PPP Loans-Take Two

First, you should know that if you took a first-round PPP loan that did not exceed $150,000, SBA has just released a simplified forgiveness form-just one page with key information, but with no requirement to document payroll or other costs (although that documentation should be retained in case it is requested in the future). The form is called PPP Loan Forgiveness Application Form 3508S. It may be used for first and second round loans.

If you took an original PPP loan and spent it all on allowable expenses, you can apply for a second round loan.

However, to qualify for a second round loan, you must have been adversely affected by the pandemic and this is measured by a decline in your gross receipts.

The maximum loan amount for second round loans is based on 2.5 times the average monthly qualifying costs for payroll, payroll taxes, and fringe benefits, with an overall maximum of $2 million.

Applicants for second round loans must have no more than 300 employees and must have suffered a decrease in gross receipts of 25% or more in any quarter from 2019 to the same quarter 2020. Alternatively, a decrease of 25% for the full year will also qualify.

Unlike businesses, nonprofits use amounts collected to determine whether they had a 25% decrease.  This can be beneficial because a timing change could result in a qualifying decrease.

Contributions as well as funding and revenue are all included as amounts collected for nonprofits. PPP loan proceeds are not included.

SBA has guidance for organizations that were not in operation for a full year in 2019.

If you did not take an original PPP loan, you can apply for an initial loan under the new program.

The calculation for first round loans is essentially the same as described above for second round loans, with an overall limit of $10 million.

As in the past, first round loan borrowers need to maintain employee and compensation levels and spend the proceeds on payroll and other eligible costs such as mortgage interest, rent, utilities, and worker protection costs related to Covid-19.

In some circumstances, organizations are allowed to modify their first round loans if they did not receive all they were eligible for.

Either first or second round loans must be applied for by March 31, 2021. These loans will be made through banks.

SBA and the AICPA have extensive guidance on the loan process.

Have you completed your 1099s? There is a new form 1099 NEC

What is nonemployee compensation?  by John Heveron

If the following four conditions are met, you must generally report a payment as NEC.

  • You made the payment to someone who is not your employee.
  • You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).
  • You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
  • You made payments to the payee of at least $600 during the year.

Trade or business reporting only.

 Report on Form 1099-NEC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit. However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements.

Due Date.  Form 1099 is due January 31, 2020 (presumably February 1 because the 31st is a Sunday).  The due date doesn’t get extended with electronic filing.

Exceptions. Some payments do not have to be reported on Form 1099-NEC, although they may be taxable to the recipient. Payments for which a Form 1099-NEC is not required include all of the following.

  • Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). However.
  • Payments for merchandise, utilities, freight, storage, and similar items.
  • Business travel allowances paid to employees (report on Form W-2).
  • Cost of current life insurance protection (report on Form W-2 or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.).
  • Payments to a tax-exempt organization including tax-exempt trusts (IRAs, HSAs, Archer MSAs, Coverdell ESAs, and ABLE (529A) accounts), the United States, a state, the District of Columbia, a U.S. possession, or a foreign government.

Tips for your first single audit

by John Heveron

Will this be the first year you are subject to compliance auditing?  If so, the following information will help you prepare.

If you expend (not receive) $750,000 or more of federal funds in a fiscal year, you will be subject to compliance auditing.  You can calculate that $750,000 amount on a cash or accrual basis regardless of your regular accounting method, but will need to be consistent with that method going forward.

The $750,000 threshold includes expended amounts that were received directly from the federal government or indirectly through other agencies.

Additional CARES Act funding that you received during the year is federal funding (Heath and Human Services (HHS) Provider Relief Fund), and so is the forgiveness of an EIDL (COVID-19 Economic Injury Disaster Loans) loan because it comes from the SBA (Small Business Administration) – a government agency.  However, PPP (Paycheck Protection Programs) loans come from banks and are not considered federal funding even though they are ultimately paid by the federal government.

So, if you expect to be subject to compliance auditing for this fiscal year because you will spend $750,000 in federal funds, here are some key things to do now:

  • First, make sure that your CPA firm is experienced and qualified with compliance auditing.  If they only do one or two compliance audits, you may want to consider another firm.  Ideally, they will be members of the AICPA Governmental Audit Quality Center (Association of International Certified Professional Accountants).  You may need to request proposals from other accounting firms
  • Schedule a meeting with your auditors in advance of the audit so that you can discuss their expectations of you.  Although there are certain procedures auditors must follow, they are permitted to use their professional judgment and conduct the audit in the way they feel is most appropriate.

Because compliance audits incorporate Governmental Auditing Standards and Generally Accepted Auditing Standards, your auditors will perform procedures to be sure that you have systems in place to:

  • comply with laws, regulations, contracts and agreements that will impact your financial statements, and have controls over that compliance
  • comply with requirements that have a direct and material effect on the funding you receive, and have controls over those areas of compliance.  These include items such as, who is eligible to receive services, what services can be provided, and during what time frame.

Uniform Guidance (2 CFR 200) and HHS regulations (45 CFR 75) refer to a process for controls which includes the following:

  1. The Control Environment–your commitment to integrity and ethical values, your oversight, and your commitment to competence and accountability (ongoing training is big)
  2. Risk Assessment–identifying and analyzing risks, and assessing fraud risks
  3. Control Activities–the policies and procedures you adopt for accounting and documentation, and your controls over technology
  4. Information and Communication–your internal communications and training and external communications about your policies, procedures, and values
  5. Monitoring Activities–your ongoing assessment of whether controls are appropriate for your current programs and whether they are being followed

This sounds somewhat unwieldy, but stated more simply, it says that you must (1) consider what could go wrong with your accounting, reporting, or the execution of your grants, (2) develop board approve policies to reduce the possibility of errors, and alert you about problems, (3) train staff involved with finances and grant administration about these policies, and (4) periodically check back to make sure your controls are still working and are still proper for your circumstances.

Some of the key policies you will need to have include:

  • an up-to-date personnel policy which incorporates current regulations and addresses whistleblower protection and conflicts of interest (these can be separate policies)
  • a procurement policy that meets requirements of Uniform Guidance and Uniform Administrative Guidance
  • procedures for carrying out federal awards, including for the management of any advance payments you receive, and
  • security for protection of confidential information, including employee and client information

Your auditors may also look into your procedures for:

  • Budget development and review,
  • Compliance with your indirect cost rate or other cost reimbursement procedure,
  • Identifying unallowable costs,
  • Verifying that costs are necessary and Reasonable
  • Records retention,
  • Securing property and equipment,
  • Dealing with subcontractors and subrecipients, and
  • Complying with the buy American and hire American Executive Order.

ILRU has several helpful resources including sample policies and procedures for procurement, records retention and the like.

CARES Act funds used for Transition, Diversion, and related Housing costs

As Kelly Buckland, NCIL ED says it, “Affordable, accessible housing or the lack of it, is the biggest barrier to transitioning people from congregate settings.” He clarified with ACL/OILP that centers can use CARES Act funding to assist individuals transitioning from or avoiding institutionalization to obtain housing — including temporary housing such as hotels. Included are consumers who want to transition from congregate settings to the community, or those who need to avoid being sent to congregate settings.

If you weren’t aware of this, listen closely. Re-read it. Let it sink in. This is clarified in ACL’s FAQ issued June 12, 2020, regarding CARES Act funding. The response in FAQ Question 15 identifies the following services as allowable:

  • Services and activities that assist individuals with disabilities who are at risk of being institutionalized to remain in their communities
  • Services and activities that assist individuals with disabilities to move from an institutional setting to a home in a community-based setting
  • Services and activities that address the shortage of accessible housing

Nationally 40% of the COVID-19 deaths in this country are linked to nursing homes, long term care or assisted living. There are other congregate settings that are also problematic — Intermediate Care Facilities (ICFs), correctional facilities, and other group living settings. Assisting people to get out or stay out of congregate living/institutional settings has never been more important. Our people are dying during this emergency, in greater number than we have known before.

You can find the full text of the FAQ on this page, under “CARES Act Funding”. Whether an expense is allowed or not is not a simple answer, because it’s not a simple question. You are “expected to make prudent, reasonable decisions regarding the allowability of CIL CARES Act service costs in the same manner the grantee would determine allowability of service costs funded by any other funding stream.   We always recommend CILs do a quick read of the FAQ to help them identify questions they can ask themselves while developing or editing current CIL policies and decision points related to CIL CARES Act funding.” You need to make the case that the expense is for a qualified person (one who says they have a significant disability) and that the expense is related to assisting them in being safe and healthy in this difficult time.

What has changed?

In any life there are events that change everything. We live in a world that shifts and changes as events impact us. Think about some events that have changed everything, for the foreseeable future. Post the Kennedy assassination motorcades for presidents were different. Following the Challenger disaster new safety was imposed on all space travel. Post 911 air travel changed forever: who could have imagined the TSA? Post Sandyhook schools everywhere strengthened their protections for school children.

And Post-COVID-19? We can almost see that finish line with the release of vaccines. What has changed forever? I have a few thoughts.

  • We will never take handshakes for granted. I am not sure we will return to them at all, but if we do I suspect no one will be judged for failing to extend their hand. Even fist bumps may be suspect, and elbow bumps may be the new protocol.
  • Signatures will not be expected as the only affirmation. Have you noticed that many businesses no longer require your signature at the time you purchase something with a card? And as Centers we know we can now use an electronic signature or have a staff person verify what used to be signed consumer statements. I suspect this is a long-term change, and we will see businesses and other entities much more comfortable with verification methods other than signatures.
  • Working remotely will be part of an individual work schedule, because we’ve learned we can be very effective working from home. We will have new ways to measure performance, other than just time.
  • Employers will be more involved in the health and well-being of staff. As staff have moved through their own challenges, employers have been beside them, adjusting work schedules, understanding when kids are working in the background, granting mental health days, discussing the fears and challenges of the pandemic. I hope this is a permanent change. It has made workplaces more welcoming and flexible.
  • We are better at using technology. A year ago there was talk about Artificial Intelligence displacing people; and about people who can’t adapt to technology being displaced. We are using technology tools better than ever, including people who struggled with the technology a few months ago. I think this is a permanent change — the world needs technology and is using it well.
  • We are better at creating a healthy environment. From cleaning techniques to mental health support, offices are better than they used to be.
  • People are more included, less marginalized. If your center has more than one office, or has board members from more than one county, you have already seen them responding to the new, more equal playing field of having everyone on the call have equal status. When two-thirds of the group is around the table, the ones participating by phone or video are never really equal in their opportunity to discuss things. Now that everyone is on video with an equal opportunity to participate, they are more included.

Share your thoughts — what else has changed that may have long-term impact?

The latest on Program Performance Reports (PPRs, formerly 704 reports) from ACL

Here is correspondence from your funder regarding your annual reporting, which is typically due December 31. Note that the CILs are submitting only CARES Act reporting in GrantSolutions at this time, and this is due no later than 12/31/2020 at 11:59 pm EST. We are not sure exactly when and how the other PPR reports will be submitted, but you are urged to go ahead and complete a copy of the instrument so you are prepared to submit with very short notice once we know how the report will be collected. Here is the “Dear Colleagues” letter from Corinna Stiles that was sent out this morning.

Dear Colleagues,

As a reminder, ACL has discontinued the use of ACLReporting.  Grantees will not be submitting annual PPRs through ACLReporting.  We are currently working to determine the most suitable web-based platform to meet our Program Performance Report (PPR) needs.    ACL does not anticipate having a web-based platform available prior to the current 12/31/20 PPR due date (723 States 1/31/21).  ACL will provide the PPR submission deadline once a new web-based platform is secured.  ACL strongly encourages you to complete the CIL and ILS annual PPR instrument before 12/31/20 (723 States 1/31/21) and keep in your records so that you can easily and TIMELY transfer data when a data submission platform comes online.  We will share more information as it becomes available.  Please note the following:


  • CIL CARES Act PPRs are due in GrantSolutions no later than 12/31/20 11:59 pm EST.
  • ACL strongly encourages you to complete the CIL annual PPR instrument before 12/31/20 so that you can easily and TIMELY transfer data when a data submission platform becomes available. 


  • ACL strongly encourages you to complete the ILS annual PPR instrument before 12/31/20 so that you can easily and TIMELY transfer data when a data submission platform comes online.

723 States:

  • ACL strongly encourages you to complete the annual PPR instrument before 1/31/21 so that you can easily and TIMELY transfer data when a data submission platform comes online.

Thank you for your patience,

Corinna Stiles

Corinna H. Stiles, PhD, JD, Director | Office of Independent Living Programs

Administration for Community Living  U.S. Department of Health and Human Services

330 C Street, SW. RM 1123 Washington DC 20201 | 202.795.7446 | www.acl.gov

COVID-19 Information and Resourceshttps://acl.gov/COVID-19

As our staff become infected with COVID-19 — what do we need to rethink?

I am hearing it from many of you — one or more of your staff are home or hospitalized with COVID-19. Many believe the next few weeks will be worse because of the Thanksgiving gatherings. How does that impact your CIL? Here are some of the thoughts you’ve expressed. We hope sharing will strengthen all of us as we navigate the next few months.

  • What’s the rush in bringing everyone back into the office? Some of your staff and many of the people you serve are considered vulnerable, and if they contract the virus the consequences could include long term recovery or even death. Now I know that there are all kinds of viewpoints out there about how serious this is or isn’t. But what I also know is that some people are dying from it — even a member of my own family. You have gotten the hang of working from home. Continue to improve that process and don’t get in a hurry to re-open the office. If any part of it — email and phone service provision for example — is still a little rough, use this time to improve it.
  • Do your consumers have new or different needs as this pandemic continues? If you haven’t done wellness checks (by phone usually) on past and present consumers, do that now. If you have done it in the past, do it again. Keep you finger on the pulse of our community, be responsive, but do it at a distance. Consider having more face to face (via Zoom or another video platform) to provide some social interaction for people who are really missing other people.
  • What does peer support look like in a pandemic? This is a great time to expand your thinking and your provision of peer support. Are there people who are interested in a buddy system — a call relationship between two consumers (with their permission of course) that opens the door to peer support in a new way? Are there group meetings that make sense, for larger video calls. If you aren’t doing this now, consider it. The philosophy of peer support is alive and well, even if it looks different. People are finding a very real need for connections and this is one tool to provide that.
  • What is your policy about when staff should stay home? Do you require staff members to stay home if they have a cough or fever? How about if a family/household member or someone they are close to tests positive? If not, consider developing and implementing that policy.
  • Use this time for staff training from our website or via Zoom. If you have already completed all the training (which is doubtful!) take time to review — are your policies and procedures up to date? Do they lay out the steps that staff should take as they implement the requirements? Update them, not just to capture your remote service delivery, but also to improve all your processes. Then train staff on those at your regular check-in meetings.
  • When you do reopen, go slow. Consider starting with a reduced number of staff, alternating maybe week to week, while observing rigorous cleaning protocols. Consider appointments only for in-person and really consider whether in-person provides enough benefit to take the risk. When you open to consumers, consider using the same precautions you see in the community, including asking if the person or anyone close to them has symptoms, and taking temperatures.
  • Continually examine your policies, procedures and practices. As we have seen these last nine months and more, we are always learning new things. Keep up to date. Time at home isn’t time off, closure of the office isn’t closure of services, and we are able with CARES Act funds to address some real community needs. As this continues to unfold we should continue to assess what the community needs and respond to it.

A footnote — as you update your policies and procedures, make sure you know the effective date. You don’t have the option to apply things retroactively at this point, but only going forward, so you need to know when new elements become effective.

How are your Consumer Files?

I know one of the things some of you are doing with extra staff time is cleaning up your consumer records. You may call these Consumer Service Records or Consumer information Files or choose some other designation, but the bottom line is that you have a record of the services you provide to an eligible individual. Here are a few items for you to keep in mind.

  1. All records of individuals served are confidential. Whether you keep private identifying information (social security numbers?) or medical information (neither required by IL but sometimes needed for other services), your records and information about those you serve is confidential. You must keep them locked and password protected. Extra tip: Sometimes consumer information isn’t in the paper or computer file. Sometimes it is in an activity list, a birthday calendar or a mailing or email list. Keep these confidential, too.
  2. Your records must document what your annual reports (PPRs) indicate. How do you demonstrate who you serve, their disability (eligibility) and their desire to have an Independent Living Plan (or waive it)? Right now, all across the country, Centers are pulling reports from their consumer data base to use in completing their Program Performance Report. Look at them closely. Do they make sense? Do the staff seem knowledgeable in how to document? Run a cross-check by staff member to pick up any reporting inconsistencies. Make sure that the information in your PPR is an accurate reflection of the services provided. Extra tip: If you find anything that you have to go back and calculate by hand for the PPR you are working on now, train staff in corrections now so the reports for the current year are accurate.
  3. Review the COMP documents for more details. If your center is reviewed by your federal funder, it will be reviewed using the COMP materials provided by the Office of Independent Living Programs. You can find those materials here. Extra tip: One of the documents in the COMP process is a Consumer Information File Checklist that will help you double check all your records.
  4. Follow your own policies. You should have policies and procedures that specify when a file is closed and why, and a policy on how long you retain consumer records. You must demonstrate that you follow your own policies including these. If you destroy inactive records after seven years, for example, you shouldn’t hang on to inactive records that are 30 years old. Extra tip: Set a specific time for data entry. Some centers set a half day a week when they don’t see consumers so that staff are always caught up on data entry. You also want to set time for file review. This is done annually in small organizations, but may be done monthly or quarterly if needed. It is good practice to have staff review each other’s files from time to time, if your confidentiality policy allows that, so that staff can learn from each other’s processes.

A note about HIPPAA: Centers for Independent Living are not medical entities and are not typically bound by HIPPAA. However, you may have a specific funding source that requires this level of confidentiality. Follow the requirements related to that funding. You can institute that level of confidentiality for all of your consumer records if you wish.

2020 Uniform Guidance Updates

Clothes pins are scattered on a wooden table. One is standing upright and holding a green paper sign with black lettering “UPDATE”.

Uniform Guidance has been updated effective November 12, 2020. Several sections have been updated with new rules, revised amounts, new terminology and some clarification.

The most significant changes include the following:

  • Certain new sections (§200.211 & §200.301) indicate that, where applicable,  federal awards should include performance goals and targets.  Awarding agencies should measure performance to show achievement of goals and objectives.  We will need to see whether and how this affects individual grants.
  • Procurement Thresholds-the micro-purchase threshold has been increased to $10,000 and the simplified acquisition threshold has been increased to $250,000.  In addition, grantees with “clean audits” can elect to increase the micro-purchase threshold to $50,000.  This election is annual (§200.320).  That section also clarifies that micro-purchases do not require any competitive process.
  • The optional 10% de minimis indirect cost rate was previously available only to organizations that had not previously negotiated an indirect cost rate.  Now the de minimis rate is available to any organization that does not currently have an approved indirect cost rate.
  • Organizations that pass funds through to sub-recipients must recognize the sub- recipients’ approved indirect cost rate, but if none exist the pass-through entity must work with the sub-recipient to determine an appropriate indirect cost rate.
  • There are requirements for domestic sourcing preferences “to the greatest extent practicable” (§200.322).
  • There is also a new section (200.215) called “Never Contract with the Enemy”.  However, this only applies to grants in excess of $50,000 that are performed outside United States and its territories.
  • There is also a ban against purchasing any equipment, services, or systems that use telecommunications equipment or services manufactured by Huawei, or any of its affiliates.
  • §200.344 extends the time to close out an award from 90 calendar days to 120 calendar days after the period of performance.  Financial and performance reports must be provided within that timeframe.  That section also confirms that there are no federal requirements governing the disposition of income earned after the period of performance for the federal award unless the federal awarding agency requires a specific use.
  • The terms “budget period” and period of performance” have new definitions and a stricter requirement for incurring costs during the budget.
  • You may see a new term “Assistance Listings”.  That is the new name for the CFDA (Catalog of Federal Domestic Assistance).  The prior CFDA numbers are now Assistance Listing Numbers.
  • Finally, OMB will be developing a website confirming each recipients indirect cost rate, base, and rate type (§200.414(h))-stay tuned!

John F. Heveron, Jr. Principal, Heveron and Company CPAs