Did you obligate your SLFRF funds by the deadline? We’ll be checking next year

Dec 4, 2025

What’s changing and why it matters

The end of September marked the wrap-up of our 2024 calendar year single audits. This was also the deadline for local governments to submit financial statements and audit results to the federal audit clearinghouse because it was nine months after the fiscal year-end.

Before the end of September, our audit staff reviewed local government spending of the State and Local Fiscal Recovery Funds (SLFRF). In those audits, we did not verify that recipients obligated funds because there was no risk of noncompliance (the deadline coincided with the fiscal year end).

That changes for next year’s audits.

In 2025, to count an expenditure as allowable under this federal award, recipients must have incurred an obligation for those costs by December 31, 2024 (this applies to everyone except subrecipients).

What it means to obligate SLFRF funds

Recipients may only use SLFRF funds to cover costs incurred by December 31, 2024. To incur a cost, you must have also incurred an obligation for that cost, by that date.

Before the December 31, 2024, deadline, recipients could have obligated SLFRF funds in several ways, including:

  • Placing an order for property or services that requires future payment
  • Entering into a new contract or subaward that requires future payment  
  • Entering into an interagency agreement that meets Department of Treasury requirements (FAQ 17.6)
  • Establishing and filing employee positions that fall within the scope of an eligible use of SLFRF (see FAQ 17.7)
  • Becoming subject to a legal requirement that resulted in a cost to you, because you received or spent SLFRF funds. The legal requirement may be a federal law, federal regulation, or part of the SLFRF award’s terms and conditions. For example, as part of spending SLFRF funds, the federal award’s terms and conditions required you to obtain a federal single audit.

What you should do before December 31, 2025

If you have any concerns, you may want to review your 2025 expenditures and verify you:

  • Have documentation that supports your obligations
  • Followed Department of Treasury rules and guidance for what is considered an obligation
  • Complied with the December 31, 2024, obligation deadline

As with all other federal award documentation, make sure you retain it for audit purposes.

If you didn’t obligate your funds on time

If you spent SLFRF funds that weren’t properly obligated by December 31, 2024, contact the Department of Treasury right away to return the funds.

Don’t wait for the federal single audit to find spent SLRF funds that you did not properly obligate. For more information, refer to FAQ 17.2.

What to expect next audit season

When we audit your 2025 SLFRF expenditures, we’ll check whether you properly obligated those expenditures by the deadline.

If they were not properly obligated, our Office will question those costs. If known or likely questioned costs exceed $25,000, we’ll report it as an audit finding. We follow Uniform Guidance requirements and generally accepted governmental auditing standards. 

How to prepare now

To prepare for next year’s audit season, be ready to:

  • Answer questions about your SLFRF award requirements (make sure your staff understand them)
  • Explain your processes and key controls
  • Provide documented proof of the key controls in operation
  • Properly report SLFRF expenditures on your Schedule of Expenditures of Federal Awards
  • Provide documented proof of your compliance with the terms and conditions of the SLFRF award, including documentation that supports that that you obligated the funds before the deadline 

If you require a federal single audit and do not have an established annual schedule, contact your local audit team. 

More information and resources

Follow the Department of Treasury’s guidance on what counts as an obligation. Key resources include:

The Department of Treasury also has additional information about this federal program on the Treasury’s website.

Additional help 

While your awarding agency is the best source for information about a federal program, you can also submit technical questions about federal awards to our HelpDesk in the client portal. 

If you have other questions, comments or suggestions, feel free to email us at Center@sao.wa.gov.