Dear Center Members: |
This GAQC Alert informs you about the following important releases and updates as follows:
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PRF Reporting 60-Day Grace Period
HRSA has announced that PRF recipients (which include both nonfederal entities and for-profit entities) have been given a 60-day grace period to file the PRF Period 1 report due to the challenges recipients have been facing due to COVID-19 surges and recent natural disasters (see GAQC Alert #429 for more detail around PRF reporting and the definition of Period 1). The grace period began on October 1, 2021 and ends on November 30, 2021, and any unused funds must be returned no later than 30 days after the end of the grace period (i.e., December 30, 2021).
Although the announcement indicates that providers will be out of compliance if the report is not filed by September 30, 2021, auditors are not expected to report a single audit finding for clients that take advantage of the grace period because the 2021 Compliance Supplement (2021 Supplement) does not require auditor testing of the timeliness of PRF reporting filing. Further, HRSA will already know about any late filings well before single audits that include PRF are issued. We have discussed this matter with the HHS Single Audit Coordinator who concurs with this answer.
Finally, auditors with clients that take advantage of some or all the 60-day grace period will be further delayed in being able to begin their compliance audit of PRF. As indicated in the 2021 Compliance Supplement, auditors should delay the commencement of the compliance audit of PRF until the provider has completed the report.
New PRF Guidance
HRSA has added new and updated existing FAQs in the last month. It has also issued two new fact sheets. Details on each is included below.
PRF FAQs. The PRF FAQs that were previously located on the HHS Web site, are now on the HRSA Web site. Access the FAQs and search for 8/30/2021, 9/13/2021, and 9/29/2021 to identify what is recently new or updated. As noted in GAQC Alert #429, HRSA previously clarified that for nonfederal entities PRF expenditures and/or lost revenue are to be included on the schedule of expenditures of federal awards (SEFA) for fiscal years ending on or after June 30, 2021, and the amounts to be reported are based on pre-defined periods established by HRSA. Several of the new FAQs issued clarify that for-profit entities will report PRF expenditures and/or lost revenue in the same manner as that for nonfederal entities both from a period and timing perspective. Additionally, HRSA included new FAQs that address how certain entities can fulfill the PRF auditing requirements (e.g., consolidated entities with multiple subsidiaries and for-profit entities under common control) and numerous questions relevant to Phase 4 and ARP Rural Payments.
Auditing Fact Sheet. HRSA issued a new document, Independent Audit Requirement Fact Sheet, in response to common questions it is receiving on the audit requirements. It generally reiterates information that the GAQC has already communicated in past GAQC Alerts. One item of note relevant to commercial organizations is that it states that HRSA defers to the auditor and the provider of commercial organizations to determine the basis of accounting that will be sufficient to complete a financial related audit in accordance with Government Auditing Standards. As a reminder, the GAQC continues to work on illustrative schedules and auditor’s reports that could be used for these for-profit financial-related audits and plans to send updated illustrations over to HRSA soon for its feedback. Our goal is to issue nonauthoritative guidance that auditors and for-profit entities may refer to when they are subject to the HHS audit requirements. The GAQC will communicate developments in a future GAQC Alert.
Consolidated Entity Fact Sheet. This new HRSA document, Parent-Subsidiary Reporting Fact Sheet, is intended to assist recipients that are part of consolidated entities better understand the reporting in the PRF Reporting Portal. It covers how both general and targeted distributions are to be reported. Particularly useful is guidance it provides on how distributions that are transferred between the parent and subsidiaries are to be input reporting portal.
ARP Program Listing
OMB has issued a list of new and existing COVID-19 federal financial assistance programs with ARP funding. Programs in the listing with an asterisk are identified as new programs. The other programs listed are existing programs that received ARP funding. This listing is important for several reasons. First, remember that per Appendix IV, Internal Reference Tables, of the 2021 Supplement states that all new ARP programs are considered "higher risk." Further, if you are auditing a client for which one of these new programs is a Type A program, Appendix IV reminds auditors that they will not have been audited in one of the two most recent audit periods and generally must be audited as a major program.
The identification in the listing of existing programs with ARP funding is also important. As described in Appendix VII, Other Audit Advisories, of the 2021 Supplement, nonfederal entities should separately identify COVID-19 expenditures on the SEFA and DCF. Therefore, knowing which federal programs have received ARP funding will assist when determining which programs have COVID-19 funding. We have noted a few inconsistencies in the summary released. For example, it includes asterisks next to several programs that are not new (e.g., the Special Education Cluster (84.027/84.173), the Education Stabilization Fund (84.425), and the Emergency Rental Assistance Program (21.023)). We have informed OMB of these discrepancies and they are checking with the related agencies. We have requested that they post a corrected list to remove the asterisks next to these programs.
CSLFRF Reporting Extension
The U.S. Department of Treasury has sent a communication to the States about revised reporting deadlines afor the first CSLFRF Project and Expenditure Report (originally due October 31, 2021) as follows:
- For States, U.S. territories, metropolitan cities and counties, and Tribal Governments, the report will now be due on January 31, 2022, and will cover the period between award date and December 31, 2021.
- For non-entitlement units of government, the Project and Expenditure report will now be due on April 30, 2022, and will cover the period between award date and March 31, 2022.
Treasury's announcement also states that further instructions will be provided at a later date to assist recipients to gather and submit the information through Treasury's Portal. Also, it reminds States and territories to continue to submit monthly distribution information through Treasury's Portal. The GAQC is working to determine what implications this change will have on future single audits of this program, if any, and will communicate developments when we have them.
Emergency Rural Health Care Grants
USDA has released information on Emergency Rural Health Care Recovery Grants (in a Federal Register Notice of Funding and a related USDA manual) with applications due from prospective entities on 10/12/21. As part of the application process for Track One of the funding, a CPA certification is required stating that: "(a) no funds requested have been reimbursed from other Federal or state sources; (b) no funds requested are obligated to be reimbursed from other Federal or state sources; and (c) funds requested are reasonable, appropriate, and align with actual or anticipated costs and/or lost revenues during the grant period."
We have clarified with USDA that the required certification can be provided by a CPA that is employed by or otherwise affiliated with the entity applying for the grant. A USDA FAQ was just issued confirming this (look under the Track One FAQs). We believe that this is the best alternative when possible. Otherwise, we caution our members that signing a certification statement without performing an underlying engagement under professional auditing standards is not permitted. Instead, an engagement would have to be developed (e.g., under the AICPA attestation standards) with the issuance of a related report. We have informed USDA about our concerns from an external CPA perspective and they are aware that we are recommending CPA firms not sign the statement they are asking for. We have also learned that USDA is adding this funding to Assistance Listing 10.766 which is an existing USDA loan program. The 2021 Supplement has not been updated to reflect any requirements of this new funding.
ED Financial Responsibility Schedule Clarifications
ED has issued a Dear Colleague letter relevant to the requirements for proprietary, private non-profit, or foreign schools to include a Financial Responsibility Supplemental Schedule as part of any audited financial statements submissions to ED on or after July 1, 2020. Auditors with clients required to prepare this schedule are encouraged to review the letter which discusses various reminders including those on the required in-relation-to reporting by the auditor on the schedule. * * * * *
Sincerely,
AICPA Governmental Audit Quality Center |
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In This Alert |
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Single Audit Q&A Event |
Due to its popularity, we are offering a CPE rebroadcast of our recent Lightning Round Q&A Web event on November 4, 2021, from 1:00 PM – 3:00 PM (Eastern). The event is comprised of 2 hours of commonly asked questions the GAQC has been getting on single audit topics. Register now. |
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