Due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27, 2020, the Provider Relief Fund was created. Many qualified healthcare providers were able to obtain federal funding to assist in keeping their doors open and continuing to serve patients during the coronavirus outbreak. This was a lifeline for many healthcare entities, however, most recipients will have some additional reporting requirements regarding the funds they received.
When entities including commercial, states, other local governmental entities, and not-for-profit organizations obtain and expend federal assistance of $750,000 or more, (including funds received from the Provider Relief Fund), they reach the threshold for an audit by a Certified Public Accountant (CPA). This audit checks for compliance with federal laws and guidelines and is termed a “single audit” as it was introduced in 1984 to replace the numerous audits that had been in place for various federally funded programs.
If your organization did not expend $750,000 or more in federal funds, you will not have to undergo a single audit.
If you did expend $750,000 or more, auditors will need to verify that the funds were used in compliance with applicable federal programs. During this process, auditors look at eligibility and cash management in addition to the proper use of funds received under the applicable program including invoices, contracts, and financial statements. Therefore, providers are strongly encouraged to keep detailed accounting records and be able to demonstrate that funds expended were used as intended by the specific program. Auditors will also need to report on internal control deficiencies and other relevant findings. Depending on the complexity of the recipient’s entity and how accurate and organized the books and records are, this could be relatively straightforward, or very involved and quite costly.
A single audit is typically due 9 months after the end of the provider’s fiscal year. Many providers work on a fiscal year ending June 30, which would make this audit due on March 31, 2021. So, if you expended $750,000 or more in funds, you will need to hire a CPA with experience performing single audits and begin the process, if you haven’t already; the sooner the better. Single audit extensions may be granted on a case by case basis.
The U.S. Department of Health and Human Services (HHS) has noted that commercial organizations (for-profit entities) can choose to have a financial audit under Generally Accepted Government Auditing Standards (GAGAS) instead of choosing to have a single audit. More guidance is still anticipated from HHS in regards to this second option but this option would reduce the scope of the audit by removing the requirement to perform the compliance audit component and limits the scope of the audit to consideration of HHS awards (including Provider Relief Funds) instead of all federal awards.
If you have any questions about your responsibilities and need help navigating through these compliance requirements, our team stands ready to assist you.
Feel free to reach out to us through our contact form here or by calling our office at 401-921-2000 to begin discussing your situation and next steps.