Audit 370750

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 #736060815 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance 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 selected Option 1, as defined by HRSA, to calculate lost revenue. This option consists of reporting actual revenues from relevant quarters in the period of availability with the system calculating the lost revenues because of declines. The fiscal year 2021 single audit identified unallowable expenses totaling $263,861. The Company utilized excess lost revenues at the time to cover this difference. To capture the use of these lost revenues from Period 1, the Authority should have used Option 3, as defined by HRSA, to calculate and report lost revenues. Within that calculation, lost revenues could then be reduced by the $263,861. Cause: The Authority's Period 4 report to HRSA was filed prior to the completion of the 2021 single audit and identification of these unallowable expenses Effect: The reporting to HRSA for Period 4 was considered incorrect. The Authority did not reduce lost revenues by amounts used in the prior period on unallowable expenses. While the effects of the report errors did not result in unallowable lost revenues during Period 4, errors to amounts reported for lost revenues could result in unallowable costs. Questioned Costs: None reported. Context/Sampling: All key line items on the Period 4 report to HRSA were tested. Repeat Finding from Prior Years: Yes, finding 2022-02. Recommendation: We recommend the Authority report on lost revenues for any future reporting to HRSA utilizing Option 3 in order to show the use of the unallowable expenses from Period 1, however, no future reporting is expected. 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 #736060815 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Material Weakness in Internal Control Over Compliance 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: There was no documentation of review and approval of the expenditure listing, lost revenue calculation, or the Department of Health and Human Services (HHS) Period 4 report prior to submission of the HHS Period 4 report. Cause: The Authority did not have an adequate internal control policy in place to ensure review and approval of expenditures and lost revenue claimed under the federal program, as well as the HHS Period 4 report prior to submission. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures or lost revenue may be claimed under the program and the HHS Period 4 report may not be accurately completed. Questioned Costs: None. Context: There was one lost revenue calculation, one expenditure detail and one HHS Period 4 report and all were tested. Repeat Finding from Prior Years: Yes, finding number 2021-001. Recommendation: We recommend management implement policies and procedures to ensure a complete review of supporting documentation and any reporting to a federal agency prior to submission by an individual separate from the preparer. Views of Responsible Officials: Management agrees with the finding.