Due to the far-reaching economic impact of the COVID-19 pandemic, many nonprofit organizations have turned to the emergency funding streams issued by the U.S. Small Business Administration (SBA). These streams include, the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program Loans (PPP).
Shortly after these relief opportunities became available, the American Institute of Certified Public Accountants's (AICPA) Governmental Audit Quality Center (GAQC) posed this important question to the SBA: Do these funds constitute federal awards which would be subject to the Uniform Guidance single audit requirements? Fortunately, we now have an answer.
The GAQC asked this question, and the SBA staff stated that loans made under the PPP will not be subject to the single audit requirements. Alternatively, loans received under the EIDL program are considered to be part of the SBA’s direct loan program and are considered federal financial assistance and will be subject to the single audit requirements under the Uniform Guidance. This means nonprofit organizations that receive a loan under the EIDL program must include these funds as federal awards for the calculation to determine if an audit is required under the Uniform Guidance.
To ensure the proper reporting of funds received through federal relief programs, contact your Friedman advisor.