The U.S. Department of the Treasury (Treasury) released an updated ERA2 Closeout Resource on April 14, which clarifies aspects of the ERA2 program closure process, including audit and record retention requirements. ERA2 financial and statistical records, supporting documents, and non-federal entity records must be retained by recipients for five years, for up to twenty years, if funds were used for affordable rental housing purposes per the ERA2 Award Terms. In terms of audit requirements, recipients that expended $1M or more in ERA awards during the fiscal year that began on or after October 1, 2024 are required to undergo a single audit or program specific audit for that fiscal year. They are responsible for arranging the audit and ensuring a smooth process and must take prompt corrective action if there are any audit findings.
The Closeout Resource also includes information about the ERA2 closeout process, including when obligations must be paid in full. Recipients have until September 30, 2025, to obligate funds for administrative and program expenses, and 120 days from that point to expend the funds. Funds paid out after September 30 may only cover housing stability services, rent, utility, and energy expenses, rental arrears, affordable rental housing projects, and eviction prevention activities arising before September 30.
Recipients must submit a final closeout report within 120 calendar days after September 30, then Treasury begins the closeout review process, including determining if recipients need to return funds. Once recipients return funds (if applicable), Treasury sends the recipient a notification of completion. Recipients may undergo an early closeout process before the September 30 deadline if award objectives, including administrative actions and operational activities, are completed before September 30. The recipient then requests early closeout through Treasury’s portal, which is reviewed by Treasury. If approved, the recipient submits the final report, and the steps outlined above take place. In both types of closeout processes, funds cannot be obligated or expended once the final report is submitted to Treasury.
After recipients submit the final closeout report, Treasury makes a determination if money is owed. Potential reasons for repayment include excess funds, unobligated balances, improper use of funds or other noncompliance issues. Once Treasury makes a final determination of the final balance owed, recipients have 30 calendar days to repay funds to avoid debt collection. If a recipient enters debt collection, Treasury will issue a demand letter outlining penalties for nonpayment.
Read the Closeout Resource here.
Read the ERA2 guidance here.