Single Audit Implications of CARES Act Funding

In response to the COVID-19 pandemic, many not-for-profit entities applied for relief funding made available through the CARES Act. Two of the most common forms of funding are loans made through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program.

A significant question among not-for-profit entities that received PPP or EIDL funding was whether or not the loans, which are sourced from the U.S. Small Business Administration (SBA), would be considered federal assistance with respect to the Uniform Guidance single audit requirements. 

The AICPA Government Audit Quality Center (GAQC) released Alert No. 404 noting that based on their discussions with SBA staff, it is their interpretation that PPP Loans made to not-for-profit organizations would not be subject to single audit under the Uniform Guidance. However, loans made to not-for-profit organizations under the EIDL program would be considered federal financial assistance and are subject to the Uniform Guidance single audit requirements. 

Although the GAQC is not an authoritative body, not-for-profit entities may choose to use the information in the GAQC Alert for planning decisions as we all continue to await official guidance from SBA. 

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