As a recipient of an award under the American Rescue Plan Act’s (ARPA) Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), recipients are required to comply with Treasury’s Final Rule. Among other requirements, the Final Rule states “most of the provisions of the Uniform Guidance (2 CFR Part 200) apply to this program, including the Cost Principles and Single Audit Act requirements.” Treasury maintained the right to make certain exceptions to the Uniform Guidance and has provided various iterations of frequently asked questions (FAQs) to recipients providing clarity on the applicability of numerous regulations.
In the July 27, 2022 version of the FAQ’s, Treasury has provided exceptions to recipients over certain provisions of the Uniform Guidance for expenditures made under “Revenue Replacement” in questions 13.14 – 13.16. These exceptions may change how recipients choose to expend the portion of their award declared as revenue loss. The full text of the exceptions can be found in Treasury’s Frequently Asked Questions. Treasury reminds recipients that while certain provisions of the Uniform Guidance may not apply, they should not deviate from their established practices and policies regarding the incurrence of cost.
Notable changes impacting expenditures made from revenue replacement contained in the updated FAQs:
With these changes, recipients may wish to reconsider their strategy for utilizing the portion of their award dedicated as Revenue Replacement. Treasury has afforded an opportunity to do so. Originally, the “one-time, irrevocable” election to calculate revenue loss or take the $10 million standard allowance was to be made with the April 2022 Project and Expenditure Report. Treasury has now extended this deadline through April 2023 and any change will supersede the prior election. Also, previously reported program expenditures can be reallocated among expenditure categories in future Project and Expenditure Reports.
As a reminder, important CSLFRF requirements applicable to Revenue Replacement have not changed. Like funds expended from the other expenditure categories, Revenue Replacement expenditures must be obligated by Dec. 31, 2024 and expended by December 31, 2026. The following overarching prohibitions still apply:
ARP awards create an opportunity to make transformational improvements in your community. Baker Tilly continues to guide our clients through the evolving landscape of the American Rescue Plan Act. Please contact us to discuss how our proven Four steps to a successful ARP process can benefit your community.