FAC Explorer

Audit 15889

FY End
2023-09-30
Total Expended
$1.77M
Findings
4
Programs
2
Organization: Perham Hospital District (MN)
Year: 2023 Accepted: 2024-02-06
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
11923 2023-003 Material Weakness - AB
11924 2023-004 Material Weakness - L
588365 2023-003 Material Weakness - AB
588366 2023-004 Material Weakness - L

Programs

ALN Program Spent Major Findings
93.498 Provider Relief Fund $1.76M Yes 2
93.301 Small Rural Hospital Improvement Grant Program $11,400 - 0

Contacts

Name Title Type
SNGRN7Z22YN8 Justine Anderson Auditee
2183471302 Ashley Brandt-Duda Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Organization does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Perham Hospital District d/b/a Perham Hospital & Perham Living (the Organization) under programs of the federal government for the year ended September 30, 2023. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Organization.
Title: COVID‐19 Provider Relief Funds and American Rescue Plan (ARP) Rural Distribution Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Organization does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. The Organization received amounts from the U.S. Department of Health and Human Services (HHS) through the COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution program (Federal Financial Assistance Listing #93.498). The expenditures are recognized on the Schedule when the expenditures were included in the reporting to HHS for Period 4, defined as payments received between July 1, 2021 and December 31, 2021, and Period 5, defined as payments received between January 1, 2022 and June 30, 2022. As the total amount of $1,761,518 was included in the Period 4 report submitted to HHS, that amount is shown on the accompanying Schedule. There were no amounts reported on Period 5 to HHS. The total amount of expenditures included on the Schedule requires management to make estimates and assumptions that affect the reported amounts. Accordingly, such expenditures are considered a significant estimate. Estimates and assumptions may include reducing actual expenses by amounts that have been reimbursed or are obligated to be reimbursed by other sources and estimating marginal increases in expenses related to coronavirus. Actual amounts could differ from those estimates.

Finding Details

Finding 2023-003
Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #411271856 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Material Weakness in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Organization selected option iii to calculate lost revenue, which consists of utilizing an alternative reasonable method. Condition: The Organization selected option iii to calculate lost revenue using budgeted net revenues to actual net revenues. The Organization utilized net revenues for part of the calculation and then utilized gross revenues in later quarters. This inconsistency of net and gross revenues caused a miscalculation of the Organization’s total lost revenue. Cause: These errors indicate there is a lack of policies governing the review and approval of the lost revenue calculation to its supporting documents. Effect: The Organization did not follow their methodology for calculating lost revenues, resulting in overstating the amount of lost revenues to be claimed by $282,934. While the Organization had an error in the total amount of lost revenue calculated, the Organization has excess amounts of lost revenues to carryforward of $3,663,347. Questioned Costs: None reported. Context: Lost revenue was tested for all twelve quarters that were reported. Controls did not appear to be operating effectively for three of the quarters tested. Repeat Finding from Prior Years: No Recommendation: We recommend that the Organization enhance internal control policies to ensure that the lost revenue calculation follows the selected lost revenue methodology per the Organization’s memo. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-004
Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #411271856 Reporting 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 the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Organization is required to submit an accurate report to HHS for each filing period that funds were received. Condition: The Organization utilized net revenues and gross revenues in the lost revenue calculation causing errors in the lost revenue calculation which resulted in key line items being reported incorrectly in the Period 4 HHS Report. Cause: These key line item errors indicate there is a lack of policies governing the review and approval of the HHS Report to its supporting documents (i.e. lost revenue calculations). Effect: The Organization did not follow their methodology for calculating lost revenues, resulting in overstating the amount of lost revenues to be claimed by $282,934. While the Organization had an error in the total amount of lost revenue calculated, the Organization has excess amounts of lost revenues to carryforward of $3,663,347. As a result of the error in calculation, there were three key line items on the Period 4 HHS Report that were incorrect. Questioned Costs: None reported. Context: All key line items on the HHS Period 4 Report were tested. Of the twelve key line items tested related to lost revenue, three line items contained errors. Repeat Finding from Prior Years: No Recommendation: We recommend the Organization enhance internal control policies to ensure the HHS Report is properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly supported. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-003
Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #411271856 Activities Allowed or Unallowed and Allowable Costs/Costs Principles Material Weakness in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Organization selected option iii to calculate lost revenue, which consists of utilizing an alternative reasonable method. Condition: The Organization selected option iii to calculate lost revenue using budgeted net revenues to actual net revenues. The Organization utilized net revenues for part of the calculation and then utilized gross revenues in later quarters. This inconsistency of net and gross revenues caused a miscalculation of the Organization’s total lost revenue. Cause: These errors indicate there is a lack of policies governing the review and approval of the lost revenue calculation to its supporting documents. Effect: The Organization did not follow their methodology for calculating lost revenues, resulting in overstating the amount of lost revenues to be claimed by $282,934. While the Organization had an error in the total amount of lost revenue calculated, the Organization has excess amounts of lost revenues to carryforward of $3,663,347. Questioned Costs: None reported. Context: Lost revenue was tested for all twelve quarters that were reported. Controls did not appear to be operating effectively for three of the quarters tested. Repeat Finding from Prior Years: No Recommendation: We recommend that the Organization enhance internal control policies to ensure that the lost revenue calculation follows the selected lost revenue methodology per the Organization’s memo. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-004
Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #411271856 Reporting 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 the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Organization is required to submit an accurate report to HHS for each filing period that funds were received. Condition: The Organization utilized net revenues and gross revenues in the lost revenue calculation causing errors in the lost revenue calculation which resulted in key line items being reported incorrectly in the Period 4 HHS Report. Cause: These key line item errors indicate there is a lack of policies governing the review and approval of the HHS Report to its supporting documents (i.e. lost revenue calculations). Effect: The Organization did not follow their methodology for calculating lost revenues, resulting in overstating the amount of lost revenues to be claimed by $282,934. While the Organization had an error in the total amount of lost revenue calculated, the Organization has excess amounts of lost revenues to carryforward of $3,663,347. As a result of the error in calculation, there were three key line items on the Period 4 HHS Report that were incorrect. Questioned Costs: None reported. Context: All key line items on the HHS Period 4 Report were tested. Of the twelve key line items tested related to lost revenue, three line items contained errors. Repeat Finding from Prior Years: No Recommendation: We recommend the Organization enhance internal control policies to ensure the HHS Report is properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly supported. Views of Responsible Officials: Management agrees with the finding.