CARES Act Sec 18004(a)(1) Funds Accounting Guidance

Audit Requirements and Allowable Uses
CARES Act funds are subject to audit. Districts must be able to provide reports to demonstrate that funds were used for allowable purposes. Expenditures of CARES Act funds will be included in the districts’ audit reports on the Schedule of Expenditures of Federal Awards (SEFA) using CFDA number 84:425E.

The disbursement provided for by Sec. 18004(a)(1) of the CARES Act requires that, of the amount allocated to each institution, no less than 50 percent must be used to provide students with emergency financial aid grants to help cover expenses related to the disruption of campus operations due to coronavirus.  The remaining 50 percent of funds may be used to cover any costs associated with converting courses to distance education.

Institutions may use the funds to provide student refunds and reimburse themselves for costs, on or after March 13, 2020, the date of the President’s Proclamation, resulting from significant changes to the delivery of instruction, including interruption in instruction, due to the coronavirus, including:

  • Recipient’s institutional costs to provide refunds for room and board, tuition, other fees
  • To make additional emergency financial aid grants to students for food, housing, course materials, technology, health care, and child care
  • To award scholarships to provide payment for future academic terms
  • Purchase equipment or software, pay for online licensing fees, or pay for internet service to enable students to transition to distance learning
  • Purchase computers or other equipment to donate or provide to students

Some expenditures of CARES Act funds are strictly disallowed, including payment to contractors for pre-enrollment recruitment activities; endowments; or capital outlay for athletic facilities, sectarian instruction, or religious worship.

The CARES Act also provides for the Secretary of Education to allocate an additional award or grant under Sec. 18004(a)(2) for minority serving institutions or Sec. 18004(a)(3) for smaller institutions particularly impacted by coronavirus, as determined by the Secretary.  If your college receives these funds, those additional funds may be used to defray expenses (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll). 

Additional federal guidance, including the Recipient’s Funding Certification and Agreement and a CARES Act Frequently Asked Questions about the Emergency Financial Aid Grants to Students, is available on the U.S. Department of Education’s CARES Act webpage.  

Accounting Requirements for CARES Act Funds
CARES Act Revenue:

CARES Act Expenditures:

  • Each institution may develop its own system and process for how to allocate CARES Act funds to students.
  • Funds are restricted in nature and should be accounted for separately using a unique COVID19 program code/identifier to easily pull COVID19 cost reports.
  • All expenditures should follow the existing BAM classifications. Expenditure classification is dependent on the nature of the expenditure.
  • Direct aid to students should be accounted for in other outgo (7xxx) object code.

Example Journal Entry - Student Aid Portion
Each institution may determine how to account for and distribute the CARES Act funds, as long as the requirements noted above are met.  As an example, the first disbursement for direct aid to students could be recorded as follows:

  • Revenue
    • Fund Code – 74 Student Financial Aid
    • Object (Account) Code – Distinct 81xx for CARES Act funds

  • Expenditures
    • Object (Account) Code – 75xx for cash grants/aid
    • Activity (Program) Code – 7320xx Student Aid

Example Journal Entry - institutional Portion
Each institution may determine how to account for and distribute the CARES Act funds, as long as the requirements noted above are met.  As an example, COVID19 related expenditures could be recorded as follows:

  • Revenue
    • Fund Code – 12 General Fund – Restricted
    • Object (Account) Code – Distinct 81xx for CARES Act Funds
  • Expenditures
    • Object (Account) Code – 4000 Supplies and Materials
    • Activity (Program) Code – 65xx COVID19-Facilties Disinfecting

If you have any additional questions, please contact the Fiscal Standards Unit at or Lorena Romero, CCCCO Specialist at