Category Archives: Uncategorized

Provider Relief Funds – Update

HHS issued revised (again) reporting procedures for Provider Relief Fund (PRF) recipients that received more than $10,000.  The revision:

  • Delayed the deadline for the initial report, originally February 15, 2021 for use of funds through December 31, 2020, however a new due date was NOT announced. The final report for use of funds through June 30, 2021 as of now is unchanged at July 31, 2021.
  • Changed the “lost revenue” calculation to allow more flexibility. Methods now allowable include:
    • Difference between 2019 and 2020 actual patient care revenue
    • Difference between 2020 BUDGETED and 2020 actual patient care revenue (extra reporting required to attest to budget that was approved prior to March 27, 2020)
    • Other reasonable method, which will lead to a higher likelihood of government audit
  • Added flexibility of allocation of funds from Targeted Distributions to subsidiaries

The reporting portal was supposed to open on January 15, however it is now open for registration only.  Here is a link to HHS’ notice.  We are confident additional guidance will be forthcoming.  Stay tuned!

NC Medicaid Transformation – January 2021 Update

Medicaid Transformation is a behemoth of a project that has been in the works long before we were hit with a public emergency in the form of a pandemic.  Both the Standard Plan and the Tailored Plan are on track to go live on time.  The Standard Plan has a implementation date of July 1, 2021 and the Tailored plans will follow one year later.

This is a good reference to keep updated with the latest from the NC Division of Health Benefits.

Guidance for Second-Round of PPP is here!

Small businesses need all the help they can get.  Especially during a public health emergency.  The PPP loans were designed to provide swift relief to these small businesses.  The latest in PPP news is that the latest round still follow the same conditions, processes and terms as the first draw.  March 31, 2021 is the final day to apply for PPP assistance.  Here are some additional resources:

What to do when the audit ends

Financial audits conducted by outside experts are among the most effective tools for revealing risks in not-for-profits. They help assure donors and other stakeholders about your stability — so long as you respond to the results appropriately. In fact, failing to act on issues identified in an audit could threaten your organization’s long-term viability.

Working with the draft

Once outside auditors complete their work, they typically present a draft report to an organization’s audit committee, executive director and senior financial staffers. Those individuals should take the time to review the draft before it’s presented to the board of directors.

Your organization’s audit committee and management also should meet with the auditors prior to the board presentation. Often auditors will provide a management letter (also called “communication with those charged with governance”), highlighting operational areas and controls that need improvement. Your nonprofit’s team can respond to these comments, indicating ways they plan to improve the organization’s operations and controls, to be included in the final letter. The audit committee also can use the meeting to ensure the audit is properly comprehensive.

Executive director’s role

One important audit committee task is to obtain your executive director’s impression of the auditors and audit process. Were the auditors efficient, or did they perform or require redundant work? Did they demonstrate the requisite expertise, skills and understanding? Were they disruptive to operations? Consider this input when deciding whether to retain the same firm for the next audit.

The committee also might want to seek feedback from employees who worked most closely with auditors. In addition to feedback on the auditors, they may have suggestions on how to streamline the process for the next audit.

No material misrepresentation

The final audit report will state whether your organization’s financial statements present its financial position in accordance with U.S. accounting principles. The statements must be presented without any inaccuracies or “material” — meaning significant — misrepresentation.

The auditors also will identify, in a separate letter, specific concerns about material internal control issues. Adequate internal controls are critical for preventing, catching and remedying misstatements that could compromise the integrity of financial statements. The auditors’ other suggestions, presented in the management letter, should include your organization’s responses.

If the auditors find your internal controls weak, promptly shore them up. You could, for example, implement new controls or new accounting practices.

Contact us if you have questions about audits and post-audit procedures.

© 2020

Should your nonprofit accept that new grant?

Current financial pressures mean that your not-for-profit probably can’t afford to pass up offers of support. Yet you need to be careful about blindly accepting grants. Smaller nonprofits that don’t have formal grant evaluation processes are at risk of accepting grants with unmanageable burdens and costs. But large organizations also need to be careful because they have significantly more grant opportunities — including for grants that are outside their current expertise and experience.

Here’s how accepting the wrong grant may backfire in costly and time-consuming ways.

Administrative burdens

Some grants could result in excessive administrative burdens. For example, you could be caught off guard by the reporting requirements that come with a grant as small as $5,000. You might not have staff with the requisite reporting experience, or you may lack the processes and controls to collect the necessary data. Often government funds passed through to your nonprofit still carry the requirements that are associated with the original funding, which can be quite extensive.

Grants that go outside your organization’s original mission can pose problems, too. Managing the grant may involve a steep learning curve. You could even face an IRS challenge to your exempt status.

Cost inefficiencies

Another risk is cost inefficiencies. A grant can create unforeseen expenses that undermine its face value. For example, new grants from either federal or foundation sources may have explicit administrative requirements your organization must satisfy.

Additionally, your nonprofit might run up expenses to complete the program that aren’t allowable or reimbursable under the grant. Before saying “yes” to a grant, net all these costs against the original grant amount to determine its true benefit.

Lost opportunities

For any unreimbursed costs associated with new grants, consider other ways your organization might spend that money (and staff resources). Could you get more mission-related bang for your buck if you spend it on existing programs?

Quantifying the benefit of a new grant or program can be equally or more challenging than identifying its costs. Evaluate every program to quantify its impact on your mission. This will allow you to answer the critical question when evaluating a potential grant: Are there existing programs that can be expanded using the same funds to yield a greater benefit to your mission?

Do your homework

Grants from the government or a foundation can help your nonprofit expand its reach and improve its effectiveness in both the short and long term. But they also can hamstring your organizations in unexpected ways. Contact us for help or more information.

© 2020

Retroactive Rate Increase – NC Medicaid

NC Medicaid issued Special Bulletin COVID-19 #124 on Wednesday, August, 19, 2020.  This bulletin outlines the specifics regarding a retroactive rate increase for any fee-for-service codes that are billed through NCTracks.  The increase will retro to March 1 and will incorporate any service codes that have not already received a rate increase through a Managed Care Organization (MCO).

The service codes are defined in COVID-19 Special Bulletin #99.  If you have any questions, please contact our office for additional information.

The Government Audit Quality Center (GAQC) Updates

This is from the GAQC, Alert No. 404:

The purpose of this GAQC Alert is to provide you with important governmental auditing updates relating to the Novel Coronavirus (COVID-19) as follows:

·   A definitive answer has been provided by the Small Business Administration (SBA) regarding the applicability of single audit requirements to Payment Protection Program (PPP) loans and Economic Injury Disaster loans (EIDL) obtained by not-for-profit entities (NFPs);

·   Statement on Auditing Standard (SAS) 141, Amendment to the Effective Date of SAS Nos. 134 Through 140, has been issued by the Auditing Standards Board (ASB).

·   The U.S. Department of Housing and Urban Development (HUD) has further extended certain submission deadlines for multifamily housing entities and public housing agencies (PHAs), as well as updated other COVID-19 guidance.

·   The Department of Energy (DOE) has extended audit submission deadlines for certain for-profit entities;

·   There are several COVID-19-related developments at the Federal Audit Clearinghouse (FAC); and

·   Registration information for an upcoming AICPA Webcast that will cover general audit-related implications of the COVID-19 pandemic.

SBA Loan Programs

In response to the COVID-19 pandemic, SBA PPP loans, administered under the 7(a) guaranty loan program, are being provided through local financial institutions. While these loans have been made primarily to for-profit entities, some NFPs have also received PPP loans. One of the most common questions we have received is whether SBA PPP loans obtained by NFPs are subject to the Uniform Guidance single audit requirements. The good news is that we have recently received an answer to this question. Based on recent discussions with SBA staff, we have been informed that PPP loans made to NFPs will not be subject to single audit.

On the other hand, SBA informed us that loans made to NFPs under the EIDL program are considered a direct loan program disbursed from SBA to loan recipients. Therefore, these loans are considered federal financial assistance and are subject to the Uniform Guidance single audit requirements.

SAS 141 Delays Auditing Standards

SAS 141 was issued in May 2020 and provides a one year delay for implementing SAS Nos. 134-140 to provide relief to auditors amid the challenges created by the COVID-19 pandemic. This suite of standards will, among other things, result in significant changes to the auditor’s reporting. The standards will now be effective for audits of financial statements for periods ending on or after December 15, 2021 (previously they would have been effective for periods ending on or after December 15, 2020). While early implementation was not permitted for these standards as originally issued, SAS 141 does permit early implementation. Additionally, because they are so interrelated, the ASB recommends that the suite of SASs be implemented concurrently.

HUD COVID-19 Extensions

Multifamily Housing Entities. As reported in GAQC Alert #399, HUD’s Real Estate Assessment Center (REAC) had previously provided a 30-day extension for multifamily audit submissions having due dates of 3/31/20 and 4/30/20 (requiring them to be submitted by April 30th and May 31st respectively). We have just heard from HUD staff that they have further extended these submission deadlines to June 30, 2020. A new user alert has been posted for those logging into the Financial Assessment Subsystem – Multifamily Housing site as follows:

“Global Extension Till June 30th REAC is extending due dates on all submissions that are due April 30th and May 31st. The new due dates for these submissions will be June 30th. This applies to all submissions due within this time frame.”

Further, as noted in GAQC Alert #399, HUD issued a question and answer (Q&A) document, Questions and Answers for Office of Multifamily Housing Stakeholders, which has now been updated through May, 1, 2020, Some of the more recent questions added to the document address forbearance provisions described in Mortgagee Letter 2020-09, Implementation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act Forbearance, which are relevant to multifamily borrowers, servicers, and lenders. Note that Q7 in this Q&A document addresses the audit extension but has not yet been updated to reflect the latest June 30th extension provided by REAC. We assume the next version of the Q&A will reflect this latest change.

PHA Unaudited Submissions. On April 22, 2020, HUD issued an updated version of COVID-19 FAQs for Public Housing Agencies. QC14 of the FAQs extends the submission deadline for unaudited submissions required to be made by PHAs with 12/31/19 and 3/31/20 year-ends to 8/31/20 and 11/30/20 respectively. PHAs are not required to seek HUD approval for these extensions.

FAC Update

Although the FAC is accepting single audit submissions, FAC staff has informed us that the COVID-19 pandemic has impacted normal processing times and that telephone support is limited. It is currently not unusual for a month to pass between the receipt of a submission and for the submission to be processed by the FAC. However, this delay will not impact the recorded acceptance date which will still be based on the actual date of submission.

On another note, the FAC posted information about the 6-month single audit submission extension on the FAC home page under the heading “Important Announcements.” See GAQC Alert #401 for more information on this extension that was established by OMB Memorandum M-20-17, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations (OMB Memo M-20-17). In its announcement, the FAC added the following language that does not appear in the OMB memo: “Individual recipients and subrecipients…are requested to include a reference to the [OMB] memorandum in their audit reporting packages so that Federal agencies and pass-through entities are informed.” We understand this addition was made based on a request from OMB and believe the intent is for the auditee to add a statement in the reporting package when it has taken advantage of the 6-month extension due to the COVID-19 pandemic. We have an inquiry into OMB for confirmation on this, as well as a question about where in the reporting package this notification should be placed. We will follow-up in a future GAQC Alert once we get a response.

DOE For-Profit Audit Extension

In the DOE National Nuclear Security Administration’s implementation of OMB Memo M-20-17, DOE extended the audit submission deadline for for-profit entities subject to a compliance audit under DOE rules. The extension is consistent with the extension language provided by OMB for single audits (i.e., a 6-month extension). See the DOE announcement, section 13, titled “Extension of Single Audit Submission,” for more information.


If you have additional questions, please feel free to contact our office.


Upcoming Single Audit Submission Highlights

The U.S. Office of Management and Budget (OMB) issued the following memorandum, dated March 9, 2020, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19).

In response to that alert, the Governmental Audit Quality Center (GAQC) of the AICPA followed up with OMB to clarify certain points made in the memo and issued their own alert No. 398 as follows:

  • The OMB memo discusses a potential extension of the single audit submission deadline by 12 months. OMB clarified that this extension cannot be applied to ALL recipients as of right now. The memo is intended to provide guidance to federal agencies relating to areas where relief may be provided to certain
  • The guidance in the OMB memo primarily relates to recipients receiving funds for coronavirus preparation and response (H.R. 6074). There could be cases where agencies may decide to apply the guidance to existing awards that are deemed by the agency to be for continued research and services necessary to carry out the emergency response relating to COVID-19.
  • Federal agencies are expected to issue their own guidance.
  • OMB is working on additional guidance to address situations where recipients may have operations that have been adversely impacted by COVID-19 but are not recipients of H.R.6074 funds.
  • The GAQC recommends that entities and auditors contact the National Single Audit Coordinator at the cognizant or oversight agency if there are concerns about meeting the upcoming March 31, 2020 deadline (for June 30, 2019 single audit submissions).

If you have any questions, or would like more clarification on this issue, please contact our office.

3 keys to a successful accounting system upgrade

Technology is tricky. Much of today’s software is engineered so well that it will perform adequately for years. But new and better features are being created all the time. And if you’re not getting as much out of your financial data as your competitors are, you could be at a disadvantage.

For these reasons, it can be hard to decide when to upgrade your company’s accounting software. Here are three keys to consider:

1. Your users are ready. When making a major change to your accounting software, the sophistication of the system needs to align with the technological savvy of its primary users. Sometimes companies buy expensive software only to have many of its features gather virtual dust because the employees who use it are resistant to change.

But if your users are well trained and adaptable, they may be able to extract added value from a more sophisticated accounting system. For instance, they could track key performance indicators to generate more meaningful financial reports.

2. The price is right. You’ll of course need to consider the costs involved. As holds true for any technology purchase, project leaders must set a budget and focus the search on products and vendors offering only the functions your company needs.

But don’t stop there. Explore add-on services such as free trials, initial training and ongoing support. You want to get the most value from the software, which goes beyond the new and improved features themselves.

3. You need to integrate. This is the concept of networking your accounting system with your other mission-critical systems such as sales, inventory and production.

For most companies today, integration is essential to maximizing the return on investment in accounting software. So, if you haven’t yet implemented this functionality, an upgrade may be highly advisable. Just be aware that a successful companywide integration will call for buy-in from every nook and cranny of your business.

Typically, if a company doesn’t need any major accounting process changes, it probably doesn’t need a major accounting software change either. But if upgrading both will help grow your business, it’s absolutely a step worth considering. We can provide further guidance and info. Contact our team today!

When it comes to revenue, nonprofits need to think like auditors

Auditors examining a not-for-profit’s financial statements spend considerable time on the revenue figures. They look at the accounting methods used to record revenues and perform a detailed income analysis. You can use the same techniques to increase your understanding of your organization’s revenue profile.

In particular, consider:

Individual contributions. Compare the donation dollars raised to past years to pinpoint trends. For example, have individual contributions been increasing over the past five years? What campaigns have you implemented during that period? You might go beyond the totals and determine if the number of major donors has grown.

Also estimate what portion of contributions is restricted. If a large percentage of donations are tied up in restricted funds, you might want to re-evaluate your gift acceptance policy or fundraising materials.

Grants. Grants can vary dramatically in size and purpose ― from covering operational costs, to launching a program, to funding client services. Pay attention to trends here, too. Did one funder supply 50% of total revenue in 2015, 75% in 2016, and 80% last year? A growing reliance on a single funding source is a red flag to auditors and it should be to you, too. In this case, if funding stopped, your organization might be forced to close its doors.

Fees for services. Fees from clients, joint venture partners or other third parties can be similar to fees for-profit organizations earn. They’re generally considered exchange transactions because the client receives a product or service of value in exchange for its payment. Sometimes fees are charged on a sliding scale based on income or ability to pay. In other cases, fees are subject to legal limitations set by government agencies. You’ll need to assess whether these services are paying for themselves.

Membership dues. If your nonprofit is a membership organization and charges dues, determine whether membership has grown or declined in recent years. How does this compare with your peers? Do you suspect that dues income will decline? You might consider dropping dues altogether and restructuring. If so, examine other income sources for growth potential.

Once you’ve gained a deeper understanding of your revenue picture, you can apply that knowledge to various aspects of managing your organization. This includes setting annual goals and preparing your budget. Contact us for help interpreting and applying revenue data.

© 2018