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COVID Relief Loans: Will your Nonprofit NEED a Single Audit?


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COVID Relief Loans: Will your Nonprofit NEED a Single Audit?

After weeks of awaiting official guidance, the SBA has provided instruction via the AICPA Government Audit Quality Center (GAQC) regarding whether nonprofits receiving COVID-19 relief loans will be subject to a Single Audit under Uniform Guidance.

The Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDLs) have been a financial lifeline for countless businesses during the pandemic, including both for-profit and nonprofit organizations. However, as businesses begin receiving funds, uncertainties around accounting for the loans and planning for future reporting obligations are emerging. This is especially true for nonprofits concerned about the Single Audit, which is a particularly rigorous audit for any government or nonprofit entity that expends $750,000 or more in federal funds in a single year.

The Facts

On May 5, the AICPA GAQC announced the new SBA guidance which clarifies that nonprofits receiving PPP loans will not be subject to Single Audit, but that nonprofits receiving loans through the EIDL program will be. The distinction is based on how the two loans are distributed. Because the PPP loans are provided through local financial institutions, they are not considered federal financial assistance. However, loans from the EIDL program are disbursed directly from the SBA and are therefore regarded as federal financial assistance and are subject to Single Audit.

Nonprofits that receive an EIDL loan should include the total loan amount when calculating whether a Single Audit is required. If the amount of the EIDL loan in combination with other federal funds exceeds $750,000 in their fiscal year, the nonprofit must complete a Single Audit. However, this new guidance confirms that nonprofits will not need to include any PPP loan amounts in this calculation.

Aprio Can Help

Aprio is continuously monitoring new guidance from the SBA and AICPA, as well as the Treasury and the IRS, to ensure we have the latest information when advising our clients. If you have a nonprofit business and you are concerned about your obligation to complete a Single Audit after receiving a loan through the PPP or EIDL programs, you can contact Aprio Partner Justin Elanjian for more information.

Although PPP loans will not impact a nonprofit’s subjectivity to a Single Audit, these loans do pose other complex issues for companies who receive the funds, especially in regards to PPP Loan Forgiveness. For a consultation on the documentation of need and the requirements to maximize PPP Loan Forgiveness, reach out!

Contact Aprio’s dedicated SBA Loan Forgiveness Team.