or other finance or audit issues are encouraged to consult with their advisors for further guidance related to their specific situation. Please feel free to contact your GYF Executive at 412-338-9300 for assistance.
*Under OMB Uniform Guidance, Single Audit requirements apply for an entity that expends $750,000 or more of federal assistance (commonly known as federal funds, federal grants, or federal awards) received for its operations. This rigorous, organization-wide examination is required by the federal government to provide assurance that the entity has appropriate internal controls in place, and is generally in compliance with program requirements. Click here for additional information about single audit requirements.