Non-Federal Audit Requirements for Commercial (For-Profit) Organizations
1. What are the HHS audit requirements for commercial (For-Profit) organizations?
The Department of Health and Human Services (HHS) has specified requirements for non-Federal audits of for-profit (commercial) organizations in HHS' Title 45, Code of Federal Regulations (CFR), Part 75.501(h) through (k), "Non-Federal Audits." Per the regulations, a for-profit (commercial) organization is subject to audit requirements for a non-Federal audit if, during its fiscal year, it expended $750,000* or more under HHS awards and at least one award is a HHS grant or subgrant. Title 45 CFR Part 75 essentially incorporates the thresholds and deadlines of Office of Management and Budget (OMB) Uniform Guidance: Cost Principles, Audit, and Administrative Requirements for Federal Awards and provides for-profit organizations with two options regarding the type of audit that will satisfy the audit requirements either:
- a financial related audit (as defined in the Government Auditing Standards, GPO Stock #020-000-00-265-4) of a particular award in accordance with Government Auditing Standards, in those cases where the recipient receives awards under only one HHS program; or, if awards are received under multiple HHS programs, a financial related audit of all HHS awards in accordance with Government Auditing Standards; or an audit that meets the requirements contained in Title 45 CFR Subpart F.
[* Note: The threshold was $500,000 for audits of fiscal years beginning prior to December 26, 2014.]
2. Do non-federal audit requirements for commercial organizations apply only to HHS grants?
3. How do you define “expended”?
4. Are fixed price contracts included in threshold calculations?
5. Are pass through dollars (i.e., dollars not received directly from HHS) included in the calculations?
6. What is expected if the Yellow Book option is selected?
7. What is the audit period?
8. How often is an audit required?
9. Who can perform the required audit? Can my internal auditor do it?
Who pays for the required audit?
11. What is the deadline for submission of the audit report(s)?
12. Do for-profit entities have to complete the data collection form?
13. Is the management letter to be submitted as part of the reporting package?
14. Where should audit reports of for-profit organizations be submitted?
15. Are there any requirements for awardees not meeting the threshold?
16. Who can I contact if I have a technical question on how to conduct the audit?
17. COVID-19 Updates
12-Month Single Audit Extension Granted Under M-20-11
- The 12-month single audit extension granted under M-20-11 applies to recipients that received one or more Federal awards (issued in FY 2020 prior to the 7/25/2020 expiration of the Secretary’s public health emergency (PHE) declaration*) to support the continued research and services necessary to carry out the emergency response related to COVID-19.
- The recipient of a COVID-19 award is eligible for the 12-month single audit extension unless the OPDIV that issued the award explicitly informs the recipient otherwise.
- Eligible recipients who decide to delay single audit submission 12-months beyond the normal due date are not required to seek prior approval or maintain supporting documentation.
*The Secretary may extend the PHE declaration.
6-Month Single Audit Extension Granted Under M-20-17
- The 6-month single audit extension granted under M-20-17 applies to recipients affected by the loss of operational capacity and increased costs due to COVID-19 that have not yet submitted their single audits to the Federal Audit Clearinghouse (FAC) as of the date of issuance of M-20-17 (3/19/2020), with fiscal years that end on or before 6/30/2020 (single audits due to the FAC prior to 3/19/2020 do not qualify).*
- No further action by awarding agencies is required to enact this extension. Eligible recipients who believe they were adversely affected by COVID-19 and who decide to delay single audit submission 6-months beyond the normal due date are not required to seek prior approval; however, they should maintain documentation of the reason for the delayed filing.
- OPDIVs have discretion in determining whether to ask eligible recipients for supporting documentation for the 6-month delay, taking into account the associated administrative burden for the recipients and HHS.
*OMB may extend these parameters.