Finding 2022-001 ? A. Activities Allowed or Unallowed, B. Allowable Costs/Cost Principles, L. Reporting Identification of the federal program: Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing No: 93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distributions (referred to as PRF and ARP Rural Distributions programs) Award Period: January 1, 2021 through December 31, 2022 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states the following regarding internal control: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Norton Healthcare, Inc. and Affiliates (the Company) did not retain supporting documentation over its internal review and approval of expenses reported to HRSA in the HHS portal. While management had a process to identify and record allowable expenses under the PRF and ARP Rural Distribution programs, internal controls over management's accumulation and review of such expenses for allowability under the PRF and ARP Rural Distribution programs were not suitably designed. Furthermore, evidence of the review and approval of the Period 4 report submitted in the HHS portal was not retained. Cause: While management designed and implemented internal controls that required expenditures to be reviewed by members of the payroll, human resources, and finance functions as expenditures occurred, internal controls were not designed or implemented around the accumulation of expenditures and review of such expenditures for allowability under the PRF and ARP Rural Distribution programs. Furthermore, documentation to support the review and approval of the Period 4 report submitted in the HHS portal was not retained. Effect or potential effect: Lack of formalized review and approval documentation pertaining to expenditures reported under the PRF and ARP Rural Distribution programs could have resulted in unallowable expenses being charged to the programs and incorrect information being submitted to the HHS portal. Questioned costs: None. Context: We inspected the reconciliation of the underlying expense detail to the Period 4 HHS portal submission, finding the expense balances reported to reconcile. Through discussion with management, it was determined that the expense populations were primarily derived from certain pay codes and general ledger accounts created specifically for COVID-19 expenses. Upon inspection of related documentation, it was determined that transactions coded to these pay codes and general ledger accounts were approved upon occurrence. However, there was no formal documentation retained around management?s subsequent accumulation of expenditures and review and approval of these expense totals or their allowability under the PRF or ARP Rural Distribution programs? guidelines. Furthermore, documentation of the review and approval of the Period 4 report submitted to the HHS portal was not retained. We selected 40 transactions (totaling $257,584 in expenditures) for compliance testing, with no compliance exceptions identified. The entire $4,401,728 balance of HRSA PRF program funds reported in Period 4 were supported through expenses, with no lost revenue utilized in the period. Identification as a repeat finding, if applicable: This is a repeat of the 2021-001 finding. Recommendation: Management should reassess its internal controls over the accumulation, review and approval of the allowability of expenditures and retain documentation supporting that review and approval, as well as the review and approval of reports submitted to the HHS portal Views of responsible officials: Management agrees with this finding and will update policies and procedures to ensure that a comprehensive review, approval, and document retention process is applied consistently in the preparation of future HHS portal submissions.
Finding 2022-001 ? A. Activities Allowed or Unallowed, B. Allowable Costs/Cost Principles, L. Reporting Identification of the federal program: Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing No: 93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distributions (referred to as PRF and ARP Rural Distributions programs) Award Period: January 1, 2021 through December 31, 2022 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states the following regarding internal control: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Norton Healthcare, Inc. and Affiliates (the Company) did not retain supporting documentation over its internal review and approval of expenses reported to HRSA in the HHS portal. While management had a process to identify and record allowable expenses under the PRF and ARP Rural Distribution programs, internal controls over management's accumulation and review of such expenses for allowability under the PRF and ARP Rural Distribution programs were not suitably designed. Furthermore, evidence of the review and approval of the Period 4 report submitted in the HHS portal was not retained. Cause: While management designed and implemented internal controls that required expenditures to be reviewed by members of the payroll, human resources, and finance functions as expenditures occurred, internal controls were not designed or implemented around the accumulation of expenditures and review of such expenditures for allowability under the PRF and ARP Rural Distribution programs. Furthermore, documentation to support the review and approval of the Period 4 report submitted in the HHS portal was not retained. Effect or potential effect: Lack of formalized review and approval documentation pertaining to expenditures reported under the PRF and ARP Rural Distribution programs could have resulted in unallowable expenses being charged to the programs and incorrect information being submitted to the HHS portal. Questioned costs: None. Context: We inspected the reconciliation of the underlying expense detail to the Period 4 HHS portal submission, finding the expense balances reported to reconcile. Through discussion with management, it was determined that the expense populations were primarily derived from certain pay codes and general ledger accounts created specifically for COVID-19 expenses. Upon inspection of related documentation, it was determined that transactions coded to these pay codes and general ledger accounts were approved upon occurrence. However, there was no formal documentation retained around management?s subsequent accumulation of expenditures and review and approval of these expense totals or their allowability under the PRF or ARP Rural Distribution programs? guidelines. Furthermore, documentation of the review and approval of the Period 4 report submitted to the HHS portal was not retained. We selected 40 transactions (totaling $257,584 in expenditures) for compliance testing, with no compliance exceptions identified. The entire $4,401,728 balance of HRSA PRF program funds reported in Period 4 were supported through expenses, with no lost revenue utilized in the period. Identification as a repeat finding, if applicable: This is a repeat of the 2021-001 finding. Recommendation: Management should reassess its internal controls over the accumulation, review and approval of the allowability of expenditures and retain documentation supporting that review and approval, as well as the review and approval of reports submitted to the HHS portal Views of responsible officials: Management agrees with this finding and will update policies and procedures to ensure that a comprehensive review, approval, and document retention process is applied consistently in the preparation of future HHS portal submissions.