The effect of COVID-19 on the public sector is constantly evolving, and as a result, state and local governments continue to adapt and react every day. One thing is certain, there will be several tangible and intangible effects on local governments as a result of COVID-19. Many local governments have stopped providing certain services to citizens and the community resulting in a loss of critical operational revenues, and others will see diminished sales tax revenue down the line as many businesses have temporarily closed their doors.
While the long-term impact on local government is unknown at this time, as of today, some important reporting deadlines for governments have already been extended.
On March 20, 2020, the U.S. Office of Management and Budget (OMB) released memorandum M-20-17, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations. The memo is directed towards federal agencies, and it instructs agencies to take certain actions to provide administrative relief to grant recipients affected by the loss of operational capacity. The memo contains many provisions; however, the provision with the furthest reach is the extension of the Single Audit Submission deadline.
The OMB states that awarding agencies should allow recipients and subrecipients that have not yet filed their single audits with the Federal Audit Clearinghouse as of March 19, 2020 that have fiscal year-ends through June 30, 2020, an automatic extension of six (6) months beyond the normal due date. This extension does not require individual recipients and subrecipients to seek approval for the extension by the cognizant or oversight agency for audit; however, recipients and subrecipients should maintain documentation of the reason for the delayed filing. In addition, recipients and subrecipients taking advantage of this extension would still qualify as a "low-risk auditee" in the subsequent audit year.
Many Native American tribal governments have experienced closures or significant reductions in the operations of their casino and gaming operations. These total and partial shutdowns will make it difficult for tribal casinos to submit their audited financial statements and other required reports to the National Indian Gaming Commission (NIGC) by the required filing deadline of 120 days after fiscal year-end. On March 23, 2020, the NIGC released guidance providing a a 30-day extension of the submission deadline for tribal casinos.
In addition, the Government Finance Officers Association (GFOA) is providing extensions to the deadline for Comprehensive Annual Financial Reports to the GFOA’s certificate programs on a case-by-case basis. A government may request a 30-day extension of the submission deadline for the Certificate of Excellence in Financial Reporting program, Popular Annual Financial Reporting program, or the Distinguished Budget Presentation Award program by placing a formal request.
Governments can request an extension here.
Lastly, the Municipal Securities Rulemaking Board (MSRB), which operates the Electronic Municipal Market Access (EMMA) website, has not issued extensions to the electronic disclosure filing deadlines for governments that have publicly traded debt. The SEC has stated it does not have the direct authority to extend disclosure deadlines since the filing deadlines generally result from contractual obligations between the bond issuer (local governments) and investors. Governments that do not believe they will be able to issue their financial statements in time to meet their continuing disclosure requirements should contact their bond counsel in order to discuss the implications of this, and whether alternative filings should be made on EMMA.
It is clear that the impact of COVID-19 will be significant for 2020 financial reporting, federal grant administration and single audit reporting; therefore, RubinBrown will continue to monitor extensions and communications from the federal government.
Readers should not act upon information presented without individual professional consultation.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
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