The U.S. Department of the Treasury (“Treasury”) has begun notifying recipients of Coronavirus State and Local Fiscal Recovery Fund (SLFRF) grants that they have been selected for program desk reviews.  

The American Rescue Plan Act of 2021 (“ARPA”) authorized multi-million dollar formula grants for states, local, territorial and tribal governments, disbursed by the Treasury, to respond to the economic and public health impacts of the COVID-19 pandemic, among other eligible uses.

This new oversight effort follows Treasury’s notice last spring that it “intends to vigorously monitor recipients’ methods of obligating funds” and is “committed to recouping funds…obligated or expended impermissibly, as well as to recapturing funds that [recipients] did not obligate by the [December 31, 2024] deadline.” U.S. Treasury, Notice to Recipients (March 25, 2025).    

As 2026 unfolds, recipients of SLFRF grants should expect Treasury to implement “enhanc[ed] compliance checks on the obligation data submitted by recipients….[including] Information Document Requests and [recipients] will be expected to promptly comply with such requests.” Id.

Key Readiness Steps for Reviews

To prepare for Treasury’s SLFRF desk reviews, program recipients should, at a minimum:

1. Review and maintain readily accessible grantee’s Quarterly or Annual reports, as applicable, and support documentation;
2. Assess financial management policies and procedures, and internal controls bearing on obligation of SLFRF program funds and program expenditures (including procurement contracts and subawards);
3. Review lost revenue calculations and/or elections made under the program;
4. Be prepared to discuss key programmatic outcomes and milestones.

Feldesman LLP will continue to monitor and assess the impact of Treasury’s expanding oversight of Fiscal Recovery Fund awards to states and local governments. 

If you have any questions, please contact Phillip Escoriaza.