The Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP) are providing significant relief to organizations, despite the continued confusion around forgiveness. Congress has been making it clear that they did not want these programs to result in any unintended burden or consequences for those benefiting from them. However, there have been recent discussions regarding the requirement to have a Single Audit performed if you receive federal funding as part of the EIDL or PPP, which would post a significant burden to many recipients.
Preliminary guidance recently released by the AICPA indicates that PPP loans received by nonprofit organizations would not trigger the Single Audit requirement. However, it appears as though funding received under the EIDL program is considered to be a direct loan, and accordingly, federal financial assistance, that depending on the amount received, could subject the nonprofit organization to the Single Audit requirement. Typically, a nonprofit organization is required to have a Single Audit when receiving and expending federal funding of $750,000 or greater. For nonprofit organizations that would be otherwise under this threshold, proceeds received under the EIDL program could thrust them above the threshold and trigger the audit requirement.
It appears that the rules pertaining to for-profit entities could differ; if a for-profit entity is already subject to a Single Audit, any funding from the EIDL would be aggregated with other federal funds received and included in your SEFA (Schedule of Federal Expenditures of Federal Awards). However, if you are a for-profit entity that does not receive federal funds, or have been under the threshold in the past, and accordingly has not been subjected to a Single Audit, funding received from the EIDL would not be aggregated with those other federal funds to determine whether or not you would subject you to a Single Audit requirement.
If your organization has received funding under the EIDL program, and you have questions regarding your Single Audit filing requirements, please reach out to our Assurance & Advisory team here at LGA and we will be happy to guide you through the requirements.
by Daniel Pare, CPA