The Provider Relief Fund (“PRF”) was created to assist healthcare providers during the COVID-19 pandemic. Through the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the Department of Health and Human Services (“HHS”) distributed funds to qualified providers for healthcare related expenses and lost revenues due to COVID-19 and to reimburse for testing and treating uninsured individuals with COVID-19. In addition to reporting on the use of funds within the PRF Reporting Portal, HHS has stated that for profit entities who received $750,000 or more of HHS awards during the entity’s fiscal year will be subject to audit as described in section 75.216 of HHS’s adoption of the Uniform Guidance.

The AICPA recently hosted a webinar on January 20, 2022, for audits of for-profit entities receiving PRF and other HHS awards. Below are five key takeaways we learned for upcoming compliance audits for for-profit entities.

1. What are the different types of compliance audits available?

The three options include a financial audit in accordance with Generally Accepted Government Auditing Standards (GAGAS), a program specific audit in accordance with 2 CFR Section 75 (Uniform Guidance), or a single audit under Uniform Guidance. The chart below shows the three options allowed and an overview of each.

It is up to the entity to determine the type of audit to engage the auditor to perform. LBMC can assist in helping an entity understand the different audits and decide which option is best. We expect most entities will choose a financial audit in accordance with GAGAS.

2. What amounts will be reported on the schedule?

Amounts reported on the schedule in the PRF audit (regardless of the option chosen as described above) will align with the PRF period of availability and what is reported in the PRF Reporting Portal. For calendar year-ends, total expenditures and lost revenues from both Period 1 and Period 2 report submissions to the HRSA PRF reporting portal will be included on the 12/31/21 schedule in the PRF audit. This would include PRF funding received from April 10, 2020 to December 31, 2020.

In addition to PRF amounts, the schedule will also include any other HHS awards received during 2021 including 93.461, COVID 19 Claims Reimbursement for the Uninsured Program

and the COVID-19 Coverage Assistance Funds (assistance listing 93.461), 93.697, COVID-19 Testing and Mitigation for Rural Health Clinics (assistance listing 93.697), and other HHS awards such as NIH Research and Development grants.

3. What will the audit schedule look like in a financial audit?

  1. The financial audit will be conducted under AU-C 805, Special Considerations – Audits of Single Financial Statements and Specified Elements, Accounts, or Items of a Financial Statement. The schedule prepared will relate to a specified financial statement element and will be based on revenues recognized.

Based on drafts provided by the Government Audit Quality Center (GAQC), we expect the schedule to include columns for the federal department/program title/grant name, assistance listing number, amounts recognized in accordance with GAAP for the year ended December 31, 2020 and amounts recognized in accordance with GAAP for the year ended December 31, 2021. If an entity does not prepare GAAP financial statements, the schedule can be prepared on a special purpose framework (cash or income tax basis).  Additionally, there will be notes to the schedule of HHS awards which could include the following:

  • General
    • Entity description, funding received
  • Summary of significant accounting policies
    • Listing of Taxpayer Identification Numbers (TINs) covered in the audit
  • Estimates
  • Subsequent events
  • Other disclosures

Auditor reporting on the schedule will include an opinion on the schedule under AU-C 805, a report on internal control over financial reporting and on compliance and other matters, and a report on findings, if applicable.

4. When will the audit be due?

For most for-profit entities with calendar year-ends, the fiscal year ended 12/31/21 will be the first year that PRF and other HHS awards are subject to audit. Per the HRSA FAQs, audits of fiscal year-ends ending after 6/30/21 are due to HRSA the earlier of 30 days after the compliance audit report date or nine months after the fiscal year.  For entities with calendar year-ends, this will equal a due date of the earlier of 30 days after the completion of the compliance audit or September 30, 2022.

5. What else should we know?

There are still more details to come. The GAQC will be releasing a non-authoritative practice aid that will include FAQs, illustrative schedules, notes, and auditor reports, and a primer on Government Auditing Standards.

The 2021 Compliance Supplement contains a special test and provisions related to testing out-of-network patient out-of-pocket expenses. The GAQC also indicated they are currently working with HRSA to determine how an auditor can test compliance.

With additional information from the GAQC expected to be issued in the next few months as well as continuing developments on the testing of out-of-network patient out-of-pocket expenses, we expect the majority of these PRF audits to take place in the spring and summer.

Stay tuned for additional details to be provided. In the meantime, if you have any questions contact our team today.