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 #736060835
Activities Allowed or Unallowed, Allowable Cost/Cost Principles, and Reporting
Material Weakness in Internal Control Over Compliance and Material Noncompliance Related to Reporting
Criteria: 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.
Condition: The Authority is a critical access hospital and reimbursed from Medicare based on the expenses incurred to treat Medicare beneficiaries for the majority of operating activities. The Authority claimed expenses attributable to coronavirus but did not reduce such expense by the amounts Medicare reimburses or is obligated to reimburse the Authority. As a result, the Authority's Period 4 report to the Department of Health and Human Services (HHS) contained a material error in one of the key line items.
Cause: The Authority did not have adequate internal controls policy in place to ensure expenses claimed were being reduced by Medicare's reimbursement.
Effect: The Authority claimed and reported expenses that were reimbursed or obligated to be reimbursed by Medicare.
Questioned Costs: None. While expenses were overstated by $179,554, the Authority had adequate other expenditures and lost revenues included on the Period 4 report to HHS to substantiate the amounts received in Period 4.
Context: The Authority claimed expenses attributable to coronavirus totaling $835,781. The Authority's estimate of reimbursement from Medicare for costs incurred was based on the Medicare utilization from the 2022 and 2023 annual cost report. This methodology was applied to all costs incurred in determining the total amount of $179,544 considered to be reimbursed by another source. While sampling was used to test expenditures, it was not used to identify or calculate the error. All key line items on the Period 4 report to HHS were subject to testing for reporting.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Authority modify internal control policies to ensure amounts claimed for this program are reduced by amounts reimbursed or obligated to be reimbursed by another source, including Medicare cost-based reimbursement.
Views of Responsible Officials: Management agrees with the finding.
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 #736060835
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.
Condition: The Authority selected Option 3, as defined by HHS, to calculate lost revenue. The calculation of lost revenues contained errors on the Period 4 report to HHS, of which two key line items were considered to have material errors. In total, the impact was a reduction in total lost revenue claimed by $34,975.
Cause: The Authority did not have adequate internal controls policy in place to ensure lost revenues included accurate calculations by quarter, as required by HHS.
Effect: The lost revenues section on the Period 4 report to HHS was considered incorrect. There is a possibility that ineligible lost revenues may be claimed under the program and the report may not be accurately completed.
Questioned Costs: None. After consideration of all errors on the Period 4 report to HHS, the Authority still had $12,142,106 of unused lost revenues.
Context: All key line items were tested on the Period 4 report to HHS.
Repeat Finding from Prior Years: No
Recommendation: The Authority’s processes should be amended to ensure the lost revenue calculation not only agrees with system generated reports, but also includes all required patient care revenue.
Views of Responsible Officials: Management agrees with the finding
U.S. Department of Agriculture
Federal Financial Assistance Listing #10.766
Community Facilities Loans and Grants Cluster
Community Facilities Loans and Grants
Special Tests and Provisions
Significant Deficiency in Internal Control Over Compliance and Noncompliance Not Considered Material
Criteria: Article IV of the Authority's Supplemental Bond Indenture agreement dated June 1, 2006, requires the Authority to establish a reserve fund. As approved by the USDA Community Programs Director, the Authority was required to make monthly deposits of $1,350 into the reserve fund beginning in April 2021, until the fund reaches $162,000.
Condition: While deposits were made during the year to the debt reserve fund, certain payments were not considered to be made timely. In addition, as of June 30, 2023, the debt reserve fund was required to have a balance of $36,450, however, the balance was $36,041.
Cause: The Authority did not have an internal control in place to ensure timely deposits were made to the debt reserve fund, as required.
Effect: The Authority's reserve account was not in compliance with the Supplemental Bond Indenture and program requirements as a result of missing or late payments which continue to result in noncompliance with the program.
Questioned Costs: None reported.
Context: We sampled 4 monthly bank statements and identified there were two monthly deposits during the months of October and June.
Repeat Finding from Prior Years: Yes
Recommendation: The Authority needs to establish a monthly process to ensure the reserve deposit is made and posted by the bank on a timely basis. Additionally, the Authority should monitor to ensure the reserve fund has an adequate balance based on the requirements.
Views of Responsible Officials: Management agrees with the finding.
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 #736060835
Activities Allowed or Unallowed, Allowable Cost/Cost Principles, and Reporting
Material Weakness in Internal Control Over Compliance and Material Noncompliance Related to Reporting
Criteria: 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.
Condition: The Authority is a critical access hospital and reimbursed from Medicare based on the expenses incurred to treat Medicare beneficiaries for the majority of operating activities. The Authority claimed expenses attributable to coronavirus but did not reduce such expense by the amounts Medicare reimburses or is obligated to reimburse the Authority. As a result, the Authority's Period 4 report to the Department of Health and Human Services (HHS) contained a material error in one of the key line items.
Cause: The Authority did not have adequate internal controls policy in place to ensure expenses claimed were being reduced by Medicare's reimbursement.
Effect: The Authority claimed and reported expenses that were reimbursed or obligated to be reimbursed by Medicare.
Questioned Costs: None. While expenses were overstated by $179,554, the Authority had adequate other expenditures and lost revenues included on the Period 4 report to HHS to substantiate the amounts received in Period 4.
Context: The Authority claimed expenses attributable to coronavirus totaling $835,781. The Authority's estimate of reimbursement from Medicare for costs incurred was based on the Medicare utilization from the 2022 and 2023 annual cost report. This methodology was applied to all costs incurred in determining the total amount of $179,544 considered to be reimbursed by another source. While sampling was used to test expenditures, it was not used to identify or calculate the error. All key line items on the Period 4 report to HHS were subject to testing for reporting.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Authority modify internal control policies to ensure amounts claimed for this program are reduced by amounts reimbursed or obligated to be reimbursed by another source, including Medicare cost-based reimbursement.
Views of Responsible Officials: Management agrees with the finding.
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 #736060835
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.
Condition: The Authority selected Option 3, as defined by HHS, to calculate lost revenue. The calculation of lost revenues contained errors on the Period 4 report to HHS, of which two key line items were considered to have material errors. In total, the impact was a reduction in total lost revenue claimed by $34,975.
Cause: The Authority did not have adequate internal controls policy in place to ensure lost revenues included accurate calculations by quarter, as required by HHS.
Effect: The lost revenues section on the Period 4 report to HHS was considered incorrect. There is a possibility that ineligible lost revenues may be claimed under the program and the report may not be accurately completed.
Questioned Costs: None. After consideration of all errors on the Period 4 report to HHS, the Authority still had $12,142,106 of unused lost revenues.
Context: All key line items were tested on the Period 4 report to HHS.
Repeat Finding from Prior Years: No
Recommendation: The Authority’s processes should be amended to ensure the lost revenue calculation not only agrees with system generated reports, but also includes all required patient care revenue.
Views of Responsible Officials: Management agrees with the finding
U.S. Department of Agriculture
Federal Financial Assistance Listing #10.766
Community Facilities Loans and Grants Cluster
Community Facilities Loans and Grants
Special Tests and Provisions
Significant Deficiency in Internal Control Over Compliance and Noncompliance Not Considered Material
Criteria: Article IV of the Authority's Supplemental Bond Indenture agreement dated June 1, 2006, requires the Authority to establish a reserve fund. As approved by the USDA Community Programs Director, the Authority was required to make monthly deposits of $1,350 into the reserve fund beginning in April 2021, until the fund reaches $162,000.
Condition: While deposits were made during the year to the debt reserve fund, certain payments were not considered to be made timely. In addition, as of June 30, 2023, the debt reserve fund was required to have a balance of $36,450, however, the balance was $36,041.
Cause: The Authority did not have an internal control in place to ensure timely deposits were made to the debt reserve fund, as required.
Effect: The Authority's reserve account was not in compliance with the Supplemental Bond Indenture and program requirements as a result of missing or late payments which continue to result in noncompliance with the program.
Questioned Costs: None reported.
Context: We sampled 4 monthly bank statements and identified there were two monthly deposits during the months of October and June.
Repeat Finding from Prior Years: Yes
Recommendation: The Authority needs to establish a monthly process to ensure the reserve deposit is made and posted by the bank on a timely basis. Additionally, the Authority should monitor to ensure the reserve fund has an adequate balance based on the requirements.
Views of Responsible Officials: Management agrees with the finding.