The long-awaited compliance supplement addendum has been released providing additional guidance relating to the Single Audit or Program-Specific audit requirements for federal financial assistance provided under numerous programs, including the Provider Relief Funds (PRF) program under CFDA #93.498 and COVID-19 Testing for the Uninsured covered under CFDA #93.461, as well as audit requirements applicable to for-profit entities.
This article specifically addresses the matters related to the PRF program under CFDA #93.498, which covers all distributions related to the PRF program and other factors that may impact the Single Audit or Program Specific audit reporting.
Need to get caught up on HHS Provider Relief Fund guidelines? We broke down some of your most-asked questions in our HHS Provider Relief Fund town hall.
Timing on Schedule of Expenditures of Federal Awards
Federal funding reported on the schedule of expenditures of federal awards (SEFA) and used to determine whether a Single Audit or federal program audit is necessary is based on the amounts included in the reporting required by the Department of Health and Human Services (HHS).
HHS is requiring all recipients of one or more payments in excess of $10,000 in the aggregate to report expenditures (including lost revenues) for calendar year December 31, 2020, by February 15, 2021. If recipients do not expend PRF funds in full by December 31, 2020, they will have until June 30, 2021, which is required to be reported by July 31, 2021. This reporting does not apply to the Nursing Home Infection Control or the Rural Health Clinic Testing distributions; HHS will announce these requirements later.
The following is a summary of what should be reported on the SEFA:
Based on the guidance, if the recipient has a fiscal year ending prior to December 31, 2020, the SEFA will not include any PRF until fiscal year 2021, even if amounts have been recognized as revenue on the fiscal year 2020 financial statements.
Applicable Compliance Requirements
The addendum modifies Part 2, “Matrix of Compliance Requirements” to identify which of the 12 types of compliance requirements are subject to audit. They are:
“Guidance documents accessed by links on the HHS.gov website such as those listed under “Availability of Other Program Information” are provided only to clarify the applicable laws, regulations, and terms and conditions of the award and do not create new compliance requirements. However, non-federal entities in substantial compliance with the guidance applicable in these guidance documents at the time of a transaction are considered in compliance with the underlying compliance requirements.”It is unclear how this provision should be incorporated into the Single Audit process. If a transaction was entered into based on guidance that was subsequently superseded, causing that transaction to be unallowable, we recommend documenting the position supporting why the expenditure was allowable based on the guidance available at the time the purchase was made.
The HHS report will ultimately determine the amounts subject to testing for a single audit or federal program audit. Accordingly, the accuracy of that report is significant. Inaccurate reporting could create potential findings, instances of noncompliance and possibly questioned costs.
Extended Due Date
In light of the late issuance of audit guidance for the COVID-19 programs contained in the addendum, recipients and subrecipients that received COVID-19 funding with original due dates from July 1, 2020, through June 30, 2021, are being granted an extension for up to three months beyond the normal due date to complete and submit the Single Audit reporting package.
Donated Personal Protective Equipment (Unrelated to PRF Program)
If an organization received donated Personal Protective Equipment (PPE), the PPE may have been originally purchased with federal assistance funds and provided without any compliance or reporting requirements or assistance listing (CFDA) information from the donors. Unless the PPE is known to be purchased by the donor with non-federal funds, the entities that received donated PPE should record the fair market value of the PPE as a stand-alone line item footnote on their SEFA. The value of donated PPE should not be included to determine the threshold for a Single Audit or to determine the type A/B threshold for major programs.
Continuously Changing Guidelines
HHS continues to add, amend or remove clarifying guidance related to the Provider Relief Fund payments provided to healthcare entities and individuals. Eide Bailly will continue to monitor the updated information.
If you have any questions about the PRF Single Audit guidance outlined above, we can help.