FAC Explorer

Audit 301678

FY End
2023-06-30
Total Expended
$6.51M
Findings
6
Programs
3
Organization: Pershing County Hospital District (NV)
Year: 2023 Accepted: 2024-04-01
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
391076 2023-003 Material Weakness - P
391077 2023-003 Material Weakness - P
391078 2023-004 Material Weakness - L
967518 2023-003 Material Weakness - P
967519 2023-003 Material Weakness - P
967520 2023-004 Material Weakness - L

Programs

ALN Program Spent Major Findings
10.766 Community Facilities Loans and Grants $6.00M Yes 1
93.498 Provider Relief Fund $283,157 Yes 2
93.155 Rural Health Research Centers $230,560 - 0

Contacts

Name Title Type
EYGECW74VXX7 Lynn Broyles Auditee
7752732621 Renee Gravalin 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 Hospital 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 Pershing County Hospital District d/b/a Pershing General Hospital and Nursing Home (Hospital) under programs of the federal government for the year ended June 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 Hospital, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Hospital.
Title: Community Facilities Loan Program 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 Hospital does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. Expenditures reported on this Schedule consists of the beginning of the year outstanding loan balance of the Hospital’s USDA loans. If applicable, advances made on the loans during the year are reported on the Schedule. The Hospital’s outstanding loan balance for the USDA loans as of June 30, 2023 was $5,840,745.
Title: 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 Hospital does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. The Hospital received amounts form the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund (PRF) 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 and 5, defined as payments received between July 1, 2021 and June 30, 2022. As the total amount of $283,157 was included on the Period 4 report submitted to HHS, that amount is shown on the accompanying Schedule. The Hospital did not receive or expend any Period 5 funding. The total amount of PRF expenditures included on the SEFA 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 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
United States Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance – Other Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the schedule is not unusual, as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft a Schedule that is correct without assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital’s schedule of expenditures of federal awards and internal controls that impact financial reporting. Views of Responsible Officials Management agrees with the finding.
Finding 2023-003
United States Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance – Other Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the schedule is not unusual, as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft a Schedule that is correct without assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital’s schedule of expenditures of federal awards and internal controls that impact financial reporting. 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 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 Hospital claimed lost revenues based on a method other than the method reported. Condition: The Hospital selected the Actual Revenue Option (i.e., Option 1) in the HHS Special Report. Option 1 is based on actual quarterly net revenues by payor which are included in the HHS Special Report ‐Period 4 for years 2019 through 2022. However, management calculated the net revenues using various allocations due to reporting limitations within the accounting and billing system and did not use the actual quarterly financial statements to complete the HHS Special Report. The calculation used by management would be considered an Alternative Reasonable Methodology (i.e., Option 3). The selection of Option 1 was improperly reported within the HHS Special Report – Period 4 which caused the report to be inaccurate. In addition, for Quarter 3 and Quarter 4 of 2021, the amounts reported on the HHS Special Report do not agree to the related client support by $168,838 and $157,009, respectively. In both cases, the support indicated a higher amount of revenue. It should be noted that no lost revenue was reported for Quarter 3 and Quarter 4 in 2021, so there was no impact to the lost revenue calculation. In addition, lost revenue was not used to support the provider relief fund amounts claimed by the Hospital in the HHS Special Report – Period 4 as the Hospital had eligible expenditures to support the amount of provider relief funds claimed. Cause: The Hospital did not have an adequate internal control policy in place to the ensure the appropriate method of reporting lost revenue on the HHS Special Report under the federal programs was selected. In addition, there was not an adequate internal control policy in place to ensure the amount reported on the HHS Special Report – Period 4 agreed to the supporting documentation. Effect: The lack of adequate policies governing lost revenue calculations and HHS Special Report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. The Hospital selected the incorrect method of reporting lost revenues based on the calculation used. In addition, the support for two quarters does not agree to the amounts reported. The total difference is $325,847. Questioned Costs: None reported. Context: The lost revenue calculation for all applicable quarters was tested. All key line items were tested on the HHS Special Report submitted to the Department of Health and Human Services for Period 4. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Hospital review the lost revenue calculation methodology utilized to ensure that the methodology utilized matches the methods reported. In this case, the reporting to HHS should be under the Alternative Reasonable Methodology (i.e., Option 3) which also requires management to document why this method is appropriate. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-003
United States Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance – Other Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the schedule is not unusual, as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft a Schedule that is correct without assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital’s schedule of expenditures of federal awards and internal controls that impact financial reporting. Views of Responsible Officials Management agrees with the finding.
Finding 2023-003
United States Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance – Other Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the schedule is not unusual, as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft a Schedule that is correct without assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital’s schedule of expenditures of federal awards and internal controls that impact financial reporting. 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 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 Hospital claimed lost revenues based on a method other than the method reported. Condition: The Hospital selected the Actual Revenue Option (i.e., Option 1) in the HHS Special Report. Option 1 is based on actual quarterly net revenues by payor which are included in the HHS Special Report ‐Period 4 for years 2019 through 2022. However, management calculated the net revenues using various allocations due to reporting limitations within the accounting and billing system and did not use the actual quarterly financial statements to complete the HHS Special Report. The calculation used by management would be considered an Alternative Reasonable Methodology (i.e., Option 3). The selection of Option 1 was improperly reported within the HHS Special Report – Period 4 which caused the report to be inaccurate. In addition, for Quarter 3 and Quarter 4 of 2021, the amounts reported on the HHS Special Report do not agree to the related client support by $168,838 and $157,009, respectively. In both cases, the support indicated a higher amount of revenue. It should be noted that no lost revenue was reported for Quarter 3 and Quarter 4 in 2021, so there was no impact to the lost revenue calculation. In addition, lost revenue was not used to support the provider relief fund amounts claimed by the Hospital in the HHS Special Report – Period 4 as the Hospital had eligible expenditures to support the amount of provider relief funds claimed. Cause: The Hospital did not have an adequate internal control policy in place to the ensure the appropriate method of reporting lost revenue on the HHS Special Report under the federal programs was selected. In addition, there was not an adequate internal control policy in place to ensure the amount reported on the HHS Special Report – Period 4 agreed to the supporting documentation. Effect: The lack of adequate policies governing lost revenue calculations and HHS Special Report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. The Hospital selected the incorrect method of reporting lost revenues based on the calculation used. In addition, the support for two quarters does not agree to the amounts reported. The total difference is $325,847. Questioned Costs: None reported. Context: The lost revenue calculation for all applicable quarters was tested. All key line items were tested on the HHS Special Report submitted to the Department of Health and Human Services for Period 4. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Hospital review the lost revenue calculation methodology utilized to ensure that the methodology utilized matches the methods reported. In this case, the reporting to HHS should be under the Alternative Reasonable Methodology (i.e., Option 3) which also requires management to document why this method is appropriate. Views of Responsible Officials: Management agrees with the finding.