FAC Explorer

Audit 29294

FY End
2022-02-28
Total Expended
$4.32M
Findings
2
Programs
3
Organization: Schuyler County Hospital District (IL)
Year: 2022 Accepted: 2022-11-29
Auditor: Rsm US LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
32904 2022-002 Material Weakness - L
609346 2022-002 Material Weakness - L

Programs

ALN Program Spent Major Findings
93.498 Provider Relief Fund $3.98M Yes 1
93.155 Rural Health Research Centers $256,978 - 0
93.301 Small Rural Hospital Improvement Grant Program $84,090 - 0

Contacts

Name Title Type
JB8AJ23PA975 Tammy Gadberry Auditee
2173225296 Anna Kyer 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. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Schuyler County Hospital District (the Hospital) under programs of the federal government for the year ended February 28, 2022. The information in this Schedule 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). Therefore, some amounts presented in the Schedule may differ from amounts presented in, or used in the preparation of, the financial statements.For purposes of the Schedule, federal awards include all federal assistance entered into directly between the Hospital and the federal government and sub-awards from nonfederal Hospitals made under federally sponsored agreements. The Schedule does not include payments received under Medicare and Medicaid reimbursement programs. Because the Schedule presents only a selected portion of the activities of the Hospital, it is not intended to, and does not, present the net position, changes in net position or cash flows of the Hospital.
Title: Subrecipients Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. None of the federal expenditures presented in the Schedule were provided to subrecipients during the year ended February 28, 2022.
Title: Noncash Assistance, Insurance, Loans and Loans Guarantees Outstanding Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Hospital did not receive any noncash assistance during the year ended February 28, 2022. There were no federal awards expended for insurance or any loans or loan guarantees outstanding as of February 28, 2022.
Title: Provider Relief Fund Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Under the terms and conditions of the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution program (PRF) (ALN 93.498), the Hospital is required to report COVID-19 related expenses and lost revenue to the U.S. Department of Health and Human Services (HHS). Guidance from HHS has required the reporting of the COVID-19 related expenses and lost revenue in certain reporting periods based on when the funds were received. The February 28, 2022 Schedule includes PRF expenditures of $3,979,522. Distributions of $3,979,522 were received by the Hospital from April 10, 2020 to December 31, 2020. The Hospital recognized none and $3,979,522 of the amount received as revenue in its February 28, 2022 and 2021 financial statements, respectively, as the terms and conditions of the PRF grant were satisfied. HHS requires PRF amounts received by December 31, 2020 to be reported on the February 28, 2022 Schedule rather than the February 28, 2021 Schedule.

Finding Details

Finding 2022-002
Finding 2022-002 ? Lost Revenue Calculation Methodology Reporting U.S. Department of Health and Human Services Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (93.498) Federal Award Year 2020-2021 Criteria: Title 2, Subtitle A Chapter II Part 200 Subpart D 200.303 Internal controls. 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). In addition, the terms and conditions of the award requires the recipient to submit reports as the secretary of HHS determines are needed to ensure compliance with conditions that are imposed on the payment, and such reports shall be in such form, with such content, as specified by the secretary of HHS in future program instructions directed to all recipients. Specific criteria have been established by the U.S. Department of Health and Human Services (HHS) in their terms and conditions related to allowable costs and reporting for this program including proper reporting of critical information, such as amounts included in reimbursed expense and lost revenues table. Condition: For the Hospital?s Period 1 reporting in the HRSA portal (Portal), the Hospital inaccurately reported lost revenues and expenses, resulting in an overstatement of lost revenues and an understatement of expenses. Cause: Management did not have effective internal controls in place to ensure reporting of lost revenues and COVID-eligible expenses were adequately reviewed before submission. Effect or potential effect: The calculation of lost revenues did not comply with the Terms and Conditions of the federal program, and total allowable costs reported in the Portal as PRF reimbursed expenses were overstated by $1,337,784. However, the Hospital had identified additional expenses, but did not report them in the Portal as they believed the lost revenues amounts were sufficient. While reporting was inaccurate, there were no questioned costs. Had the Hospital not incurred enough eligible expenses to cover the miscalculation, there could have been questioned costs. Context: The Hospital mistakenly used an incorrect input in their calculation of lost revenues for Q2 2020, resulting in an overstatement of lost revenues. Additionally, the Hospital had identified COVID-related expenses, but did not report them in the Portal as they believed lost revenue alone exceeded the Period 1 PRF distributions received. The total overstatement of lost revenues and expenses is $1,337,784. This error was detected by the auditors and management, but after the PRF information had already been submitted, and the Portal did not allow management to correct a previous submission. However, management had additional expenses which were identified, but not reported related to COVID that would be eligible for PRF, and therefore had the error been corrected, total allowable costs still would have exceeded the amount of PRF payments received in Period 1. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management develop and implement effective internal controls to ensure accurate reporting in the Portal. This will ensure the calculation of lost revenues and expenses comply with Terms and Conditions of the federal program. Views of responsible officials: Management agrees with the finding and recommendations.
Finding 2022-002
Finding 2022-002 ? Lost Revenue Calculation Methodology Reporting U.S. Department of Health and Human Services Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (93.498) Federal Award Year 2020-2021 Criteria: Title 2, Subtitle A Chapter II Part 200 Subpart D 200.303 Internal controls. 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). In addition, the terms and conditions of the award requires the recipient to submit reports as the secretary of HHS determines are needed to ensure compliance with conditions that are imposed on the payment, and such reports shall be in such form, with such content, as specified by the secretary of HHS in future program instructions directed to all recipients. Specific criteria have been established by the U.S. Department of Health and Human Services (HHS) in their terms and conditions related to allowable costs and reporting for this program including proper reporting of critical information, such as amounts included in reimbursed expense and lost revenues table. Condition: For the Hospital?s Period 1 reporting in the HRSA portal (Portal), the Hospital inaccurately reported lost revenues and expenses, resulting in an overstatement of lost revenues and an understatement of expenses. Cause: Management did not have effective internal controls in place to ensure reporting of lost revenues and COVID-eligible expenses were adequately reviewed before submission. Effect or potential effect: The calculation of lost revenues did not comply with the Terms and Conditions of the federal program, and total allowable costs reported in the Portal as PRF reimbursed expenses were overstated by $1,337,784. However, the Hospital had identified additional expenses, but did not report them in the Portal as they believed the lost revenues amounts were sufficient. While reporting was inaccurate, there were no questioned costs. Had the Hospital not incurred enough eligible expenses to cover the miscalculation, there could have been questioned costs. Context: The Hospital mistakenly used an incorrect input in their calculation of lost revenues for Q2 2020, resulting in an overstatement of lost revenues. Additionally, the Hospital had identified COVID-related expenses, but did not report them in the Portal as they believed lost revenue alone exceeded the Period 1 PRF distributions received. The total overstatement of lost revenues and expenses is $1,337,784. This error was detected by the auditors and management, but after the PRF information had already been submitted, and the Portal did not allow management to correct a previous submission. However, management had additional expenses which were identified, but not reported related to COVID that would be eligible for PRF, and therefore had the error been corrected, total allowable costs still would have exceeded the amount of PRF payments received in Period 1. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management develop and implement effective internal controls to ensure accurate reporting in the Portal. This will ensure the calculation of lost revenues and expenses comply with Terms and Conditions of the federal program. Views of responsible officials: Management agrees with the finding and recommendations.