CARES Act Records Retention – Think Like an Auditor

by Chas Ann Fadrigo

The CARES Act (1) expenditure relief, whether received directly or indirectly from the U.S. Department of Treasury, must follow specific requirements. One important requirement to prepare for is the federal grant funds audit. When a non-federal entity (sub-recipient) expends $750,000 or more in federal funding during a fiscal year, it can expect a Single Audit (2) focused on compliance and internal control matters. 

A grant management policy (3) helps assure both the granting agency and the prime recipient that practices such as proper compliance review, internal controls, and monitoring are in place. Organizations that do not have a policy in place but receive Coronavirus Relief Fund payments should consider performing an internal audit to ensure COVID-19 related costs incurred during the covered period (March 1, 2020, to December 31, 2021) are necessary, appropriate, allowable, and well documented.  

Generally, federal grant recipients must retain records for three years from the date of submission of the final expenditure report (4); however, exceptions include real property and equipment. Well prepared grant documentation will serve as a "gift" during the audit process. Begin your preparation by reviewing the legal instrument of financial assistance and evaluating all applicable cost categories. Grant managers should reconcile project detail, identify expenditure types/assets acquired, and establish a list of significant contracts, loans, and transfers or direct payments to other entities. 

To establish strong federal award documentation, think like an auditor. Your organization will benefit from good preparation and avoid missteps such as those identified in audit reports found on the website (5).

Your CARES Act record-keeping started last year; audit-ready documentation can start today.

  1. Coronavirus Aid, Relief, and Economic Security (CARES) Act FAQs
  2. Single Audit -Uniform Guidance in 2 CFR §200.501 Subpart F has superseded OMB Circular A-133
  3. GFOA Best Practice Grant policy
  4. Federal Award Records Retention Requirements -2 CFR § 200.334
  5. Department of Treasury Office of Inspector General – Coronavirus Relief Fund Prime Recipient Desk Review Procedures OIG-CA-21-004R, March 22, 2021

Websites that include related audit reports:

  2. U.S. Government Accountability Office (U.S. GAO)