ESSER Funds May Subject Charter School to Federal Single Audit

In response to the COVID-19 pandemic, federal funding has been available to charter schools through the Massachusetts Department of Elementary and Secondary Education (DESE) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.  The most significant of this funding is the Elementary and Secondary School Emergency Relief (ESSER) funds.

While these funds are and have been integral in helping charter schools in the current pandemic environment, the addition of these Federal funds could come at a hidden cost. If a charter school utilizes over $750,000 of Federal funds, which includes entitlement grants and a significant portion of nutrition funding, the charter school will be required to undergo an audit under Subpart F of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), known as a Single Audit. Many charter schools currently receive less then the $750,000, however this additional funding will push them over this threshold, subjecting them to a “Single Audit.”

The specific compliance requirements related to the CARES Act & ESSER funds have yet to be defined by the U.S. Office of Management and Budget (OMB). AAFCPAs will continue to monitor communications from OMB and provide additional updates and guidance as new information becomes available.

How to Prepare for a Federal Single Audit?

In order to best prepare for a federal audit for fiscal year 2021, AAFCPAs advises charter school clients to consider the following:

  • Assess and project the total amount of federal funding to be expended in fiscal year 2021 and determine if the charter school will be over the $750,000 Single Audit threshold.
  • Familiarize yourself with the Uniform Guidance requirements and the OMB Compliance Supplement to ensure you have the current policies and procedures in place, specifically the federal procurement standards, which differ from those required at the state level. Although, as indicated above, we do not currently know the specific audit requirements for the CARES funding, the standard federal requirements will most likely be applicable.
  • Prepare a mock audit internally to assess your readiness for a Single Audit.
  • Reach out to your AAFCPAs advisors for assistance and guidance to begin the process now to avoid surprises.

If you have questions, please contact Nichole Reilly, CPA, MBA, at, 774.512.4016, John Buckley, CPA, CGMA, at, 774.512.4039; or your AAFCPAs Partner.