Department of Health and Human Services
Federal Financial Assistance Listing #93.697
COVID‐19 Testing and Mitigation for Rural Health Clinics
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance
Period of Performance
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control
over federal awards that provides reasonable assurance that the Health System is managing the federal award in
compliance with federal statutes, regulations and terms and conditions of the federal award. The Terms and
Conditions of the grant required the Health System expend the grant for costs incurred on or after January 1,
2021 and on or before December 31, 2022.
Condition: The Health System’s expense tracking spreadsheet, which identified the expenses claimed under the
federal program as allowable costs included three expenses which were subsequent to December 31, 2022 and
therefore, outside the period of performance. Although invoices were approved for payment, only one invoice
included documentation relating to specific approval as allowable costs related to the grant. Likewise, the
Health System’s expense tracking spreadsheet did not include a documented secondary review and approval by
someone other than the preparer.
Cause: The Health System’s review and approval process over the Health System’s expense tracking spreadsheet
did not identify the expenses outside the period of performance. Expenditures subsequent to December 31,
2022 were due to vendor supply chain delays.
Effect: The Health System’s expense tracking spreadsheet which identified the expenses claimed under the
federal program as allowable costs had less expenses in the period of performance identified than funds
received; therefore, some funds may be considered unallowed.
Questioned Costs: $90,345, consisting of three invoices were determined by looking at the entire listing for any
expenditures subsequent to December 31, 2022.
Context: A nonstatistical sample of 10 ($164,238) from a population of 51 expenditures ($290,165) were tested.
One of 10 invoices for $51,025 were subsequent to December 31, 2022. One of 10 invoices included
documentation relating to specific approval as allowable costs related to the grant.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Health System implement a control process which includes an
independent review and approval of the expense tracking spreadsheet which identifies the expenses claimed
under the federal program as allowable costs and retain documentation of the review process.
Views of Responsible Officials: Management agrees with the finding. However, the expenses referenced as being outside of the period of performance were costs to a vendor whom was contracted/engaged prior to the period of performance. Due to supply chain/vendor demand issues, the work was completed subsequent to the period of performance. It was our understanding that these are eligible expenses under the program, as the work and payment was delayed due to supply chain/vendor demand issues. However, if necessary, we have identified other qualifying expenditures incurred within the period of performance we can submit which will satisfy allowable costs claimed for the period of performance.
Department of Health and Human Services
Federal Financial Assistance Listing #93.697
COVID‐19 Testing and Mitigation for Rural Health Clinics
Procurement, Suspension, and Debarment
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control
over federal awards that provides reasonable assurance that the Health System is managing the federal award in
compliance with federal statutes, regulations and terms and conditions of the federal award. The non‐Federal
entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR
200.318 through 200.327 which also requires documentation to be retained to detail the history of
procurements.
Condition: The Health System did not obtain quotes from multiple vendors as it relates to the procurement and
purchasing of flooring which was over the micro‐purchase threshold. In addition, Health System did not have a
written procurement policy or written standards of conduct policy related to procurement.
Cause: The Health System did not have a procurement policy in place.
Effect: Without obtaining multiple quotes and having a procurement policy or standards of conduct policy
related to procurement, demonstrating that the Health System complies with laws, regulations, and other
compliance requirements is difficult.
Questioned Costs: Covered transactions entered into by the Health System over the micro‐purchase threshold
without multiple quotes totaled $147,460. Questioned costs are unable to be identified as multiple quotes were
not received by the Health System to ensure the price paid was reasonable.
Context: Sampling was not used as only three vendors had purchases over $10,000.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Health System implement a procurement policy and standards of
conduct policy related to procurement, implement internal control processes to ensure compliance with their
procurement policy, and retain documentation to support procurement, suspension and debarment procedures
performed.
Views of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services
Federal Financial Assistance Listing #93.697
COVID‐19 Testing and Mitigation for Rural Health Clinics
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance
Period of Performance
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control
over federal awards that provides reasonable assurance that the Health System is managing the federal award in
compliance with federal statutes, regulations and terms and conditions of the federal award. The Terms and
Conditions of the grant required the Health System expend the grant for costs incurred on or after January 1,
2021 and on or before December 31, 2022.
Condition: The Health System’s expense tracking spreadsheet, which identified the expenses claimed under the
federal program as allowable costs included three expenses which were subsequent to December 31, 2022 and
therefore, outside the period of performance. Although invoices were approved for payment, only one invoice
included documentation relating to specific approval as allowable costs related to the grant. Likewise, the
Health System’s expense tracking spreadsheet did not include a documented secondary review and approval by
someone other than the preparer.
Cause: The Health System’s review and approval process over the Health System’s expense tracking spreadsheet
did not identify the expenses outside the period of performance. Expenditures subsequent to December 31,
2022 were due to vendor supply chain delays.
Effect: The Health System’s expense tracking spreadsheet which identified the expenses claimed under the
federal program as allowable costs had less expenses in the period of performance identified than funds
received; therefore, some funds may be considered unallowed.
Questioned Costs: $90,345, consisting of three invoices were determined by looking at the entire listing for any
expenditures subsequent to December 31, 2022.
Context: A nonstatistical sample of 10 ($164,238) from a population of 51 expenditures ($290,165) were tested.
One of 10 invoices for $51,025 were subsequent to December 31, 2022. One of 10 invoices included
documentation relating to specific approval as allowable costs related to the grant.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Health System implement a control process which includes an
independent review and approval of the expense tracking spreadsheet which identifies the expenses claimed
under the federal program as allowable costs and retain documentation of the review process.
Views of Responsible Officials: Management agrees with the finding. However, the expenses referenced as being outside of the period of performance were costs to a vendor whom was contracted/engaged prior to the period of performance. Due to supply chain/vendor demand issues, the work was completed subsequent to the period of performance. It was our understanding that these are eligible expenses under the program, as the work and payment was delayed due to supply chain/vendor demand issues. However, if necessary, we have identified other qualifying expenditures incurred within the period of performance we can submit which will satisfy allowable costs claimed for the period of performance.
Department of Health and Human Services
Federal Financial Assistance Listing #93.697
COVID‐19 Testing and Mitigation for Rural Health Clinics
Procurement, Suspension, and Debarment
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control
over federal awards that provides reasonable assurance that the Health System is managing the federal award in
compliance with federal statutes, regulations and terms and conditions of the federal award. The non‐Federal
entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR
200.318 through 200.327 which also requires documentation to be retained to detail the history of
procurements.
Condition: The Health System did not obtain quotes from multiple vendors as it relates to the procurement and
purchasing of flooring which was over the micro‐purchase threshold. In addition, Health System did not have a
written procurement policy or written standards of conduct policy related to procurement.
Cause: The Health System did not have a procurement policy in place.
Effect: Without obtaining multiple quotes and having a procurement policy or standards of conduct policy
related to procurement, demonstrating that the Health System complies with laws, regulations, and other
compliance requirements is difficult.
Questioned Costs: Covered transactions entered into by the Health System over the micro‐purchase threshold
without multiple quotes totaled $147,460. Questioned costs are unable to be identified as multiple quotes were
not received by the Health System to ensure the price paid was reasonable.
Context: Sampling was not used as only three vendors had purchases over $10,000.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Health System implement a procurement policy and standards of
conduct policy related to procurement, implement internal control processes to ensure compliance with their
procurement policy, and retain documentation to support procurement, suspension and debarment procedures
performed.
Views of Responsible Officials: Management agrees with the finding.