OMB Rescinds Previous COVID Flexibility Memorandums and Issues M-20-26
Section: Washington Update

M-20-26: Extension of Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) Due to Loss of Operations
Last week, the U.S. Office of Management and Budget issued M-20-26 to provide for an extension of allowability of salaries and other project activities (item 6 in M-20-17) through September 30, 2020, and to also extend the single audit submission (item 13 in M-20-17) through December 31, 2020,  to allow a responsible transition to normal operations.
OMB previously issued three memoranda directing that all federal departments and agencies marshal all legally available federal resources to combat the Coronavirus crisis. The OMB memos were intended to provided class exceptions allowing federal awarding agencies to grant various administrative, financial and audit requirement flexibilities to their recipients. The flexibilities and current expiration dates are June 16, 2020 (for M-20-17 and M-20-20) and July 26, 2020 (for M-20-11).
While M-20-26 extends some of the flexibilities provided in previous expiring memos, it also:
  • Eliminates the six-month single audit extension that was contained within M-20-17.  While the new memo does contain an extension for certain entities, there is no extension for entities with 6/30/2020 year-ends. 
  • Requires auditees and auditors to separately identify Emergency Acts expenditures on the SEFA and audit findings, respectively. OMB has stated that instructions will be provided in the Compliance Supplement Part 8, Appendix VII and any agency guidance related the implementation of M-20-26. The FAC webpage will also have a reminder. 
  • Added the requirement to exhaust other funding sources and reduce overall operational costs. Specifically, it states: 
Due to the limited funding resources under each federal award to achieve its specific public program goals, awarding agencies must inform recipients to exhaust other available funding sources to sustain its workforce and implement necessary steps to save overall operational costs (such as rent renegotiations) during this pandemic period in order to preserve Federal funds for the ramp-up effort. Recipients should retain documentation of their efforts to exhaust other funding sources and reduce overall operational costs.
All flexibilities provided in this memorandum are time-limited and will expire on September 30, 2020. M-20-17 and M-20-20 are rescinded. M-20-11 expires on July 26, 2020.