Single Audit Requirements for Provider Relief Funds

By Keith Solomon, CPA, Partner and Laurie Hafner, CPA, Partner

The Office of Management and Budget issued in late December 2020 the Compliance Supplement Addendum, 2020 (Guidance) to assist auditors and entities in understanding the Single Audit requirements for not-for-profit entities that expended $750,000 or more of Provider Relief Funds. For-profit entities that receive Provider Relief Funds will have the option of having a Single Audit or an audit in accordance with Government Auditing Standards. Provider Relief Funds and COVID-19 Testing for the Uninsured are included in the Department of Health section of the Guidance and classified in the Catalog of Federal Domestic Assistance as number 93.498 and number 93.461, respectively.

The new Guidance clarifies the Provider Relief Fund Single Audit requirements as follows:

  • The applicable compliance requirements for Provider Relief Funds
  • Reporting requirements for Provider Relief Fund Recipients
  • What an entity should report on the Schedule of Expenditures of Federal Awards (SEFA)
  • The period covered by the Schedule of Expenditures of Federal Awards
  • Special Report Testing

Applicable Compliance Requirements for Provider Relief Funds

The Guidance establishes that the applicable compliance requirements include the following:

  • Activities Allowed or Unallowed
  • Allowable Costs/Cost Principles
  • Reporting

The Guidance defines activities allowed or unallowed as activities that prevent, prepare for and respond to coronavirus or lost revenues that are attributable to coronavirus. The Guidance also clarifies that Provider Relief Funds may not be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.

Reporting Requirements for Provider Relief Fund Recipients

Provider Relief Fund Recipients must report for the calendar year ended December 31, 2020 healthcare- related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse. Provider Relief Fund payment amounts not fully expended on healthcare-related expenses attributable to coronavirus are then applied to lost revenues.

The reporting portal is expected to be available on January 15, 2021, with a final due date for reporting of February 15, 2021. Entities with unused funds after December 31, 2020 must submit a second and final report no later than July 31, 2021 that includes patient care related revenue amounts earned January 1 –June 30, 2021.

What an Entity Should Report on the Schedule of Expenditures of Federal Awards

An entity with a fiscal year-end of December 31, 2020 should report on the Schedule of Expenditures of Federal Awards as expenditures (including lost revenue) based upon the amount reported on the Provider Relief Fund Report for calendar year ended December 31, 2020. In addition, the entity’s financial statement footnotes to the SEFA should disclose that the amount included on the SEFA is based upon the December 31, 2020 Provider Relief Fund Report.

Special Report Testing

For audits of fiscal years ended on or after December 31, 2020, the Guidance states that a notice will be posted on February 1, 2021 on OMB’s Office of Federal Financial Management website which will provide key line items and other information from the Report that are subject to audit. Auditors performing audits of December 31, 2020 year-ends are expected to test this special reporting even though it will not be able to be submitted by recipients until early 2021.

Still Evolving

The auditing and reporting of Provider Relief Funds is evolving and has had several different interpretations since these Funds were distributed. Our Firm will continue to provide guidance on this area as more information is available.

Contact Us

The Healthcare Practice at PKF O’Connor Davies is available to assist you with the various compliance, reporting and other requirements imposed by federal agencies. We also provide a full spectrum of audit, tax and consulting services for Healthcare not-for-profit and for-profit entities. For more information, please contact your client service partner or any of the following:

Christopher J. McCarthy, CPA
Healthcare Practice Co-Leader

Keith A. Solomon, CPA
Healthcare Practice Co-Leader

Laurie Hafner, CPA

Dorothea Russo, CPA

Krista Karabel