Coronavirus and Provider Relief Fund are Subject to Federal Single Audit

The CARES Act established the Provider Relief Fund and the Coronavirus Relief Fund.

Provider Relief Fund

The  Provider Relief Fund  is the second-largest new program established by the CARES Act. It provides funding to hospitals and other healthcare providers, including states, local governments, nonprofits, and for-profit entities on the front lines of the coronavirus response. The funding supports healthcare-related expenses or lost revenue attributed to COVID-19 and to ensure that uninsured Americans can get treatment for COVID-19.

$50 billion of the Provider Relief Fund was allocated for general distribution to Medicare facilities and providers impacted by COVID-19 based on eligible providers' net patient revenue. Most recipients received a direct deposit to their account without the need to apply for the relief. Subsequently, HHS announced an additional distribution of approximately $15 billion to eligible providers that participate in state Medicaid programs.

The Department of Health and Human Services (HHS) has recently clarified that both nonprofit and for-profit entities who received Provider Relief Funds  are  subject to  Single Audit requirements.

Nonprofits who received Provider Relief Funds must report this federal financial assistance on the Schedule of Expenditures of Federal Awards under CFDA 93.498. The threshold at which a federal Single Audit is required is when total Federal Awards equal or exceed $750,000. If your organization has never required a federal Single Audit in the past, please be aware that the receipt of the Provider Relief Funding could push you past the threshold, and you may need to undergo a federal Single Audit.

Commercial organizations who receive over $750,000 of federal funding have two options to address this requirement: 1) a financial audit specific to the particular HHS award conducted in accordance with Government Auditing Standards (45 CFR 75.216) or 2) a Single Audit in conformance with the requirements under 45 CFR 75 Subpart F.

Funds received from the CARES Act Paycheck Protection Program are not subject to Single Audit and therefore are not included in calculating the funding threshold.

Coronavirus Relief Fund

The CARES Act established the $150 billion  Coronavirus Relief Fund  ("CRF"). These funds were disbursed directly to state and local governments. Governments have broad discretion to utilize payments for expenditures ranging from COVID-19 testing to reimbursing small businesses, including nonprofits, for the costs of business interruption caused by required closures.

Nonprofits who received Coronavirus Relief Funds must report this federal financial assistance on the Schedule of Expenditures of Federal Awards under CFDA 21.019. Your organization likely received supplemental payments through existing state contracts that included CRF funds. These funds must be reported separately as federally-sourced funds and could impact your annual state and federal single audit process. If you are unsure whether your organization received CRF funding, we recommend that you contact the funder for clarification.

Guidance regarding the performance of the federal Single Audit is released annually in a Compliance Supplement published by the Federal Office of Management and Budget. For 2020 Single Audits, it is anticipated that information regarding compliance testing requirements pertaining to the Provider Relief Fund and the Coronavirus Relief Fund will be released sometime in the fall.

Funding under the CARES Act, including the Provider Relief Fund and the Coronavirus Relief Fund, is high profile and subject to increased scrutiny. We recommend that you closely monitor compliance and reporting requirements and take steps now to ensure compliance with the terms and conditions of this federal financial assistance. 

Guidance and regulations from federal agencies regarding COVID-19 relief funding continue to evolve, and additional information is expected to be released. Please contact your Whittlesey Advisor to keep abreast of these developments.