navigating the covid -19 federal appropriation acts: a ......jun 18, 2020 · • sba has released...
TRANSCRIPT
The information provided herein is for informational purposes only and should not be construed as financial, investment, tax, accounting or legal advice.
Navigating the COVID-19 Federal Appropriation Acts: A Roadmap for Tribes
June 18, 2020
Presented by REDW’s COVID-19 Response Team
expertise.
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Housekeeping Notes
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expertise.
• A Roadmap for Tribes, Compliance & Allowability• Cybersecurity Risks with COVID-19• Human Resources Considerations• Available Loans and Tax Credits• COVID-19 Disruptions and Business Interruption Claims• How Federal Appropriation Acts Impact Gaming
Operations
Agenda
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A Roadmap for Tribes, Compliance & Allowability
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Rochelle AlconSenior Manager, Audit & [email protected]
expertise.
• Establish CARES Act emergency task force/committee• Develop and Approve:
– Pandemic Response Plan– General Welfare Exclusion Act Policy (if Tribal Member Assistance is
planned)– Temporary Policies, e.g., Administrative Pay, Hazard Pay, EFMLA,
Interim controls , etc.– Temporary authorities and guidelines for Government orders to
react to different phases of the Pandemic
• Develop a Road Map (checklist) and timeline
Navigating the COVID-19 Federal Appropriation Acts: A Roadmap for Tribes
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expertise.
• Determine what Federal funding has been received and what Federal programs/sources are still available
• Review Federal Funding Agreements and any other guidance documents associated funding sources
• Develop a needs list(s)• Review needs list(s) expenditure line items for allowability• Approve budget through an executive order• Record keeping
Develop Road Map (Checklist) and timeline
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expertise.
• Funding received from BIA, IHS, other Federal funding, and the Relief Fund are subject to Single Audit
• Allowable costs– BIA: Cost that prevent, prepare and respond to COVID-19
– IHS: Testing, medical supplies, equipment, supplies, health education, purchased/referred care, and tele-health services
– Relief Fund: Expenditures that are “necessary” and not budgeted for before March 27, 2020; must be “incurred” before December 30, 2020; return any unused funds to US Treasury.
Compliance and Allowability
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expertise.
• Indirect/administrative costs• Business interruption costs (not revenue losses)• Hazard pay• Administrative pay• Replacement of air filtration• Rural broadband capacity that can be placed in service quickly to meet
pandemic needs• Software upgrades to meet telework capabilities• Building renovations or re-purpose to meet pandemic response needs • Computers for employees for telework or implement tele-medicine• Schools – computers/devices for remote school-work
Allowable Costs Under the Tribal Relief Fund
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expertise.
Increased Cybersecurity Risks with COVID-19 and Remote Workers• Phishing – pandemic creates a different threat profile
– Remote workers more vulnerable to phishing threats if not educated
– Phishing websites increased 350% worldwide in March vs. early 2020 (Google)
– Healthcare, business loans and government assistance messages
– Fake video conferencing invitations capture login credentials and spread malware
– Remote workers don’t know to whom or how to report suspicious messages
• Fake Websites– Over 300,000 suspicious COVID-19 websites created March 9-23 (RiskIQ)
• Remote Access to network not secure / no training on remote access security• Home Wi-Fi security – most people do not know how to secure this• Passwords – need complexity, change frequently, do not share• Keep computers and other devices up to date with latest security patches• New data privacy and security concerns with remote workers
– Existing regulatory compliance, such as HIPAA, must still be satisfied
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expertise.
COVID-19 Funding & Telework Technology• Secure remote access for employees
– Virtual Private Network (VPN)– Virtual Desktop Interface / Virtual Network– **Multi-factor Authentication (MFA) – mitigate password risk and stolen credentials
• Upgrade anti-virus (Endpoint Protection and Response) software– Next generation (Enterprise) anti-virus / anti-malware protection– Remote wipe option for mobile devices– Real-time monitoring and alerts– Blocks threats, logs events and looks for compromises within systems– Advanced machine learning technology
• Vulnerability Scanning solution – find and patch network weak points
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expertise.
COVID-19 Funding & Telework Technology
• Security Awareness Training – Many online platforms with content (Proofpoint, KnowBe4, SANS,
Infosec IQ, Threat Advice, PhishMe)– Ongoing, not just once a year – Phish employees monthly– Assess at least bi-annually– Interactive training modules quarterly or bi-monthly
• Complimentary security online training– https://beyondtheoffice.wombatsecurity.com/ (available until July 1)– https://www.knowbe4.com/homecourse (password is homecourse)
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expertise.
COVID-19 Funding & Telework Technology• Video Conferencing / Communication (Zoom, Ring Central, Microsoft Teams, GoToAssist
for IT)• Software Training for remote workers and IT staff – Accounting software, Office 365,
network security, remote access configuration, virtualization (online training)• Cloud Technology:
– Data backup to the Cloud or co-location
– Accounting / Payroll Software / Time Sheets
– Electronic Requisitions and Approval workflows (MIP, Microix, Intacct)
– Expense Reports (Expensify, Tallie)
– Electronic Document Signatures (DocuSign, Adobe Sign, RightSignature)
– Secure Cloud File Sharing
– Network services such as Microsoft Azure, Amazon, etc.
• Equipment for remote workers– Standardize this equipment if supplying (computers, monitors, printers and scanners)
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expertise.
As we pivot don’t forget…• Update IT Security Policies and Procedures• Regulatory Compliance – stay up to date as these may
pivot, too• Assess Business Continuity Plans (BCP) / Cybersecurity
Incident Response Plans (CSIRP) / Disaster Recovery Plans (DR)
• Assess accounting software for remote workers• DIY Assess Your Remote Worker Security Tool – use now
during the pandemic & then again when we return to normal (included in the webinar materials)
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expertise.
• Family First Coronavirus Response Act (FFCRA)– Paid Sick Leave– Expanded FMLA
• Tracking– Leave and associated costs– Chart of Accounts
• Policies & Procedures– Remote Work– Return to Work– Administrative Leave (COVID-Specific)– Hazard Pay– American with Disabilities Act (ADA) considerations
Human Resources Considerations
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expertise.
• PPP provides small businesses with funds to pay 8 weeks (now up to 24 weeks) of payroll costs including certain benefits. Funds can also be used to pay interest on mortgages, rent/lease, and utilities.
• Funds are provided in the form of a loan that will be fully forgiven when used for payroll cost, interest on mortgages, rent/lease, and utilities within the covered period.
• Forgiveness is based on employer maintaining or quickly rehiring employees and maintaining pay rates. Forgiveness may be decreased if full-time equivalent employees decline, or if salaries and wages decrease.
– Exemptions exist
• Application deadline is June 30, 2020. – $150B still available
• Business concerns owned and controlled by Tribes, or wholly-owned entities of Tribes, and Tribal business concerns with fewer than 500 employees are eligible for PPP loans.
– If your business meets the other eligibility criteria for a PPP loan, the fact that it is owned by a Tribe does not alone affect its eligibility.
Payroll Protection Program (PPP)
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expertise.
• Borrowers may elect to extend covered period to 24 weeks• Payroll costs requirement lowered to 60% and non-payroll costs increased
to 40%. • Loan will now be a 5-year loan with 1-year deferral. Rate will not exceed 1%.• Forgiveness period extended to December 31, 2020.• Additional Safe Harbor for FTE statutory reduction.
– (A) (i) an inability to rehire individuals who were employees of the PPP borrower on February 15, 2020; and (ii) an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020
• SBA has released new interim final guidance (06/16/20) on the new Act. • SBA also released the new PPP loan application and EZ application
Paycheck Protection Flexibility Act
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expertise.
• Tribal Employers or Tribal-owned enterprises are allowed to delay the payment of the employer portion of Social Security tax (6.2%) otherwise due and payable by 12/31/2020.
• Who Qualifies?– All employers (Even PPP recipients as of 06/05/2020)
• Guidance is needed to determine if loan forgiveness triggers payment in full of amounts deferred prior to approval of loan forgiveness.
Deferral of Employer Payroll Taxes
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expertise.
• This is a deferral. Must pay back.– 50% must be paid back by 12/31/2021– Remaining 50% must be paid back by 12/31/2020
• Impact of FICA deferral?– Generally, the FICA Credit equals the amount of employer social
security and Medicare taxes paid or incurred by the employer on tips received by the employee.
– During the period of deferral, the employer is treated as having made timely deposits of applicable taxes, as long as payments are made when due under the schedule noted above.
– Guidance is needed to confirm that this allows restaurants to claim the FICA Credit during the deferral period.
Deferral of Employer Payroll Taxes
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expertise.
• June 15, 2020 The SBA is offering low interest federal disaster loans for working capital to small businesses and non-profit organizations that are suffering substantial economic injury as a result of COVID-19 in all U.S. states, Washington D.C., and territories.
• These loans may be used to pay debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact, and that are not already covered by a Paycheck Protection Program loan. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
• To keep payments affordable for small businesses, SBA offers loans with long repayment terms, up to a maximum of 30 years. Plus, the first payment is deferred for one year.
• In addition, small businesses and non-profits may request, as part of their loan application, an EIDL Advance of up to $10,000. The EIDL Advance is designed to provide emergency economic relief to businesses that are currently experiencing a temporary loss of revenue. This advance will not have to be repaid, and small businesses may receive an advance even if they are not approved for a loan.
• Tribal business concerns with 500 employees or less are eligible for the EIDL loan and grant.
Economic Injury Disaster Loans (EIDL)
expertise.
• A refundable payroll tax credit for employers who are impacted by COVID-19, but retain their employees
• Employers qualify for the credit if: – Their operations were fully or partially suspended due to a COVID-19
related shutdown order
OR
– Their gross receipts from the quarter were less than 50% of the gross receipts for the same quarter in the prior year.
Employee Retention Credit
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expertise.
• Qualified Wages by Employer– Employers with more than 100 full-time (at least 30 hrs. per week)
employees (on average in 2019), count only wages paid to employees who are not working.
– Employers with 100 or fewer full-time (at least 30 hrs. per week) employees, count all wages paid to all employees.
• How much is the credit?– 50% of qualified wages paid to employees between March 12, 2020
and December 31, 2020• Capped at the first $10K of wages per employee
– The maximum available credit is $5K per employee (50% of $10K)
Employee Retention Credit
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expertise.
• Identify amount of qualifying wages, perhaps by setting up a new payroll code – New codes can track payments that qualify and your system might provide features that cut off at $10,000.
• Caution:– Most payroll systems do not currently have the allowed health care cost, so new procedures must be established
to get these amounts added to the payroll disbursement for purposes of credit calculations.
– The total amount from the from the Employee Retention Payment codes plus the health care cost (up to $10,000 per employee) will be multiplied by 50% to determine the credit amount.
• Employers collect their own refund via offset to regular payroll deposits– Guidance issued on March 31, 2020 made it clear that the Employee Retention Credit can be offset from the
employer’s total federal deposit for each pay period.
– Guidance also provides the refund procedure to be used when the credit amount exceeds the regular total payroll deposit.
• Form 7200• Should be processed within 2 weeks of filing.
• IRS has issued FAQs on the Employer Retention Credit: https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act
Employee Retention Credit
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Brian FoltynPrincipal, Business [email protected]
COVID-19 Disruptions & Business Interruption Claims
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COVID-19 Disruptions
Quarantines Lost Revenue
Restricted TravelLost Profits
Social Distancing Uncertainty
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Business Interruption Claims & COVID-19
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• Physical Loss• Civil Authority
Next Steps
• If you need help …
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Adam SmithSenior Manager, Audit & [email protected]
How Federal Appropriation Acts Impact Gaming Operations
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REDW Gaming - Audit and Consulting Services
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gaming.
Core Funds
Available
PPP
Relief FundEmployee
Retention Tax Credit
Retirement Plans and
Unemployment
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gaming.
PPP Loans
Record as debt until legally released
Employee Retention Tax Credit
March 12, 2020 to January 1, 2021
Determine Average number of full-time employees in 2019
100 or less: All wages, up to 50% of $10,000 per employee during the
shutdown
101 or more: Wages, up to 50% of $10,000 paid to employees that were not providing services
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gaming.
Relief Fund
Cloud-based software / remote
Sanitation costsCosts incurred while closed
Reopening costs
Professional feesAir filtration
systems
Training
Grants = Single Audit
Reimbursement of expenses
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gaming.
Considerations for 3rd and 4th
quarters
Debt compliance
Risk Management
Diversification
Cash Management
Proper disbursements
Communication
Record keeping of CARES Act
Funds
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Questions? Contact us!
Rochelle AlconSenior Manager, Audit & [email protected]
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Alicia FinleyPractice Leader, [email protected]
Adam SmithSenior Manager, Audit & [email protected]
James OrtizPrincipal, State and Local [email protected]
Brian FoltynPrincipal, Business [email protected]
Or visit redw.com/covid-19-resource-hub/
Jennifer MorenoSenior Manager, CyberHealth [email protected]