Protect Your Fiscal Recovery Funding Under Strong Increasing Federal Scrutiny

The latest GAO update on the State and Local Fiscal Recovery Funds (SLFRF) program indicates that federal oversight is tightening.

Treasury has already begun recouping funds that were not properly obligated or documented, and reporting requirements remain in place through 2026. With most jurisdictions having committed nearly all of their SLFRF allocations, the margin for error is now very small.

For many governments, this is the most administratively complex federal funding program they have managed in years. The focus is no longer just on allocating or obligating funds; it’s making sure that each and every dollar can stand up to review.

Our government funding specialists have been working with agencies to ensure compliance and have compiled useful information for agency leaders.

Why SLFRF compliance matters right now

Most governments met the December 31, 2024 obligation deadline. However, Treasury has already determined that some obligations did not meet federal standards, resulting in funds being returned.

As of early 2026, the majority of funds have been spent, and final expenditures must be completed by December 31, 2026. Treasury continues to expect detailed Project & Expenditure (P&E) reporting, and revenue replacement calculations and spending justifications remain subject to review.

In short, while the program may be winding down, compliance expectations are stronger than ever. This is where documentation, internal controls, and reporting discipline become most critical to compliance and penalty avoidance.

Final phase support: How you stay compliant

1. SLFRF Compliance Review & Gap Assessment

Before program closeout, it is critical to understand where potential exposure exists.

A thorough examination of SLFRF processes, documentation, and reporting framework can identify gaps related to:

• Obligation timing and eligibility
• Procurement documentation
• Revenue replacement methodology
• Subrecipient monitoring
• Project file completeness

Once the evaluation is complete, you must align your program with GAO and Treasury expectations.

2. Monitoring & Audit-Ready Support

Many governments are now questioning whether they would be able to defend an inquiry from GAO or Treasury.

To withstand federal scrutiny you need to:

• Strengthen fraud risk controls and expenditure monitoring
• Organize defensible, standardized project files
• Prepare for Treasury recoupment reviews, GAO oversight, or single audit testing

It is critical to be able to produce supporting documentation confidently upon request.

3. Project & Expenditure (P&E) Reporting Assistance

Reporting remains one of the highest-risk areas in the program’s final phase.

Adequate defense of your reporting requires:

• Preparation and validation of quarterly and annual reports
• Reconciliation of financial data to supporting documentation
• Alignment with the latest Treasury guidance through 2026
• Clear narrative explanations that accurately reflect program intent

Clean reporting reduces questions; fewer questions reduce risk.

4. Strengthening Internal Controls

Control weaknesses can create exposure throughout any phase of your program.

Governments often need to improve their controls around:

• Procurement and contracting
• Expenditure approvals
• Subrecipient oversight
• Documentation retention

Your controls should align with Uniform Guidance and Treasury expectations, while remaining practical for day-to-day operations.

5. Closeout Planning & Final Documentation

The final year of SLFRF spending and program close out requires careful planning that includes:

• Evaluating remaining spending strategies
• Confirming that obligations and expenditures meet federal standards
• Developing organized documentation archives to support future audits

Closeout is not just about spending remaining funds, it is about ensuring long-term compliance and defensibility.

Finish strong with guidance from trusted professionals

The SLFRF program is entering its final chapter, but federal oversight is not easing.

Now is the time to confirm that your obligations, expenditures, and reporting will withstand scrutiny, so your community retains the full benefit of its funding.

We understand the operational realities local governments face, having advised hundreds of government agencies. Our goal is to strengthen compliance without adding unnecessary administrative burden.

Fill out the form on this page to protect your SLFRF funding and finish the program strong.

Protect My SLFRF Funding