A document issued in June 2020 by the American Institute of Certified Public Accountant’s Governmental Audit Quality Center (GAQC) summarizes how Uniform Guidance applies (“Single Audit” or other audit requirements) to new federal programs established due to the COVID-19 pandemic (the Summary).
In general, the objective of a Single Audit is to provide assurance that an entity is in compliance with program requirements and has adequate internal controls in place. A Single Audit is required when a non-federal entity (state, local government, not-for-profit) expends $750,000 or more in federal awards during a fiscal year. It is essential that entities have processes in place to ensure they are appropriately tracking these expenditures—including timing and recognition to make certain that funds are expended in the correct fiscal year and within the allowable timeframe established by the program—and are maintaining adequate supporting documentation. This is critical for Single Audit determination purposes and meeting the reporting and other requirements of each program. For example, as it relates to Provider Relief Funds, health systems and hospitals will need to be diligent in tracking the lost revenue being matched against the relief fund expenditure.
Additional guidance related to federal programs established due to the COVID-19 pandemic is expected to be included in an addendum to the Office of Management and Budget (OMB) 2020 Compliance Supplement, anticipated for release this fall. The GAQC indicated it would provide updates to the Summary as matters evolve.
With recent updates to the Summary (final decisions and revisions), many non-federal entities, including many health systems and hospitals, will, for the first time, be subject to Single Audit or other audit requirements established in the Uniform Guidance. This could create a problem for certain entities if their current auditors do not meet Government Auditing Standards requirements to perform such an audit (i.e., appropriate number of continuing professional education hours and experience related to government auditing, the government environment, or the specific or unique environment in which the audited entity operates). Critical updates are as follows:
Provider Relief Funds
The Summary confirms non-federal entities receiving these funds are subject to the Single Audit requirements noted above.
Health and Human Services (HHS) has also informed GAQC that any for-profit or commercial entity that expends $750,000 or more of these funds during the entity’s fiscal year will be subject to an audit in accordance with the Uniform Guidance. Section 75.216 of HHS’s adoption of the Uniform Guidance provides two options for satisfying this audit requirement:
- A financial audit of an award in accordance with Generally Accepted Government Auditing Standards. In cases where awards are received under multiple HHS programs, a financial-related audit of all awards in accordance with Generally Accepted Government Auditing Standards; or
- A Single Audit that meets the requirements contained within Subpart F.
COVID-19 Telehealth Program
The Federal Communications Commission (FCC) confirmed that Single Audit requirements in Subpart F of the Uniform Guidance now apply.
The OMB has provided relief for audit submission deadlines. The OMB states that federal funds recipients or sub-recipients that have not yet filed their audit reporting package as of March 19, 2020, and that have normal deadlines from March 30, 2020, to June 30, 2020, may delay submission for up to six months from the original deadline. Additionally, audits with normal due dates from July 31, 2020, to September 30, 2020, may extend submission for up to three months from the original deadline.
For additional information relating to federal programs established due to the COVID-19 pandemic, visit PYA’s COVID-19 Information Hub.
For further assistance in determining how Provider Relief Funds and other COVID-19-related funding factor into your entity’s need for an audit in accordance with the Uniform Guidance, or if your current audit firm is unable or unwilling to perform such an audit, contact one of our PYA executives below at (800) 270-9629.