By Yann Reichelt, CPA, Business Assurance & Advisory Services Manager
Article 2 in our 3 Part Series on the Provider Relief Fund
What Healthcare Practices Need to Know About Provider Relief Fund Audit Requirements
As discussed in the previous article on the Provider Relief Fund, the CARES Act allocated over 175 billion dollars in a Provider Relief Fund (PRF) to support healthcare providers for expenses and lost revenues related to COVID-19.
In this article, we discuss in more detail the audit requirements of the PRF.
Commercial businesses or entities that receive  750,000 dollars or more PRF payments have two options under 45 CFR 75.216(d) and 75.501(i): 1) a financial related audit of the award or awards conducted in accordance with Government Auditing Standards; or 2) an audit in conformance with the requirements of 45 CFR 75 Subpart F. (definition of a commercial organization)
If a commercial business or entity exceeds the threshold defined above, they will need to evaluate which type of audit to engage an independent certified public accountant to perform. Currently, there is still a significant amount of uncertainty around the program parameters of a financial related audit. (Audit and Reporting FAQs from HHS). Below we discuss the basic requirements of the two options offered by the HHS based on current guidance.
Financial related audit of the Provider Reflief Fund Award:
- Management prepares a Statement of Costs (includes lost revenue)
- Auditor issues an opinion on the statement in accordance with management’s basis of accounting (e.g., GAAP or OCBOA)
- Auditor issues a report under generally accepted governmental auditing standards (GAGAS) on compliance and internal control over financial reporting
- If applicable, reporting/schedule of findings
Single Audit (an audit in conformance with Subpart F) of the Provider Relief Fund Award:
- Audit of full financial statements and auditor issues an opinion on financial statements in accordance with generally accepted auditing standards (GAAS) and GAGAS
- Management prepares Schedule of Expenditures of Federal Awards (SEFA) including all HHS awards
- Auditor opinion on compliance and reporting on internal control over compliance under the Uniform Guidance
- Auditor Schedule of Findings and Questioned Costs
We believe, based on the current guidance, that most commercial entities will elect to choose option 1 – financial related audit of an award. However, we should note that if you received multiple different types of federal awards, such as Coronavirus Relief Fund (CFDA #21.019) in addition to PRF payments, then this option is not available and a single audit must be performed.
READ OUR FULL SERIES OF ARTICLES ON THE PROVIDER RELIEF FUND FOR HEALTHCARE ENTITIES
 At the time this article was posted, current guidance states that an audit is dependent on whether a commercial entity “receives” Provider Relief Funds in excess of $750,000. However, under single audit guidance a threshold is defined based on when funds are “expensed”. The Government Audit Quality Center (GAQC) has petitioned the HHS for more clarity.
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.