FAC Explorer

Audit 295503

FY End
2023-06-30
Total Expended
$1.76M
Findings
2
Programs
1
Organization: McDonough County Hospital District (IL)
Year: 2023 Accepted: 2024-03-18
Auditor: Rsm US LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
380792 2023-003 Material Weakness - L
957234 2023-003 Material Weakness - L

Programs

ALN Program Spent Major Findings
93.498 Provider Relief Fund $1.76M Yes 1

Contacts

Name Title Type
VVA3XJNJ1KB5 William Murdock Auditee
3098361675 Ryan Caldwell 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 follwing 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 minimus cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of McDonough County Hospital District d/b/a McDonough District Hospital (the Hospital) under programs of the federal government for the year ended June 30, 2023. 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). Because the Schedule presents only a selected portion of the operations of the Hospital, it is not intended and does not present the financial position, changes in financial position, or cash flows of the Hospital.
Title: Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized follwing 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 minimus cost rate. 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.
Title: Indirect Cost Rate Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized follwing 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 minimus cost rate. The Hospital has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.
Title: Non-Cash Assistance, Insurance, Loans & Loan Guarantees Outstanding Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized follwing 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 minimus cost rate. The Hospital did not receive any non-cash assistance during the year ended June 30, 2023. There were no federal awards expended for insurance or any loans or loan guarantees outstanding as of June 30, 2023.
Title: Provider Relief Fund Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized follwing 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 minimus cost rate. Under the terms and conditions of the Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution program (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 June 30, 2023 Schedule includes ALN 93.498 expenditures of $1,761,173. Distributions of $1,761,173 were received by the Hospital from July 1, 2021 to June 30, 2022. The Hospital recognized $1,761,173 as revenue in its June 30, 2022 financial statements, as the terms and conditions of the ALN 93.498 grant were satisfied. HHS requires ALN 93.948 amounts received from July 1, 2021 to June 30, 2022 to be reported on the June 30, 2023 Schedule rather than the June 30, 2022 Schedule.

Finding Details

Finding 2023-003
2023-003 Preparation of Provider Relief Fund Reporting Portal Submission U.S. Department of Health and Human Services Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (93.498) Federal Award Year 2022-2023 Criteria: The requirements for reporting are contained in the program legislation, Federal awarding agency regulations, and the terms and conditions of the award. Per 2 CFR 200.303, the non-Federal entity must 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. Effective internal controls should include procedures to ensure the Provider Relief Fund (PRF) reporting portal submission is accurate. Condition: During our testing over reporting, we observed management did not have effective internal controls in place to ensure the reporting portal submission was completed accurately. In the report submitted to Health Resources and Services Administration (HRSA) for period 4, the Hospital mistakenly reported $1,600,451 as American Rescue Plan (ARP) Rural expenses and $187,140 as other PRF expenses. The Hospital entered the total Federal award cash receipts for period 4 as the reportable PRF and ARP Rural expenses for payments received during period 4. The PRF and ARP Rural expenses should have been zero in the portal as the Hospital did not track PRF and ARP Rural expenses. The Hospital properly included lost revenue information in the report within the lost revenue section of the report; however, due to the PRF and ARP Rural expenses being incorrectly reported, none of the PRF and ARP Rural payments reported were used for lost revenues in the report submitted for period 4. As a result, the total unused lost revenues line reported $5,775,235 but should have been $3,987,644. Additionally, the Hospital incorrectly indicated it reported lost revenue based on the 2020 Budgeted Revenue reporting method. The lost revenue information included in the report was calculated using the Alternate Reasonable Method. Cause: The Hospital did not design or have internal controls in place to ensure the period 4 report was adequately reviewed before submission to HRSA. Effect: Amounts reported as ARP Rural expenses and PRF expenses were in the PRF reporting portal submission were inaccurate for period 4. Additionally, due to the incorrect lost revenue reporting method being selected, amounts reported as budgeted net patient service revenue in the reporting portal submission were actual net patient service revenue. Questioned Costs: None Context: Per the PRF reporting portal submission for period 4, the Hospital reported lost revenues available to be used in the current reporting period in excess of the PRF and ARP Rural payments reported. Additionally, the lost revenue calculation included data from 6 calendar quarters that was labeled as budgeted net patient revenue. Of these 6 quarters, only 2 of the quarters were budgeted net patient revenue amounts. The other 4 were actual net patient service revenue amounts. Repeat finding in the prior year: No Recommendation: We recommend that management correct the error in the period 4 PRF reporting portal submission. We also recommend that management develop and implement effective internal controls to ensure accurate reporting. View of responsible officials of the auditee: Management agrees with the finding and recommendation.
Finding 2023-003
2023-003 Preparation of Provider Relief Fund Reporting Portal Submission U.S. Department of Health and Human Services Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (93.498) Federal Award Year 2022-2023 Criteria: The requirements for reporting are contained in the program legislation, Federal awarding agency regulations, and the terms and conditions of the award. Per 2 CFR 200.303, the non-Federal entity must 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. Effective internal controls should include procedures to ensure the Provider Relief Fund (PRF) reporting portal submission is accurate. Condition: During our testing over reporting, we observed management did not have effective internal controls in place to ensure the reporting portal submission was completed accurately. In the report submitted to Health Resources and Services Administration (HRSA) for period 4, the Hospital mistakenly reported $1,600,451 as American Rescue Plan (ARP) Rural expenses and $187,140 as other PRF expenses. The Hospital entered the total Federal award cash receipts for period 4 as the reportable PRF and ARP Rural expenses for payments received during period 4. The PRF and ARP Rural expenses should have been zero in the portal as the Hospital did not track PRF and ARP Rural expenses. The Hospital properly included lost revenue information in the report within the lost revenue section of the report; however, due to the PRF and ARP Rural expenses being incorrectly reported, none of the PRF and ARP Rural payments reported were used for lost revenues in the report submitted for period 4. As a result, the total unused lost revenues line reported $5,775,235 but should have been $3,987,644. Additionally, the Hospital incorrectly indicated it reported lost revenue based on the 2020 Budgeted Revenue reporting method. The lost revenue information included in the report was calculated using the Alternate Reasonable Method. Cause: The Hospital did not design or have internal controls in place to ensure the period 4 report was adequately reviewed before submission to HRSA. Effect: Amounts reported as ARP Rural expenses and PRF expenses were in the PRF reporting portal submission were inaccurate for period 4. Additionally, due to the incorrect lost revenue reporting method being selected, amounts reported as budgeted net patient service revenue in the reporting portal submission were actual net patient service revenue. Questioned Costs: None Context: Per the PRF reporting portal submission for period 4, the Hospital reported lost revenues available to be used in the current reporting period in excess of the PRF and ARP Rural payments reported. Additionally, the lost revenue calculation included data from 6 calendar quarters that was labeled as budgeted net patient revenue. Of these 6 quarters, only 2 of the quarters were budgeted net patient revenue amounts. The other 4 were actual net patient service revenue amounts. Repeat finding in the prior year: No Recommendation: We recommend that management correct the error in the period 4 PRF reporting portal submission. We also recommend that management develop and implement effective internal controls to ensure accurate reporting. View of responsible officials of the auditee: Management agrees with the finding and recommendation.