Eligible Uses of CARES Act Funds for Compliance and Management Expenses in 2022
Although the deadline for “incurring” CARES Act funds has passed, Alaska Native Corporations can still use CARES Act funds to pay for administrative and compliance related expenditures in 2022, including staff time spent administrating programs and CARES Act expenses incurred by December 31, 2022.
According to U.S. Department of the Treasury guidance, ANCs can use CARES Act funds to pay for the portion of payroll and benefits of employees corresponding to time spent disbursing payments from the fund and managing new grant programs established using payments from it:
“Recipients may, if they meet the conditions specified in the guidance for tracking time consistently across a department, use payments from the Fund to cover the portion of payroll and benefits of employees corresponding to time spent on administrative work necessary due to the COVID–19 public health emergency. (In other words, such costs would be eligible direct costs of the recipient). This includes, but is not limited to, costs related to disbursing payments from the Fund and managing new grant programs established using payments from the Fund.”
Treasury guidance further provides that administrative costs related to costs incurred by December 31, 2021, are eligible administrative expenses that can be paid for using Coronavirus Relief Funds even if they are incurred in 2022:
“As previously stated in FAQ B.11, recipients are permitted to use payments from the Fund to cover the expenses of an audit conducted under the Single Audit Act, subject to the limitations set forth in 2 CFR 200.425. Pursuant to that provision of the Uniform Guidance, recipients and sub recipients subject to the Single Audit Act may use payments from the Fund to cover a reasonably proportionate share of the costs of audits attributable to the Fund.
“To the extent a cost is incurred by December 31, 2021, for an eligible use consistent with section 601 of the Social Security Act and Treasury’s guidance, a necessary administrative compliance expense that relates to such underlying cost may be incurred after December 31, 2021. Such an expense would include, for example, expenses incurred to comply with the Single Audit Act and reporting and recordkeeping requirements imposed by the Office of Inspector General.” (Emphasis added)
Accordingly, to the extent that you have an “administrative compliance expense” that “relates to” an eligible CARES Act expenditure incurred by December 31, 2021, that expense can be reimbursed in 2022 using CARES funds. This should include both audit and legal expenses related to CARES Act compliance, and staff time spent administering CARES Act programs and expenses.
Finally, while all CARES Act funds (or expenditures incurred by December 31, 2021) must be paid out by September 30, 2022, the Treasury recognizes that CARES Act recipients may incur Single Audit expenses related to the CARES Act funds after September 30, 2022. Accordingly, the Treasury has stated that for such expenses, the CARES Act recipient will need to report an estimate with its final report for the quarter ending September 2022:
“A recipient with such necessary administrative expenses, such as an ongoing audit continuing past December 31, 2021, that relates to Fund expenditures incurred during the covered period, must report to the Treasury Office of Inspector General by the quarter ending September 2022 an estimate of the amount of such necessary administrative expenses.”
This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.