Details about Reporting Requirements for S.D. COVID-19 Grant Funds

Many South Dakota nonprofits, businesses, healthcare facilities, and government entities that received COVID-19 grants from the state are starting to get letters asking how they spent the funds.

The state’s guidance about allowable expenses is currently a little vague. Specifically, the grant documents read, “beneficiary will use any Grant Beneficiary receives to continue the operation of the business and to address the impact of the COVID-19 public health emergency on its operations through increased costs, reduced revenue, or other effects attributable to the public health emergency.”

Although many questions remain about reporting expense requirements, the following is what we do know right now. As more details become available, we’ll provide updates.

Government-related entities — like those associated with cities, counties, or the state — that received funding are subject to a Single Audit as part of their annual audit.

For nonprofits and for-profit entities, the “period of availability” — when the funds could be used — was set to run from Oct. 1, 2020, to Dec. 31, 2020. However, those funds can be carried into 2021. We recommend claiming expenses related to the fourth quarter of 2020, versus carrying over the funds to 2021. Based on how your business or organization’s funding was determined and eligible expenses, there should be adequate expenses related to the fourth quarter of 2020 to fully spend the funding.

Also, for nonprofits and for-profits, allowable expenses include all normal operating expenses, not just those related to COVID. Businesses and organizations shouldn’t claim expenses that expanded their operations or were outside their normal operating expenses.

Debt payments that existed during the period of availability — along with related interest expense — would also be an allowable expense. If your business or organization is looking for allowable expense, principal and interest might be a good place to start. It’s unlikely other funding sources paid for principal and interest.

As with all other COVID funding, you can’t double-dip. That means you’ll need to prove that your business or organization didn’t claim expenses from multiple funding sources.

For healthcare organizations, you’ll want to make sure you don’t claim any expenses that may be eligible for reimbursement from the U.S. Department of Health and Human Services programs. Certain capital costs might be eligible, but we recommend consulting with your CPA before claiming capital costs.

If you need help navigating these expense reporting requirements for the state, please reach out to us.

This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.