Audit 36345

Finding No. 2022-001 Federal Program: Federal Assistance Listing #93.498 US Department of Health and Human Services Provider Relief Fund Activities Allowed/Allowable Costs Material Weakness in Internal Control Over Compliance 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 Agency selected option I to calculate lost revenue, which consists of a comparison of actual results during the period of availability to the base calendar year of 2019. For all periods reported in the Agency?s Period 2 submission, the reported patient service revenue amounts were not reduced by bad debts, as required by the terms and conditions of the federal award. Cause: The Agency did not have an effective internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the report submitted for Period 2 was accurate and in accordance with the terms and conditions of the federal award. Effect: The reporting to HHS for Period 2 was considered incorrect. The Agency did not properly report patient service revenue, as gross patient revenue was not reduced by bad debt expense. The impact of the bad debts would have been to increase lost revenue by $48,639. Questioned Costs: None. Had the Agency properly reduced patient service revenue by bad debts for the periods reported, lost revenue would have been $1,665,089 compared to the $1,616,450 reported. Context: Key line items were tested on the Period 2 HHS report. Recommendation: We recommend the Agency enhance its existing internal control processes to ensure the lost revenue calculation claimed meets the requirements of the federal program and to correct the lost revenue calculation in future required reports. Views of Responsible Officials and Planned Corrective Action: Management agrees with the noted finding. However, had the Agency reported the correct lost revenue figures, the Agency satisfactorily incurred eligible expenses and lost revenue in excess of funding expended. Management will continue to refine processes to more diligently review the lost revenue calculation to ensure such amounts are in accordance with the terms and conditions of the federal award.

Finding No. 2022-001 Federal Program: Federal Assistance Listing #93.498 US Department of Health and Human Services Provider Relief Fund Activities Allowed/Allowable Costs Material Weakness in Internal Control Over Compliance 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 Agency selected option I to calculate lost revenue, which consists of a comparison of actual results during the period of availability to the base calendar year of 2019. For all periods reported in the Agency?s Period 2 submission, the reported patient service revenue amounts were not reduced by bad debts, as required by the terms and conditions of the federal award. Cause: The Agency did not have an effective internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the report submitted for Period 2 was accurate and in accordance with the terms and conditions of the federal award. Effect: The reporting to HHS for Period 2 was considered incorrect. The Agency did not properly report patient service revenue, as gross patient revenue was not reduced by bad debt expense. The impact of the bad debts would have been to increase lost revenue by $48,639. Questioned Costs: None. Had the Agency properly reduced patient service revenue by bad debts for the periods reported, lost revenue would have been $1,665,089 compared to the $1,616,450 reported. Context: Key line items were tested on the Period 2 HHS report. Recommendation: We recommend the Agency enhance its existing internal control processes to ensure the lost revenue calculation claimed meets the requirements of the federal program and to correct the lost revenue calculation in future required reports. Views of Responsible Officials and Planned Corrective Action: Management agrees with the noted finding. However, had the Agency reported the correct lost revenue figures, the Agency satisfactorily incurred eligible expenses and lost revenue in excess of funding expended. Management will continue to refine processes to more diligently review the lost revenue calculation to ensure such amounts are in accordance with the terms and conditions of the federal award.