Did you receive HHS funds? If so, you may need an audit, and you may need to pay the funds back.

Understanding the Provider Relief Fund (PRF) Audit Requirements for For-Profit Entities

The Department of Health and Human Services created the HHS loan as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act—the economic stimulus bill to alleviate the financial strain caused by the pandemic.

TWO things you need to know

1) If you received more than $750,000 in HHS awards, you are required to receive either a

  • Single or program-specific audit (Single Audit) following 45 CFR* Part 75, Subpart F, or
  • Financial-related audit of all HHS awards following Generally Accepted Government Auditing Standards (GAGAS). The financial-related audit requires that you prepare a statement of costs and lost revenues. This means you need to pull out all COVID-related expenses from your salaries, equipment, and so on.

*The authority to mandate audits is contained in 45 Code of Federal Regulations (CFR) Part 75, Uniform Administrative Requirements, Cost Principles, and Audit Requirement for HHS Awards (Uniform Guidance).

2)  If you did not spend the money or it is covering losses in revenue, you need to return the money.

  • All HHS funding you received must be spent on eligible activities (see below) no later than June 30, 2021, or be returned to HHS.
  • No double-dipping: These costs must NOT be reimbursable through other programs such as the Paycheck Protection Program (PPP) and others (see below) under the *WARNING* section.

Single Audit vs. Financial Audit

For a Single Audit, the auditor would give an opinion on the financial statements under generally accepted auditing standards and GAGAS. This choice is far more labor-intensive but could be helpful if the entity under audit already receives GAGAS audits or has received multiple HHS awards other than just the Provider Relief Fund (PRF). That is because the added work level would be limited to only the schedule of expenditures of federal awards and compliance testing.

Extension: The HHS has decided that the due date for entities using the Single Audit option has been extended an additional three months past the regular 9-month deadline after an entity’s fiscal year-end to complete their Single Audit and provide HHS with the reporting package

For a financial-related audit, the auditee would need to prepare a Statement of Costs and Lost Revenues for HHS Programs. This is a standalone statement that presents the added costs incurred because of the pandemic and/or the lost revenues resulting from the pandemic. The level of effort required to complete this audit is predicted to be significantly less than the effort needed for a full Single Audit, as a full audit of all the for-profit entity’s books is not required. Guidance on this choice is still in the process of being issued by the Department of HHS.

Extension: HHS has not clarified whether entities opting for the financial-related audit are eligible for extension.

Extensions – why it’s best to wait on both: Currently, neither the Single Audit nor the financial-related audit should be completed until HHS supplies more clarification. Do not send HHS reports until the PRF Reporting Portal on the HHS website has been opened and the ruling settled. Ask your CPA for guidance.

Spend the loan funds by June 30, 2021, or return the money

As mentioned, all PRF funding received by a for-profit entity must be spent on eligible activities no later than June 30, 2021, or be surrendered back to HHS.

Eligible activities include:

  • Costs incurred relating to COVID-19, including the construction of temporary structures.
  • Lease
  • Personal Protective Equipment (PPE)
  • Medical Supplies
  • Increased Workforce Costs
  • Lost revenues (Lost revenues may be calculated as the difference between 2019 actual revenues and either 2020 budgeted revenues or 2020 actual revenues.)

* Warning: These costs must not be reimbursable through other programs such as PPP, direct patient billing, commercial insurance, Medicare/Medicaid/Children’s Health Insurance Program (CHIP), or additional funds received from the Federal Emergency Management Agency (FEMA) and Small Business Administration (SBA). Check with your accountant if you have questions on which programs apply.

How do you return unused funds?

The Department of Health and Human Services has said that it will supply directions on returning unused funds in the future.


For-profits must spend all PRF funding they have received by June 30, 2021, and have two options to follow the auditing requirements set forth by HHS if they have received more than $750,000: 1) A Single Audit or 2) A financial related audit.

At LSL CPAs, we closely watch the updates and alerts provided by both HHS and the AICPA to ensure that we provide our clients with prompt, accurate information as it becomes available.  We also have an experienced team of auditors who work exclusively on GAGAS audits and are ready to provide auditing services or advice to our clients on the PRF program.

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About the Author, Ryan Domino, CPA

As a senior assurance manager, Ryan leads audit engagements, completes technical reviews of financial statements, and reviews audit files for municipalities, water districts, and fire authorities. He is also involved in training new staff members. He acts as a mentor and resource to both his clients and his team.

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