A critical update from the Department of Health and Human Services (HHS) provides new reporting requirement clarifications for non-profits that received Provider Relief Funding (PRF) under the CARES Act. And entities with fiscal year-ends (FYE) on or after June 30, 2021, will feel the impact first.

FYI on FYE

The new requirement, posted on the CARES Act Provider Relief Fund FAQs, states that if your non-profit entity FYE falls into this category, you’ll be among the first required to include PRF on your Schedule of Expenditure of Federal Awards (SEFA) – and that means they’ll be subject to audit. The timing and amounts for reporting are linked to the timing and amounts of funding submitted through the PRF reporting portal.

These new FAQs supersede the PRF SEFA reporting guidance previously issued.

The new reporting requirements

Here’s what you’ll need to report on your organization’s SEFA:

If your FYE is June 30, 2021, through December 30, 2021, you’ll be required to report the total expenditures and/or lost revenues from the Period 1 PRF report submission to the PRF reporting portal.

If your FYE is December 31, 2021, through June 29, 2022, you’ll be required to report the total expenditures and/or lost revenues from both the Period 1 and Period 2 PRF report submissions to the PRF reporting portal.

If your FYE is on or after June 30, 2022, SEFA reporting guidance will be provided at a later date.

Potential revenue recognition and audit timing impact

This could result in differences in the period PRF revenue is recognized in the financial statements from when PRF  is reported in the SEFA. As you prepare for your financial statement and compliance audits, keep in mind that Period 1 PRF Report must be completed first, to determine the full impact on your SEFA. (This report is due on or before September 30, 2021). The PRF section of the 2021 Compliance Supplement will advise that since the PRF report is to be tested as part of the reporting compliance requirement, auditors should consider delaying the compliance audit of the PRF program until entities have completed the PRF report. This may have an impact on the timing of FYE fieldwork and audit report issuance. The 2021 Compliance Supplement is nearing release and a follow-up addendum will be issued.

Will PRF push your non-profit organization beyond the single audit threshold?

Regardless of whether your FYE is before or after June 30, 2021, there are still some steps you should take. One of the most important is determining whether you need a single audit – even if you haven’t in the past. Any organization with total federal expenditures exceeding $750,000 will require a single audit – and as critically needed as it was, pandemic relief funding may push some non-profit organizations beyond the single audit threshold.

For-profit entities PRF reporting and auditing requirements

HHS has confirmed that for-profit entities with total annual expenditures (including PRF and other federal awards) exceeding $750,000 are subject to additional audit requirements.  If your FYE is June 30, 2021, PRF is impacting this year’s reporting (similar to non-profit organizations).  However, HHS has yet to release further audit and reporting guidance for for-profit entities.  We advise entities to begin preparing now so they’re ready when updated information is released.

Need help?

If you have questions about the new clarifications on PRF reporting and audit requirements, you’re not alone. Our team of financial professionals can answer your questions and help you ensure you’re on the right path. Contact us today for a free consultation. We’re here to help.

Barnes Dennig COVID-19 Advisory Team