If you are a provider who has received Provider Relief Funds, you are now familiar with the relevant reporting requirements for the use of the funds. But do you also have an obligation to carry out a mandatory single audit?
The Health Resources & Services Administration (“HRSA”) has issued guidance reminding health care providers that if they receive and spend a certain amount of federal funding, the health care provider must meet the individual state examination requirements. This article covers the people who must perform an audit and the various regulatory requirements for the audit process.
Which providers are subject to the single audit requirement? Basically, any recipient who spends $ 750,000 or more in federal funding in a fiscal year is subject to federal review requirements. This includes payments from the Provider Relief Fund and other federal grants.
What are the requirements for the individual audits? The requirements are specified by federal regulation (45 CFR 75 Subpart F). HRSA has also published an informative page on the provider’s “Reporting and Auditing Questions”.
What kind of audits are required? “Non-federal” bodies and “commercial” organizations have different audit options. “Non-federal” entities include states, local governments, and not-for-profit organizations. You must have an individual audit carried out in accordance with the standards for public financial control (GAGAS).. The auditor must also determine compliance with the relevant federal laws, regulations and conditions of federal prices.
A “commercial organization” that includes for-profit hospitals may choose to have the same individual audit or have an audit performed under Generally Accepted Government Auditing Standards (GAAP).
Has the Health and Social Services (“HHS”) provided guidance to the CPAs and other organizations performing the audits? The only guidance HHS made available to auditors is the Office of Management and Budget Compliance Supplement. For non-state bodies, guidance can be found in the 2020 Compliance Supplement and the upcoming 2021 Compliance Supplement.
What if a vendor doesn’t spend $ 750,000 or more during the fiscal year? The provider is exempt from federal audit requirements, but must ensure that their records are retained for possible future review by federal agencies.
How should a vendor account for FEMA funding when posting vendor aid funds? Regarding expenditures attributable to the coronavirus, vendors are instructed to determine their health expenditures and then use any amounts received from other sources, including funds received from FEMA. Payments from the Provider Relief Fund can be applied to the remaining expenses or costs.
If a provider expects to receive COVID-19 support from FEMA, it should be included in the provider Reporting on aid funds? If a vendor has not yet received FEMA funding, the vendor should not report the requested FEMA amounts in the Vendor Relief Fund report. However, if FEMA funds are received during the same payment receipt period that the provider reports on the use of payments from the Provider Assistance Fund, the funds should be considered. Finally, if a vendor receives a retrospective payment from FEMA that overlaps a previous period, the vendor cannot use the FEMA payment for expenses or lost revenue that has already been reimbursed through payments from the Provider Relief Fund.
Will HRSA carry out audits in addition to the mandatory self-audits? Every recipient of payments from the Provider Relief Fund can be subjected to a check by HRSA, which verifies the accuracy of the data transmitted by HHS for payment. All recipients found to have provided inaccurate information to HHS are subject to a payment refund and other legal action.
The self-assessment process is complex and raises new questions related to reporting and accounting for the use of federal funds. Let us know if Nexsen Pruet can guide you through this process.