State and Local Fiscal Recovery Funds closeout

Five years after the passage of the American Rescue Plan Act (ARPA) in March 2021, state and local governments are entering the final phase of the $350 billion State and Local Fiscal Recovery Funds (SLFRF) program. The December 31, 2024 obligation deadline has passed, and the December 31, 2026 expenditure deadline is approaching. As projects advance toward completion, attention is shifting to documentation, reporting, and closeout activities. In this paper, we provide a strategic framework to help state and local governments prepare for closeout and a Treasury Inspector General (TIG) audit of SLFRF funding.

We highlight practical steps to strengthen governance, internal controls, documentation, and compliance monitoring to help ensure proper stewardship of federal relief funds. We outline key audit focus areas—such as eligibility, allowable use of funds, subrecipient oversight, and reporting accuracy—and offer recommendations to proactively identify documentation to mitigate compliance risks. By implementing these practices, agencies can help demonstrate fiscal accountability, maintain transparency, and enhance readiness for Treasury oversight while helping ensure continued alignment with federal program objectives.