| Dear Center Members: |
| This GAQC Alert informs you about the following important matters:
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SEFA Scenarios Practice Aid
The GAQC has released a nonauthoritative practice aid, GAQC Nonauthoritative Guidance on the Reporting of Certain COVID-19 Awards on an Accrual Basis SEFA, that walks members through the nuances of determining what goes on an entity’s accrual-basis SEFA and when. Access the practice aid. While the issues covered are not necessarily new, the way COVID-19 funding was provided to recipients, timing issues, and the specifics of program terms and conditions, have caused some confusion in practice. The practice aid:
- Provides various illustrative scenarios to assist auditees and auditors in evaluating the facts and circumstances relating to an accrual-basis SEFA, including several specific to the Department of Education Higher Education Emergency Relief Fund (HEERF 1) under the CARES Act.
- Provides tips for the procedures an auditor may consider for determining the appropriateness of the “award date” used by the auditee.
- Does not apply to single audits of PRF funding because HHS has directly addressed the timing of SEFA reporting of PRF expenditures and lost revenue by nonfederal entities in the addendum to the 2020 OMB Compliance Supplement (2020 Supplement addendum). See the section below for more information on PRF.
Update to COVID-19 Funding Practice Aid
The GAQC has updated its practice aid, GAQC Summary of Uniform Guidance Applicability for New COVID-19-Related Federal Programs, which is a nonauthoritative summary of information about federal programs that have been established as a result of the COVID-19 pandemic. Access the summary, which is updated through February 16, 2020. The document provides members with a one-stop location to find information on the various COVID-19 programs, along with an indication of the applicability of single audit rules. To easily identify what has been updated, search the document for “2-16.” Among the changes made are the following:
- The addition of the Emergency Rental Assistance Program (Assistance Listing 21.023); and the Shuttered Venue Operators Grant (Assistance Listing 59.075) which were established by the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) that was signed into law in late December 2020. Funding under both programs is subject to single audit (see GAQC Alert #420 for more information on both programs).
- Updates to various hyperlinks to agency guidance for the programs included in the summary.
- Updates to ensure the information in the summary aligns with the 2020 Supplement addendum.
Provider Relief Fund Update
Single Audits. The last time we communicated on PRF and single audit was to announce that the 2020 Supplement addendum section for PRF instructed that PRF expenditures and lost revenue were not to be included on a nonfederal entity’s SEFA until December 31, 2020, year-ends and later. This approach was taken by HHS to link the SEFA reporting for PRF to the amounts to be reported directly to HHS. While HHS had expected its PRF Reporting Portal to be available to accept submissions by mid-January, it is only available for recipient registration at this time. There is no estimated date for when the portal will be open to accept submissions that we are aware of.
This delay in direct recipient reporting to HHS means that single audits of December 31, 2020, and later year-ends that include PRF funding will not be able to be completed. This is because the SEFA reporting is linked to the HHS reporting and the PRF section of the Supplement addendum requires the auditor to test the HHS reporting. The GAQC continues to monitor this situation and will communicate developments in future GAQC Alerts. We are also planning to meet with OMB to discuss the implications of this delay on the timing of single audits going forward.
For-Profit Entity Audits. The GAQC held a web event in December 2020 that was a primer for auditors of for-profit entities subject to an audit of HHS awards. As discussed in that event, for-profits have two options for audit: (1) A financial-related audit in accordance with Government Auditing Standards; or (2) a full single audit (or program-specific audit if eligible). The delays in the HHS portal launch described above, along with the need for HHS guidance on its expectations for the financial-related audit option, are also keeping the for-profit audits of HHS awards from beginning.
Recent Interaction with HHS on PRF and Audit Delays. The GAQC met with HHS staff on February 9, 2021, to discuss the delays in the portal launch, as well as numerous issues that we believe need to be resolved by HHS for audits that include PRF funding to occur, both for nonfederal entities and for-profit entities. Access the questions we submitted and discussed with HHS at that meeting. HHS committed to continue working on the issues and to meet again once they had more time to discuss them within HHS. Watch for more information from the GAQC as things continue to evolve.
PRF Guidance Updates. Here is a quick summary of HHS guidance issuances since mid-January 2021. General and Targeted Distribution Post-Payment Notice of Reporting Requirements, was issued in January 2020 and revised reporting requirements to reflect the changes needed due to the CRRSAA legislation. Most notable among the changes was that HHS revised the allowable methods to calculate lost revenues, which may be calculated as (1) the difference between 2019 and 2020 actual patient care revenue, (2) the difference between 2020 budgeted and 2020 actual patient care revenue (however, the 2020 budget must have been established and approved prior to March 27, 2020), or (3) any reasonable method of calculating revenue (although #3 could result in an increased risk of HHS scrutiny). As noted earlier, HHS also opened its PRF Reporting Portal for registration only. A Registration User Guide was made available, as well as a Provider Relief Fund Reporting FAQ. Finally, HHS continues to update the PRF Frequently Asked Questions and the most recent version is as of February 19, 2021.
COVID-19 Vaccines
We have been informed by HHS staff that a determination has been made by HHS that COVID-19 vaccines provided by the federal government to nonfederal entities and other healthcare providers are not considered federal financial assistance. The rationale for this decision is that the ownership and control of COVID-19 vaccines remains with the federal government until the vaccine is dispensed to an individual. Therefore, for nonfederal entities, COVID-19 vaccines are not to be presented on the SEFA or included in the scope of the single audit. This conclusion also extends to for-profit entities receiving COVID-19 vaccines; therefore, the vaccines would not be included in the scope of a for-profit entity’s audit of HHS awards.
Auditors are cautioned that there are other vaccine-related awards that should be presented on the SEFA and are subject to single audit, as well as included in the scope of a for-profit entity’s audits of HHS awards, where applicable. For example, some entities may expend administrative grants awarded for the preparation of sites for the administration of COVID-19 vaccines or funding associated with administering the vaccines under Assistance Listing 93.461, COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment, and Vaccine Administration for the Uninsured.
Other COVID-19 Updates
COVID-19 Claims Reimbursement for the Uninsured. We have started receiving more questions about Assistance Listing 93.461, COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment, and Vaccine Administration for the Uninsured. Because this program is a fee-for-service program, it is unlike most other programs subject to a single audit. For that reason, the questions we have received surround what triggers SEFA inclusion for this program. For example, is it when the initial service is provided by the provider or sometime later in the process after the provider has submitted the claim to HHS and eligibility is confirmed by HHS? There have also been questions surrounding what the audit testing would include depending on the answer to the previous question. We met with HHS staff recently to discuss these questions, and they are currently considering whether they can issue any guidance to help steer consistent practice. In the meantime, we do have a few pointers. First, many entities that received funding under this program also received funding under PRF. It is important for auditors to note that while HHS delayed the SEFA reporting of PRF as described earlier, there is no similar delay for 93.461. That is, it should be part of the single audit scope for year ends prior to December 31, 2020. Further, our members have communicated that it may be challenging to identify whether clients have this funding since it is sometimes administered by individuals in the entity’s billing department and accounted for within fee-for-service revenue. As a result, auditors may want to consider extending inquiries about this program beyond those client representatives that normally administer federal programs.
Coronavirus Relief Fund. Note that Treasury codified all of its previously issued CRF guidance and frequently asked questions in a Federal Register notice, Coronavirus Relief Fund Program Guidance, Coronavirus Relief Fund for States, Tribal Governments, and Certain Eligible Local Governments, issued in mid-January. For the most part, the guidance is identical to the previous guidance posted on Treasury’s Web site. However, the introduction section of the notice identifies the few changes that were made, including changes to reflect the extension of the spend date for CRF to December 31, 2021, that was provided by CRRSAA.
HEERF. CRRSAA authorized $81.88 billion in additional support for the Education Stabilization Fund (ESF), in addition to the $30.75 billion this program received under the CARES Act. $21.2 billion of this new funding has been made available to higher education institutions under the HEERF subprogram of ESF (and referred to by many as HEERF 2). The new funding carries different terms and conditions than the original HEERF funding, including a provision for the reimbursement of lost revenue. The GAQC has met several times with Education staff to discuss the various questions that are coming up for the new funding and continued discussions are expected as Education works to develop clarifying guidance. For the most part, this will be a 2021 single audit consideration. Stay tuned.
Uniform Guidance Update
OMB recently issued an FR notice titled, Guidance for Grants and Agreements, that contains several technical corrections to the previous update to the Uniform Guidance issued in August 2020 (read GAQC Alert #412 for more on the original update). This amendment fixes citations and references and clarifies specific language. The GAQC is currently analyzing the changes to ensure that no substantive changes were made. As a reminder, the next GAQC Web event titled, Uniform Guidance Revisions: What You Need to Know, on March 11, 2021, from 1:00 PM – 3:00 PM (Eastern Time). It will help members understand what changes have been made to the Uniform Guidance by OMB in the August update. Access registration information.
2021 Compliance Supplement
We thought that members may be interested to know that OMB and the agencies have begun work on the 2021 Compliance Supplement. The GAQC and its Executive Committee are currently in the process of reviewing vett drafts of various programs with significant revisions. As time progresses and we have more information about potential changes you should expect for 2021, we will let you know.* * * * *
Sincerely,
AICPA Governmental Audit Quality Center |
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