Finding 2022-002 - Significant Deficiency in Internal Control - Activities Allowed and Unallowed; Allowable Costs/Cost Principles Assistance Listing Number: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Not applicable Award Number/Year: N/A / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by HHS. Activities allowed have been defined as health care related expenses used to prevent, prepare for, and respond to coronavirus or lost revenues that are attributable to coronavirus. Condition/Context: A sample of 40 items were selected for testing. During our testing, we noted one item selected for testing did not contain support of authorization. This was not a statistically valid sample. Effect: There were costs charged to the program that did not contain evidence of review and authorization. Questioned Costs: None Cause: Certain invoices are approved via email. Email support of approval was not maintained due to IT email retention policies. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program and ensure support is maintained. Management should ensure these policies and procedures are being implemented as designed. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program and ensure support is maintained. Management should ensure these policies and procedures are being implemented as designed. Views of Responsible Officials: The Company agrees with the finding and will implement procedures to ensure all invoices approved via email will be stored in our document management and workflow software.
Finding 2022-002 - Significant Deficiency in Internal Control, Reporting Assistance Listing Number: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: Not Applicable Award Number/Year: Not Applicable/2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Recipients of Provider Relief Funds (PRF) payments must comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services (HHS). Condition/Context: For the reports tested, the Center used accounting data that was not adjusted for audit adjustments and other reclassifications when preparing the lost revenue calculation due to timing of when the audit was completed and with the reporting was due. As a result of these adjustments, the lost revenue decreased from $2,801,240 to $1,560,435. Additionally, the reports tested did not contain a documented review and approval of the reports prior to submission. Effect: The amounts reported to Health Resources and Services Administration (HRSA) were not in accordance with the established HHS Reporting Requirements. Questioned Costs: None reported. Cause: Timing of audit adjustments and reporting Recommendation: We recommend that management review and update, as needed, their procedure for completion of the reporting to ensure that a review and approval of such reporting is completed and documented prior to submission.
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #810530457 and #810247969 Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting Material Weakness in Internal Control over Compliance 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 Corporation claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Corporation selected Option i and Option iii to calculate lost revenue (this varied based on specific entity). Condition ? During our testing, we noted reviews were performed over individual eligible expenditures; however, there was no formal review or approval of the expenditure spreadsheet used to calculate the expenditures claimed for the federal program outside of the preparer at the LH Cut Bank location. The Corporation?s calculation of lost revenue claimed under the federal program as an allowable cost was not subject to a formal review or approval by a separate individual outside of the preparer at the LH Cut Bank location. In addition, there was no evidence retained that the Corporation?s special report submitted to the Department of Health and Human Services for Period 1 was reviewed and approved by a separate individual outside of the preparer at the LH Whitefish and LH Cut Bank locations. Cause ? The Corporation did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented at all locations. Effect - The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs ? None reported.Context/Sampling - Detail testing was performed over eligible expenditures for activities allowed and unallowable and allowable cost/cost principles. A sample of 65 expenditures was tested which totaled $983,641 out of $22,638,825. The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 1 and 2 Reporting were tested. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal control policies to ensure that formal documentation of reviews is present at for all supporting documentation and reports all locations. Views of Responsible Officials - Management agrees with the finding.
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #237293874; #810413632, #371518772; #810420653; #810540517, and #810247969 Material Weakness in Internal Control over Compliance ? Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting; Material Noncompliance - Reporting 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 Corporation selected Option i to calculate lost revenue for the LHMC, NWH, HC, and LH Whitefish entities which consists of comparing actual quarterly revenues in calendar years 2020 and 2021 to actual quarterly revenues in calendar year 2019. Note that the revenue calculations also included NOSM and HC which were acquired by LHMC effective December 31, 2020. Condition ? In some of the quarters for certain entities, it was noted that bad debt expenses were higher than revenues, creating a negative revenue for the quarter. As the HHS reporting portal would not allow negative amounts to be entered, a zero was entered into the HHS reporting portal. These negative amounts should have been offset to other quarters or other revenue line items, but were not, which resulted in higher revenue amounts being reported than the detailed reports supported. Cause ? The Corporation did not have adequate internal controls to ensure the lost revenue calculation was done in accordance with terms and conditions of the grant.Effect ? Three of the entities included in the revenue calculation were impacted by this issue and the impact was as follows:Questioned Costs ? None reported. After recalculating the revenue by correcting the above amounts, the amount of lost revenue still exceeded the amount of provider relief funds retained. Context/Sampling ? Key line items were tested on the Period 1 and Period 2 Department of Human Services special report. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal controls to ensure the revenue calculation is in compliance with the terms and conditions of the grant. The HHS Hotline is available to assist with concerns with the HHS portal or the calculations. Views of Responsible Officials - Management agrees with the finding.
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 and Period 2 TIN #237293874, #810413632; #371518772; #810420653; #810540517, and #810247969 Material Weakness in Internal Control over Compliance ? Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting; Material Noncompliance - Reporting 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 Corporation selected Option i to calculate lost revenue for the LHMC and HC entities which consists of comparing actual quarterly revenues in calendar years 2020 and 2021 to actual quarterly revenues in calendar year 2019. Condition ? The operations of HC were consolidated into KHMC as of December 31, 2020. When LHMC calculated their lost revenues, they included HC?s revenue for both 2020 and 2021 instead of only the 2021 information. This resulted in LHMC reporting higher lost revenues than the detailed reports supported in Period 1. This also affected the lost revenues reported in Period 2 for LHMC. HC filed its own report for Period 1, which included their revenues for 2019 and 2020. Zeros were entered for 2021, which resulted in reporting higher lost revenues than the detailed reports supported in Period 1. Cause ? The Corporation did not have adequate internal controls to ensure the lost revenue calculation was done in accordance with the terms and conditions of the grant.Effect ? The impact of the above condition was as follows: Questioned Costs ? None reported. After recalculating the lost revenue, the amount still exceeded the amount of provider relief funds retained. Context/Sampling ? Key line items were tested on the Period 1 and Period 2 Department of Human Services special report. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal controls to ensure the lost revenue calculation is completed according to the terms and conditions of the grant. Views of Responsible Officials - Management agrees with the finding.
2022-003 Department of Health and Human ServicesFederal Financial Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 1 and Period 2 TIN#460242831Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesMaterial Weakness in Internal Control Over Compliance and NoncomplianceReportingMaterial Weakness in Internal Control Over Compliance and Material NoncomplianceCriteria: 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 statues, regulations, and conditions of the federal award. The Center selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual resident care-related revenue to 2020 and 2021 actual resident care-related revenue by quarter. Resident care-related revenues should be reported net of adjustments for all third-party payors and any other discounts or adjustments, as applicable when reporting resident care-related revenue sources.Condition: The Center?s special report submitted to the Department of Health and Human Services for Period 1 and Period 2 TIN# 460242831 had no formal documentation of a secondary review or approval. The Center?s Period 1 lost revenue calculation was based upon actual revenue billed and reported within the Center?s billing system which had immaterial unexplained variances from the resident care-related revenue recorded on the general ledger. In addition, the Center did not consider the impact of a retroactive Medicaid reimbursement adjustment applicable to quarter 3 and quarter 4 of 2021 on the Period 2 report.Cause: The internal controls did not consider the effect of the retroactive Medicaid reimbursement adjustment or a reconciliation process to the internally generated resident care-related revenue on the general ledger to ensure accurate quarterly reporting of resident care-related revenue. In addition, the internal control process did not include a formally documented review and approval process of the report submitted to the Department of Health and Human Services for Period 1 and Period 2.Effect: Resident care-related revenue by quarter for fiscal year 2019, 2020, and 2021 on the Period 1 and Period 2 report was not accurate. The lack of adequate procedures governing program report preparation and submission increases the risk that the lost revenue incurred by quarter was not accurate and the related report could be filed incorrectly.Questioned Costs: None reported for the activities allowed or unallowed and allowable costs/cost principles. The amount of eligible lost revenue for Period 1 and Period 2 was overstated after taking into consideration the retroactive Medicaid reimbursement adjustment and comparing to internally generated resident care-related revenue on the general ledger. However, only $95,856 and $0 of lost revenue was utilized in Period 1 and Period 2, respectively, so the calculation difference decreased the excess lost revenue by $454,317.Context: All key line items related to lost revenue subject to testing on the Period 1 and Period 2 Department of Health and Human Services special report had differences. The net unexplained insignificant differences resulted in $9,919 of differences in key line items reported on the Period 1 report. The Period 2 report contained $386,707 of differences in the key line items tested due to the retroactive Medicaid reimbursement adjustment impacting quarter 3 and quarter 4 of 2021.Repeat Finding from Prior Years: NoRecommendation: We recommend that the Center enhance internal control policies to ensure special reports submitted to HHS include all necessary review and approval. In addition, we recommend the Center ensure HHS special reports include any retroactive Medicaid reimbursements.Views of Responsible Officials: Management agrees with the finding.
2022-004 Department of Health and Human ServicesFederal Financial Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 1 and Period 2 TIN#460242831Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesSignificant Deficiency in Internal Control Over ComplianceCriteria: 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 Center claimed expenses based on specifically identified COVID related expenses and general and administrative expenses.Condition: The Center claimed one invoice that was duplicated on the COVID-19 capital items claimed under equipment.Cause: The Center did not have adequate internal controls to identify the duplicate invoice on the COVID-19 equipment summary.Effect: The lack of adequate internal controls over the COVID-19 equipment summary increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner and may submit expenses that are unallowed due to duplication.Questioned Costs: None reported as amount is below $25,000.Context: A nonstatistical sample of 60 expenditures were selected for testing, which accounted for $197,649 of $1,034,974 direct program expenditures. Of the 60 tested, one invoice was duplicated.Repeat Finding from Prior Years: NoRecommendation: We recommend that the Center enhance internal control policies to ensure COVID-19 equipment purchases eligible and are properly recorded in the reports required to be submitted to the federal agency.Views of Responsible Officials: Management agrees with the finding.
2022-003 Department of Health and Human ServicesFederal Financial Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 1 and Period 2 TIN#460242831Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesMaterial Weakness in Internal Control Over Compliance and NoncomplianceReportingMaterial Weakness in Internal Control Over Compliance and Material NoncomplianceCriteria: 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 statues, regulations, and conditions of the federal award. The Center selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual resident care-related revenue to 2020 and 2021 actual resident care-related revenue by quarter. Resident care-related revenues should be reported net of adjustments for all third-party payors and any other discounts or adjustments, as applicable when reporting resident care-related revenue sources.Condition: The Center?s special report submitted to the Department of Health and Human Services for Period 1 and Period 2 TIN# 460242831 had no formal documentation of a secondary review or approval. The Center?s Period 1 lost revenue calculation was based upon actual revenue billed and reported within the Center?s billing system which had immaterial unexplained variances from the resident care-related revenue recorded on the general ledger. In addition, the Center did not consider the impact of a retroactive Medicaid reimbursement adjustment applicable to quarter 3 and quarter 4 of 2021 on the Period 2 report.Cause: The internal controls did not consider the effect of the retroactive Medicaid reimbursement adjustment or a reconciliation process to the internally generated resident care-related revenue on the general ledger to ensure accurate quarterly reporting of resident care-related revenue. In addition, the internal control process did not include a formally documented review and approval process of the report submitted to the Department of Health and Human Services for Period 1 and Period 2.Effect: Resident care-related revenue by quarter for fiscal year 2019, 2020, and 2021 on the Period 1 and Period 2 report was not accurate. The lack of adequate procedures governing program report preparation and submission increases the risk that the lost revenue incurred by quarter was not accurate and the related report could be filed incorrectly.Questioned Costs: None reported for the activities allowed or unallowed and allowable costs/cost principles. The amount of eligible lost revenue for Period 1 and Period 2 was overstated after taking into consideration the retroactive Medicaid reimbursement adjustment and comparing to internally generated resident care-related revenue on the general ledger. However, only $95,856 and $0 of lost revenue was utilized in Period 1 and Period 2, respectively, so the calculation difference decreased the excess lost revenue by $454,317.Context: All key line items related to lost revenue subject to testing on the Period 1 and Period 2 Department of Health and Human Services special report had differences. The net unexplained insignificant differences resulted in $9,919 of differences in key line items reported on the Period 1 report. The Period 2 report contained $386,707 of differences in the key line items tested due to the retroactive Medicaid reimbursement adjustment impacting quarter 3 and quarter 4 of 2021.Repeat Finding from Prior Years: NoRecommendation: We recommend that the Center enhance internal control policies to ensure special reports submitted to HHS include all necessary review and approval. In addition, we recommend the Center ensure HHS special reports include any retroactive Medicaid reimbursements.Views of Responsible Officials: Management agrees with the finding.
Program Information: Federal Program: Provider Relief Fund (PRF) Assistance Listing Number: 93.498 Federal Agency: Department of Health & Human Services Award Year: PRF Periods 1 and 2: Funds received April 10, 2020 through December 31, 2020 Criteria or requirement: Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart D, Section 200.303), the nonfederal 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. Activities Allowed and Unallowed and Allowable Costs (AB): Per the Terms and Conditions of the Provider Relief Fund program, as described in the July 2021 OMB Compliance Supplement, payments may not be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Reporting (L) - Special Reporting Under the terms and conditions of the award, Provider Relief Funds (PRF) is subject to 45 CFR section 75.302 (Financial management and standards for financial management systems). The PRF program requires special reporting through the Provider Relief Fund Reporting Portal that contains key line items containing critical information based on the period reported on. Other Provider Relief Fund Expenses for Payments Received During Payment Period for Payment Received Period is specified as a key line item. Condition found, including facts that support the deficiency identified in the finding and information to provide proper perspective for judging the prevalence and consequences of the finding: For 2 of 40 samples of expenditures, the expenditure claimed represented an amount that was claimed twice by the Company in their expenditures reporting in the Provider Relief Fund portal. Additionally, Legacy claimed expenses that were duplicated within the reporting portal. The general distribution report for Legacy Health for Period 1 shows $35,760,843 in expenses applied against the PRF funds in the PRF portal report for Legacy as a consolidated entity. Separately, the stand-alone reports for targeted funds received by Emanuel Hospital & Health Center for Period 1, Legacy Silverton Medical Center for Period 1, Legacy Clinics, LLC for Period 1, and Legacy Meridian Park Hospital for Period 2 also include expenses totaling $12,291,293 that are included in the $35,760,843 listed in the consolidated report above. This results in duplicate reporting of the same expenditures. During our testing over reporting and allowability we observed the lost revenues attributable to Coronavirus were reported in both the parent entity?s PRF reports on the general distribution payments and the subsidiary entities? PRF reports on the targeted distribution payments (i.e., lost revenues were duplicated). Lost revenues shown on the subsidiary reports as available to be applied against PRF that related to lost revenues also reported in the parent entity?s report were related to Emanuel Hospital & Health Center for Period 1 in the amount of $27,106,110 and Legacy Silverton Medical Center for Period 1 in the amount of $10,269,349. Cause and possible asserted effect: Controls were not operating effectively to detect and correct duplicate expenses shown on the portal reporting between the consolidated and stand-alone subsidiary reports for targeted funds. Identification of questioned costs and how they were computed: $12,291,293, which represents the accumulation of expenses included on the consolidated and subsidiary targeted fund portal reports. Sample Statistically Valid: The sample was not intended to be, and was not, a statistically valid sample. Repeat finding from prior year: This finding is not a repeat of a finding in the immediately prior audit. Recommendation: We recommend Legacy management enhance their control process by 1) developing a methodology to identify areas within the portal reporting requirements that are inconclusive, in conflict or ambiguous, and 2) developing a process to access subject matter expertise to resolve issues identified. Views of Responsible Officials: As noted within the portal filing summary, for reporting period 1, Legacy consolidated COVID-19 expenses ($35,760,843) plus lost revenue ($150,037,450) totaled $185,798,293. Payments from the PRF totaled $89,818,954. As a result, there were sufficient qualifying lost revenues to receive and earn all PRF funds received, regardless of the questioned costs above. Therefore, management believes no repayment of PRF funds received would be required. Further, management considered the finding. Reporting for the Legacy parent reporting entity was based on the ?Post-Payment Notice of Reporting Requirements (6/11/21)?, which includes the following requirement: ?Reporting entities will submit consolidated reports.? Neither the methodology utilized by Legacy or application of the methodology advocated by KPMG result in repayment of any of the funds received from the PRF. Management is implementing a process to identify and resolve situations in which reporting requirements are inconclusive, in conflict, or ambiguous. Outside subject matter expertise will be accessed as needed.
CFDA Number, Federal Agency, and Program Name 21.027, U.S. Department of Treasury, Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year N/A Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.303(a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Condition During the audit of federal expenditures, it was noted that the Charter Township incorrectly reported project expenditure categories to Treasury. Questioned Costs N/A Identification of How Questioned Costs Were Computed N/A Context Project expenditure category amounts reported by the Township included $114,346 of expenditures reported as Administrative Expenses and Public Sector Capacity: Administrative Needs. The correct categorization of these costs was Public Sector Workforce: Payroll and Benefits for Public Health, Public Safety, or Human Services Workers Cause and Effect The Charter Township's process in place to review reports submitted to Treasury was not effective in identifying the reporting error. This resulted in the Charter Township incorrectly reporting expenditures to Treasury. Recommendation We recommend the Charter Township implement another layer of review to ensure reported costs are accurate. Views of Responsible Officials and Planned Corrective Actions The Charter Township agrees with the finding and will put procedures into place to ensure appropriate layers of review are performed when reporting expenditures.
Criteria ? 2 CFR Section 200.303 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes regulations, and the terms and conditions of federal awards. The Organization is responsible for tracking total federal funds spent by fiscal year and making the determination whether a Single Audit is required. Condition and Context ? Management?s spreadsheet for tracking federal grants subject to Uniform Guidance Single Audit and related expenditures for the fiscal year did not include all grants subject to Single Audit. As a result, management initially determined that the Organization was below the threshold for Single Audit for the year ended March 31, 2022. Audit procedures found additional grants with expenditures during the fiscal year that were subject to Single Audit. These additional grants put the Organization over the Single Audit expenditure threshold of $750,000. Cause ? A lack of internal controls to review the tracking schedule for completeness and insufficient review of grants for the presence of federal funding. Effect ? Had audit procedures not found the additional grants, the Organization would not have met its requirement for a Single Audit for the year ended March 31, 2022. Recommendations ? As agreements are awarded, the Organization should analyze them for the presence of federal funding. In many instances there is a mix and the Organization should review the agreement for clarification of funding allocations. If unclear, the Organization should work with the grant?s administrator at the funder to determine the source of the funds. If not in the agreement, the Organization should also work with the funder to identify the federal CFDA number the federal funds fall under. The Organization should ensure all identified federal grants make it to the tracking spreadsheet. Management should strengthen its review of that tracking document to ensure it includes all federal grants with expenditures subject to Single Audit each fiscal year. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with the finding. AYCC has taken steps to strengthen fiscal oversight and tracking of federal grants subject to meet Uniform Guidance. These steps include hiring a new Chief Financial Officer with significant grant management and audit experience. Additionally, cross training staff to increase skills and knowledge surrounding the receipt, use, and tracking of federal grants. These steps combined with updated internal controls, improved systems and collaboration between the finance department and the grant department will remedy this finding and prevent further findings in the future.
Criteria ? 2 CFR Section 200.303 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes regulations, and the terms and conditions of federal awards. The Organization is responsible for tracking total federal funds spent by fiscal year and making the determination whether a Single Audit is required. Condition and Context ? Management?s spreadsheet for tracking federal grants subject to Uniform Guidance Single Audit and related expenditures for the fiscal year did not include all grants subject to Single Audit. As a result, management initially determined that the Organization was below the threshold for Single Audit for the year ended March 31, 2022. Audit procedures found additional grants with expenditures during the fiscal year that were subject to Single Audit. These additional grants put the Organization over the Single Audit expenditure threshold of $750,000. Cause ? A lack of internal controls to review the tracking schedule for completeness and insufficient review of grants for the presence of federal funding. Effect ? Had audit procedures not found the additional grants, the Organization would not have met its requirement for a Single Audit for the year ended March 31, 2022. Recommendations ? As agreements are awarded, the Organization should analyze them for the presence of federal funding. In many instances there is a mix and the Organization should review the agreement for clarification of funding allocations. If unclear, the Organization should work with the grant?s administrator at the funder to determine the source of the funds. If not in the agreement, the Organization should also work with the funder to identify the federal CFDA number the federal funds fall under. The Organization should ensure all identified federal grants make it to the tracking spreadsheet. Management should strengthen its review of that tracking document to ensure it includes all federal grants with expenditures subject to Single Audit each fiscal year. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with the finding. AYCC has taken steps to strengthen fiscal oversight and tracking of federal grants subject to meet Uniform Guidance. These steps include hiring a new Chief Financial Officer with significant grant management and audit experience. Additionally, cross training staff to increase skills and knowledge surrounding the receipt, use, and tracking of federal grants. These steps combined with updated internal controls, improved systems and collaboration between the finance department and the grant department will remedy this finding and prevent further findings in the future.
Federal Agency: United States Department of Agriculture Federal Programs: Child and Adult Care Food Program (10.558) Federal Award Numbers: 202120N105044, 202121N115044, 202222N115044, 202221N115044, 202121N202044, 202120N202044, 202121N109944, 202120N109944, 202121N119944, 202121H170644, 202222N202044, 202221N202044, 202222N119944, 202221N119944 Federal Award Years: 2021 and 2022 State Agency: Department of Health Reference: 2022-003 Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.332(d) states all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that he subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.303(a) states the nonfederal entity must Establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition For 3 of 40 subrecipients selected, the Department did not review the cases by the scheduled due date for the single audit reports as required in accordance with 2 CFR 200.332(d). The Department of Health (the Department) did not have effective internal controls in place to ensure that all required single audits of the program?s subrecipients were reviewed, followed-up, or appropriate action was taken and as necessary issued a management decision pertaining to the audit finding in accordance with 2 CFR 200, as applicable. The Department maintains an internal clearinghouse tracker (the tracker) to track the subrecipients single audit status. The tracker tracks subrecipients that are exempt from single audit requirements as well as the status and follow-up required for the subrecipients with single audits. Cause The condition is due to DOH Audit Clearinghouse personnel not operating as intended, due to COVID-19 personnel reassignments, to ensure the timely review of all single audit reports for all subrecipients receiving federal funding from the Department. Possible Asserted Effect Failure to properly obtain and review subrecipient single audit reports may result in the use of federal funding not being in compliance with federal statues, regulations, and the terms and conditions of subawards. Questioned Costs None. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding for the Department was included in the 2019 Single Audit Report as finding number 2019 032 at pages 90?92. Recommendation We recommend the Department to continue working on the implementation of its replacement computerized system to (1) identify all subrecipients required to have a single audit, (2) ensure that sanctions are imposed in a timely manner for subrecipients that do not submit timely single audit reports, and (3) issue management decisions within six months for all single audit reports that contain findings relevant to the Department?s programs. In the interim, we recommend that manual internal control procedures be implemented by the Department to ensure that all subrecipients that require a single audit to be completed submit the report on a timely basis and, if applicable, respond to management decision letters be issued by the Department. Views of Responsible Officials Recommendation accepted. Reference the corrective action plan for further details.
Federal Agency: United States Department of Agriculture Federal Programs: Child and Adult Care Food Program (10.558) Federal Award Numbers: 202120N105044, 202121N115044, 202222N115044, 202221N115044, 202121N202044, 202120N202044, 202121N109944, 202120N109944, 202121N119944, 202121H170644, 202222N202044, 202221N202044, 202222N119944, 202221N119944 Federal Award Years: 2021 and 2022 State Agency: Department of Health Reference: 2022-003 Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.332(d) states all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that he subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.303(a) states the nonfederal entity must Establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition For 3 of 40 subrecipients selected, the Department did not review the cases by the scheduled due date for the single audit reports as required in accordance with 2 CFR 200.332(d). The Department of Health (the Department) did not have effective internal controls in place to ensure that all required single audits of the program?s subrecipients were reviewed, followed-up, or appropriate action was taken and as necessary issued a management decision pertaining to the audit finding in accordance with 2 CFR 200, as applicable. The Department maintains an internal clearinghouse tracker (the tracker) to track the subrecipients single audit status. The tracker tracks subrecipients that are exempt from single audit requirements as well as the status and follow-up required for the subrecipients with single audits. Cause The condition is due to DOH Audit Clearinghouse personnel not operating as intended, due to COVID-19 personnel reassignments, to ensure the timely review of all single audit reports for all subrecipients receiving federal funding from the Department. Possible Asserted Effect Failure to properly obtain and review subrecipient single audit reports may result in the use of federal funding not being in compliance with federal statues, regulations, and the terms and conditions of subawards. Questioned Costs None. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding for the Department was included in the 2019 Single Audit Report as finding number 2019 032 at pages 90?92. Recommendation We recommend the Department to continue working on the implementation of its replacement computerized system to (1) identify all subrecipients required to have a single audit, (2) ensure that sanctions are imposed in a timely manner for subrecipients that do not submit timely single audit reports, and (3) issue management decisions within six months for all single audit reports that contain findings relevant to the Department?s programs. In the interim, we recommend that manual internal control procedures be implemented by the Department to ensure that all subrecipients that require a single audit to be completed submit the report on a timely basis and, if applicable, respond to management decision letters be issued by the Department. Views of Responsible Officials Recommendation accepted. Reference the corrective action plan for further details.
Federal Agency: United States Department of Education Federal Program: Title I Grants to Local Educational Agencies (84.010) Federal Award Numbers: S010A180032, S010A190032, S010A200032, S010A210032 Federal Award Years: 2018, 2019, 2020, 2021 State Agency: State Education Department Reference: 2022 007 Criteria 20 U.S. Code Section 6311 (20 USC 6311 or ESEA), State plans, part (b)(2)(A) requires each State plan to demonstrate that the State educational agency (SEA), in consultation with local educational agencies (LEAs), has implemented a set of high-quality student academic assessments in mathematics, reading or language arts, and science. Further, 20 USC 6311(b)(2)(B)(iii) and requires the assessment under subparagraph (A) to be used for purposes for which such assessments are valid and reliable, consistent with relevant, nationally recognized professional and technical testing standards, objectively measure academic achievement, knowledge, and skills, and be tests that do not evaluate or assess personal or family beliefs and attitudes, or publicly disclose personally identifiable information. Additionally, Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Audits, section 200.303(a) states the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government,? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The State Education Department (the Department) policies and procedures require that each LEA provide to the Office of State Assessment (OSA) at the Department a completed exam storage certificate from every school that administers academic assessments in mathematics, reading or language arts, and science. This certification includes an attestation from the school of the LEA related to maintain the security of the assessments. The certification is also required to be signed by the Principal of the school attesting to the stated procedures. For 1 of 40 LEAs selected for testing, the exam storage certificate was not signed by the Principal. Cause The condition found is due to the control not operating effectively ensuring all exam certificates are signed before acceptance by the Department. Possible Asserted Effect Failure to ensure certifications from the schools are signed by the Principal may result in the inability to ensure an assessment system is maintained that is valid, reliable, and consistent with relevant professional and technical standards. Questioned Costs None Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend that the Department enhance its policies and procedures to ensure attestation certificates are reviewed by the Department to ensure they are properly completed and have all required signatures and, if any required information is missing, appropriate follow-ups are made with districts to ensure compliance with the federal statutes, regulations, and terms and conditions of federal awards. Views of Responsible Officials Recommendation accepted. Reference the corrective action plan for further details.
Department of Health and Human Services Federal Financial Assistance Listing / CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year- Period 1 TIN #38-3807713 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control Over Compliance 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 terms and conditions of the federal award. Condition: The Medical Center tracked patient care revenues internally within a spreadsheet. The revenues included on the spreadsheet and the Period 1 report to HRSA, which were utilized to calculate lost revenues, contained an error. Cause: The Medical Center?s internal control to review and approve accurate patient care revenues, which were utilized to calculate lost revenues, did not identify and correct the errors included in the report submitted to HRSA for Period 1 on a timely manner. Effect: The reporting to HRSA for Period 1 included errors in the reporting of patient care revenue and lost revenues. The result of the errors was an increase in eligible lost revenues available under the program. Questioned Costs: None. While there were errors identified on the Period 1 report to HRSA, the result was an increase in eligible lost revenues under the program. Context: All 10 key line items related to the calculation of lost revenues attributable to coronavirus based on an Option 1 ? 2019 Actuals calculation were tested. The Medical Center did not reflect adjustments required as a result of the audit of the fiscal year 2020 financial statements. The adjustments reduced patient care revenue by $433,089 and potentially impact up to 4 key line items. Ultimately, the impact of correcting patient care revenues for the audit adjustments is expected to increase lost revenues. Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center modify internal control policies to ensure any errors in the schedule or the report are identified prior to reporting. The patient care revenues reported should include all audit and other adjustments that could have an impact on the calculation of lost revenues. Views of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services Federal Financial Assistance Listing / CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year- Period 1 TIN #38-3807713 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control Over Compliance 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 terms and conditions of the federal award. Condition: The Medical Center tracked eligible expenses internally within a spreadsheet. The spreadsheet included errors in the calculation of allowable expenditures, which were included on the Period 1 report to the Health Resources and Services Administration (HRSA). Cause: The Medical Center?s internal control to review and approve eligible expenditures did not identify and correct the errors included in the report submitted to HRSA for Period 1 on a timely manner. Effect: The reporting to HRSA for Period 1 included errors in the reporting of expenses. The result of the errors was an increase in eligible expenditures under the program. Questioned Costs: None. While there were errors identified on the Period 1 report to HRSA, the result was an increase in eligible expenditures under the program. Context: The Total Other Provider Relief Fund Expenses amount on the Period 1 report to HRSA agreed to an underlying schedule of expenses. A sample of 25 expenditures out of a population of 123 were tested. There were errors in 21 items tested. After updating the calculations to correct the errors identified, the result was an understatement of allowable expenses available to include on the Period 1 report to HRSA. Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center modify internal control policies to ensure any errors in the schedule or the report are identified prior to reporting. The expenses claimed should be based on accurate calculations and underlying data. Views of Responsible Officials: Management agrees with the finding.
Finding 2022-001 - Significant Deficiency in Internal Control - Reporting Assistance Listing Number: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: Not Applicable Award Number/Year: Not Applicable / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of Provider Relief Funds (PRF) payments must comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services (HHS). Condition/Context: For the reports tested, the Company excluded from patient care revenue the amount attributable to independent living and assisted living related services provided to residents. The Company also inadvertently used data from the wrong period when preparing the lost revenue calculation. As a result of these adjustments, the lost revenue increased from $970,102 to $1,977,744. Additionally, the reports tested did not contain a documented review and approval of the reports prior to submission. Effect: The amounts reported to Health Resources & Services Administration (HRSA) were not in accordance with the established HHS Reporting Requirements. Questioned Costs: None reported. Cause: An oversight by management resulted in using data from the wrong period when preparing their lost revenue calculation. In addition, management believed that the most appropriate option to select was Option i, not Option iii, based on their interpretation of the guidance. Recommendation: We recommend that management review and update, as needed, their procedure for completion of the reporting to ensure that a review and approval of such reporting is completed and documented prior to submission. Additionally, we recommend that management change their selected reporting option from Option i to Option iii in the next required submission, if revenue attributable to independent living related services will continue to be excluded from patient care revenues. Views of Responsible Officials: The Company will implement procedures to ensure an individual who is responsible for reporting will remain current on compliance requirements and review final reports and the related inputs prior to submission. Specifically, the Company will verify Residential Living (IL) revenues and Amortization Income are included in the lost revenue calculation.
Finding 2022-002 - Significant Deficiency in Internal Control - Activities Allowed and Unallowed; Allowable Costs/Cost Principles Assistance Listing Number: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-Through Agency: Not applicable Award Number/Year: N/A / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by HHS. Activities allowed have been defined as health care related expenses used to prevent, prepare for, and respond to coronavirus or lost revenues that are attributable to coronavirus. Condition/Context: A sample of 40 items were selected for testing. During our testing, we noted one item selected for testing that was deemed an unallowable expense as it was not used to prevent, prepare for, and respond to coronavirus. This was not a statistically valid sample. Effect: There were costs charged to the program that were for unallowable purposes. Questioned Costs: $40,323 related to the items that were not clearly identified as being used to prevent, prepare for, or respond to coronavirus, and the invoice that did not contain any supporting documentation. Cause: The Company lacked formal approved policies and procedures related to the administration of the award. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program. Views of Responsible Officials: The Company will implement procedures to ensure an individual who is reviewing and approving invoices has the appropriate skill set to ensure costs that are incurred are being used to prevent, prepare for, or respond to the coronavirus.
Identifying Number: 2022-006 Information on the Federal Program: Federal Assistance Listing #93.498, Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution. Criteria or Specific Requirement: Under Uniform Guidance, effective control and accountability must be maintained for expenses used to prevent, prepare for, and respond to COVID-19. Grantee must adequately safeguard all such property and must provide assurance that it is used solely for authorized purposes. Grantee must also have systems in place that provide reasonable assurance that the information is accurate, allowable and compliant with the terms and conditions of the agreement. 2 CFR 200.303. Condition: The Organization does not have adequate controls to provide reasonable assurance that expenditures reported as qualifying grant expenditures are allowable and compliant with the terms and conditions of the agreements. Cause: Grant agreements are reviewed for allowable and unallowable costs and for period of availability. Chief Financial Officer reviews and approves the expenditure schedules before reports are submitted. However, the review process is not consistently documented, and therefore, controls are not operating effectively. Questioned Costs: None. Context: There was no documented review on any of the expenditure submissions, therefore, this is a systemic problem. All submissions were reviewed and therefore, population was statistically valid. Repeat Finding: No. Recommendation: A formal process should be implemented and placed in service to ensure the review process of the reported grant expenditures is documented. Views of Responsible Officials: See Corrective Action Plan.
Finding 2022-002 - Significant Deficiency in Internal Control - Activities Allowed and Unallowed; Allowable Costs/Cost Principles Assistance Listing Number: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Not applicable Award Number/Year: N/A / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by HHS. Activities allowed have been defined as health care related expenses used to prevent, prepare for, and respond to coronavirus or lost revenues that are attributable to coronavirus. Condition/Context: A sample of 40 items were selected for testing. During our testing, we noted one item selected for testing did not contain support of authorization. This was not a statistically valid sample. Effect: There were costs charged to the program that did not contain evidence of review and authorization. Questioned Costs: None Cause: Certain invoices are approved via email. Email support of approval was not maintained due to IT email retention policies. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program and ensure support is maintained. Management should ensure these policies and procedures are being implemented as designed. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program and ensure support is maintained. Management should ensure these policies and procedures are being implemented as designed. Views of Responsible Officials: The Company agrees with the finding and will implement procedures to ensure all invoices approved via email will be stored in our document management and workflow software.
Finding 2022-002 - Significant Deficiency in Internal Control, Reporting Assistance Listing Number: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: Not Applicable Award Number/Year: Not Applicable/2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Recipients of Provider Relief Funds (PRF) payments must comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services (HHS). Condition/Context: For the reports tested, the Center used accounting data that was not adjusted for audit adjustments and other reclassifications when preparing the lost revenue calculation due to timing of when the audit was completed and with the reporting was due. As a result of these adjustments, the lost revenue decreased from $2,801,240 to $1,560,435. Additionally, the reports tested did not contain a documented review and approval of the reports prior to submission. Effect: The amounts reported to Health Resources and Services Administration (HRSA) were not in accordance with the established HHS Reporting Requirements. Questioned Costs: None reported. Cause: Timing of audit adjustments and reporting Recommendation: We recommend that management review and update, as needed, their procedure for completion of the reporting to ensure that a review and approval of such reporting is completed and documented prior to submission.
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #810530457 and #810247969 Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting Material Weakness in Internal Control over Compliance 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 Corporation claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Corporation selected Option i and Option iii to calculate lost revenue (this varied based on specific entity). Condition ? During our testing, we noted reviews were performed over individual eligible expenditures; however, there was no formal review or approval of the expenditure spreadsheet used to calculate the expenditures claimed for the federal program outside of the preparer at the LH Cut Bank location. The Corporation?s calculation of lost revenue claimed under the federal program as an allowable cost was not subject to a formal review or approval by a separate individual outside of the preparer at the LH Cut Bank location. In addition, there was no evidence retained that the Corporation?s special report submitted to the Department of Health and Human Services for Period 1 was reviewed and approved by a separate individual outside of the preparer at the LH Whitefish and LH Cut Bank locations. Cause ? The Corporation did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented at all locations. Effect - The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs ? None reported.Context/Sampling - Detail testing was performed over eligible expenditures for activities allowed and unallowable and allowable cost/cost principles. A sample of 65 expenditures was tested which totaled $983,641 out of $22,638,825. The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 1 and 2 Reporting were tested. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal control policies to ensure that formal documentation of reviews is present at for all supporting documentation and reports all locations. Views of Responsible Officials - Management agrees with the finding.
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #237293874; #810413632, #371518772; #810420653; #810540517, and #810247969 Material Weakness in Internal Control over Compliance ? Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting; Material Noncompliance - Reporting 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 Corporation selected Option i to calculate lost revenue for the LHMC, NWH, HC, and LH Whitefish entities which consists of comparing actual quarterly revenues in calendar years 2020 and 2021 to actual quarterly revenues in calendar year 2019. Note that the revenue calculations also included NOSM and HC which were acquired by LHMC effective December 31, 2020. Condition ? In some of the quarters for certain entities, it was noted that bad debt expenses were higher than revenues, creating a negative revenue for the quarter. As the HHS reporting portal would not allow negative amounts to be entered, a zero was entered into the HHS reporting portal. These negative amounts should have been offset to other quarters or other revenue line items, but were not, which resulted in higher revenue amounts being reported than the detailed reports supported. Cause ? The Corporation did not have adequate internal controls to ensure the lost revenue calculation was done in accordance with terms and conditions of the grant.Effect ? Three of the entities included in the revenue calculation were impacted by this issue and the impact was as follows:Questioned Costs ? None reported. After recalculating the revenue by correcting the above amounts, the amount of lost revenue still exceeded the amount of provider relief funds retained. Context/Sampling ? Key line items were tested on the Period 1 and Period 2 Department of Human Services special report. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal controls to ensure the revenue calculation is in compliance with the terms and conditions of the grant. The HHS Hotline is available to assist with concerns with the HHS portal or the calculations. Views of Responsible Officials - Management agrees with the finding.
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 and Period 2 TIN #237293874, #810413632; #371518772; #810420653; #810540517, and #810247969 Material Weakness in Internal Control over Compliance ? Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting; Material Noncompliance - Reporting 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 Corporation selected Option i to calculate lost revenue for the LHMC and HC entities which consists of comparing actual quarterly revenues in calendar years 2020 and 2021 to actual quarterly revenues in calendar year 2019. Condition ? The operations of HC were consolidated into KHMC as of December 31, 2020. When LHMC calculated their lost revenues, they included HC?s revenue for both 2020 and 2021 instead of only the 2021 information. This resulted in LHMC reporting higher lost revenues than the detailed reports supported in Period 1. This also affected the lost revenues reported in Period 2 for LHMC. HC filed its own report for Period 1, which included their revenues for 2019 and 2020. Zeros were entered for 2021, which resulted in reporting higher lost revenues than the detailed reports supported in Period 1. Cause ? The Corporation did not have adequate internal controls to ensure the lost revenue calculation was done in accordance with the terms and conditions of the grant.Effect ? The impact of the above condition was as follows: Questioned Costs ? None reported. After recalculating the lost revenue, the amount still exceeded the amount of provider relief funds retained. Context/Sampling ? Key line items were tested on the Period 1 and Period 2 Department of Human Services special report. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal controls to ensure the lost revenue calculation is completed according to the terms and conditions of the grant. Views of Responsible Officials - Management agrees with the finding.
2022-003 Department of Health and Human ServicesFederal Financial Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 1 and Period 2 TIN#460242831Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesMaterial Weakness in Internal Control Over Compliance and NoncomplianceReportingMaterial Weakness in Internal Control Over Compliance and Material NoncomplianceCriteria: 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 statues, regulations, and conditions of the federal award. The Center selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual resident care-related revenue to 2020 and 2021 actual resident care-related revenue by quarter. Resident care-related revenues should be reported net of adjustments for all third-party payors and any other discounts or adjustments, as applicable when reporting resident care-related revenue sources.Condition: The Center?s special report submitted to the Department of Health and Human Services for Period 1 and Period 2 TIN# 460242831 had no formal documentation of a secondary review or approval. The Center?s Period 1 lost revenue calculation was based upon actual revenue billed and reported within the Center?s billing system which had immaterial unexplained variances from the resident care-related revenue recorded on the general ledger. In addition, the Center did not consider the impact of a retroactive Medicaid reimbursement adjustment applicable to quarter 3 and quarter 4 of 2021 on the Period 2 report.Cause: The internal controls did not consider the effect of the retroactive Medicaid reimbursement adjustment or a reconciliation process to the internally generated resident care-related revenue on the general ledger to ensure accurate quarterly reporting of resident care-related revenue. In addition, the internal control process did not include a formally documented review and approval process of the report submitted to the Department of Health and Human Services for Period 1 and Period 2.Effect: Resident care-related revenue by quarter for fiscal year 2019, 2020, and 2021 on the Period 1 and Period 2 report was not accurate. The lack of adequate procedures governing program report preparation and submission increases the risk that the lost revenue incurred by quarter was not accurate and the related report could be filed incorrectly.Questioned Costs: None reported for the activities allowed or unallowed and allowable costs/cost principles. The amount of eligible lost revenue for Period 1 and Period 2 was overstated after taking into consideration the retroactive Medicaid reimbursement adjustment and comparing to internally generated resident care-related revenue on the general ledger. However, only $95,856 and $0 of lost revenue was utilized in Period 1 and Period 2, respectively, so the calculation difference decreased the excess lost revenue by $454,317.Context: All key line items related to lost revenue subject to testing on the Period 1 and Period 2 Department of Health and Human Services special report had differences. The net unexplained insignificant differences resulted in $9,919 of differences in key line items reported on the Period 1 report. The Period 2 report contained $386,707 of differences in the key line items tested due to the retroactive Medicaid reimbursement adjustment impacting quarter 3 and quarter 4 of 2021.Repeat Finding from Prior Years: NoRecommendation: We recommend that the Center enhance internal control policies to ensure special reports submitted to HHS include all necessary review and approval. In addition, we recommend the Center ensure HHS special reports include any retroactive Medicaid reimbursements.Views of Responsible Officials: Management agrees with the finding.
2022-004 Department of Health and Human ServicesFederal Financial Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 1 and Period 2 TIN#460242831Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesSignificant Deficiency in Internal Control Over ComplianceCriteria: 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 Center claimed expenses based on specifically identified COVID related expenses and general and administrative expenses.Condition: The Center claimed one invoice that was duplicated on the COVID-19 capital items claimed under equipment.Cause: The Center did not have adequate internal controls to identify the duplicate invoice on the COVID-19 equipment summary.Effect: The lack of adequate internal controls over the COVID-19 equipment summary increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner and may submit expenses that are unallowed due to duplication.Questioned Costs: None reported as amount is below $25,000.Context: A nonstatistical sample of 60 expenditures were selected for testing, which accounted for $197,649 of $1,034,974 direct program expenditures. Of the 60 tested, one invoice was duplicated.Repeat Finding from Prior Years: NoRecommendation: We recommend that the Center enhance internal control policies to ensure COVID-19 equipment purchases eligible and are properly recorded in the reports required to be submitted to the federal agency.Views of Responsible Officials: Management agrees with the finding.
2022-003 Department of Health and Human ServicesFederal Financial Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 1 and Period 2 TIN#460242831Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesMaterial Weakness in Internal Control Over Compliance and NoncomplianceReportingMaterial Weakness in Internal Control Over Compliance and Material NoncomplianceCriteria: 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 statues, regulations, and conditions of the federal award. The Center selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual resident care-related revenue to 2020 and 2021 actual resident care-related revenue by quarter. Resident care-related revenues should be reported net of adjustments for all third-party payors and any other discounts or adjustments, as applicable when reporting resident care-related revenue sources.Condition: The Center?s special report submitted to the Department of Health and Human Services for Period 1 and Period 2 TIN# 460242831 had no formal documentation of a secondary review or approval. The Center?s Period 1 lost revenue calculation was based upon actual revenue billed and reported within the Center?s billing system which had immaterial unexplained variances from the resident care-related revenue recorded on the general ledger. In addition, the Center did not consider the impact of a retroactive Medicaid reimbursement adjustment applicable to quarter 3 and quarter 4 of 2021 on the Period 2 report.Cause: The internal controls did not consider the effect of the retroactive Medicaid reimbursement adjustment or a reconciliation process to the internally generated resident care-related revenue on the general ledger to ensure accurate quarterly reporting of resident care-related revenue. In addition, the internal control process did not include a formally documented review and approval process of the report submitted to the Department of Health and Human Services for Period 1 and Period 2.Effect: Resident care-related revenue by quarter for fiscal year 2019, 2020, and 2021 on the Period 1 and Period 2 report was not accurate. The lack of adequate procedures governing program report preparation and submission increases the risk that the lost revenue incurred by quarter was not accurate and the related report could be filed incorrectly.Questioned Costs: None reported for the activities allowed or unallowed and allowable costs/cost principles. The amount of eligible lost revenue for Period 1 and Period 2 was overstated after taking into consideration the retroactive Medicaid reimbursement adjustment and comparing to internally generated resident care-related revenue on the general ledger. However, only $95,856 and $0 of lost revenue was utilized in Period 1 and Period 2, respectively, so the calculation difference decreased the excess lost revenue by $454,317.Context: All key line items related to lost revenue subject to testing on the Period 1 and Period 2 Department of Health and Human Services special report had differences. The net unexplained insignificant differences resulted in $9,919 of differences in key line items reported on the Period 1 report. The Period 2 report contained $386,707 of differences in the key line items tested due to the retroactive Medicaid reimbursement adjustment impacting quarter 3 and quarter 4 of 2021.Repeat Finding from Prior Years: NoRecommendation: We recommend that the Center enhance internal control policies to ensure special reports submitted to HHS include all necessary review and approval. In addition, we recommend the Center ensure HHS special reports include any retroactive Medicaid reimbursements.Views of Responsible Officials: Management agrees with the finding.
2022-003 U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.155 Section 223(f) Mortgage Insurance for the Purchase of Refinancing of Existing Multifamily Housing Projects Suspension and Debarment Significant Deficiency in Internal Control over Compliance Criteria: 2 CRF 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 the terms and conditions of the federal award. As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: Our testing identified the Project transacted more than $25,000 with a vendor but did not retain documentation to support verification that the vendor was not included as an excluded party within the System for Award Management (SAM). Cause: There was a lapse in oversight of the internal control process over suspension and debarment. Effect: The Project could execute a covered transaction with a party that is suspended or debarred or otherwise excluded. Questioned Costs: None Reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend the Project?s sponsor review its policies and procedures to ensure all vendors are compared to the SAM and documentation is retained before the Project executes a covered transaction. Views of Responsible Officials: Management agrees with the finding and the recommendation.
2022-003 U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.155 Section 223(f) Mortgage Insurance for the Purchase of Refinancing of Existing Multifamily Housing Projects Suspension and Debarment Significant Deficiency in Internal Control over Compliance Criteria: 2 CRF 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 the terms and conditions of the federal award. As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: Our testing identified the Project transacted more than $25,000 with a vendor but did not retain documentation to support verification that the vendor was not included as an excluded party within the System for Award Management (SAM). Cause: There was a lapse in oversight of the internal control process over suspension and debarment. Effect: The Project could execute a covered transaction with a party that is suspended or debarred or otherwise excluded. Questioned Costs: None Reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend the Project?s sponsor review its policies and procedures to ensure all vendors are compared to the SAM and documentation is retained before the Project executes a covered transaction. Views of Responsible Officials: Management agrees with the finding and the recommendation.
2021‐004 – Deficiency in Cash Management Controls over Compliance – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity does not have policies in procedures to ensure bank reconciliations are being performed on a timely basis and reviewed and approved by someone other than the person preparing. Criteria ‐ 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ Bank reconciliations not performed on a timely manner may not detect misstatements or errors. Cause ‐ The Entity does not have proper controls in place to verify federal funds are received for the amount requested on a timely basis or retain detailed support reconciliations are being performed.
2021‐005 – Deficiency in Special Tests and Provision Controls over Compliance with Training – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide support to test controls over compliance over training. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ The Entity may unintentionally miss a required training which could lead to repayment of funds. Cause ‐ The Entity is not following its policy to ensure all mandatory training is completed as needed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the Grantor agency. Cause ‐ The Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐007 – Deficiency in Reporting Controls over Compliance with Financial Reporting – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide the annual SF‐424A or provide support it was submitted on a timely basis. All other reporting under the program was submitted timely and accurately. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ Not submitting an accurate annual report due on a timely basis could result in disallowed costs. Cause ‐ The Entity did not have sufficient controls in place to ensure all reporting is submitted to the grantor agency accurately and on a timely basis, and to retain documentation of the reporting.
2021‐004 – Deficiency in Cash Management Controls over Compliance – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity does not have policies in procedures to ensure bank reconciliations are being performed on a timely basis and reviewed and approved by someone other than the person preparing. Criteria ‐ 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ Bank reconciliations not performed on a timely manner may not detect misstatements or errors. Cause ‐ The Entity does not have proper controls in place to verify federal funds are received for the amount requested on a timely basis or retain detailed support reconciliations are being performed.
2021‐005 – Deficiency in Special Tests and Provision Controls over Compliance with Training – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide support to test controls over compliance over training. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ The Entity may unintentionally miss a required training which could lead to repayment of funds. Cause ‐ The Entity is not following its policy to ensure all mandatory training is completed as needed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the Grantor agency. Cause ‐ The Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐007 – Deficiency in Reporting Controls over Compliance with Financial Reporting – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide the annual SF‐424A or provide support it was submitted on a timely basis. All other reporting under the program was submitted timely and accurately. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ Not submitting an accurate annual report due on a timely basis could result in disallowed costs. Cause ‐ The Entity did not have sufficient controls in place to ensure all reporting is submitted to the grantor agency accurately and on a timely basis, and to retain documentation of the reporting.
2021‐004 – Deficiency in Cash Management Controls over Compliance – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity does not have policies in procedures to ensure bank reconciliations are being performed on a timely basis and reviewed and approved by someone other than the person preparing. Criteria ‐ 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ Bank reconciliations not performed on a timely manner may not detect misstatements or errors. Cause ‐ The Entity does not have proper controls in place to verify federal funds are received for the amount requested on a timely basis or retain detailed support reconciliations are being performed.
2021‐005 – Deficiency in Special Tests and Provision Controls over Compliance with Training – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide support to test controls over compliance over training. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ The Entity may unintentionally miss a required training which could lead to repayment of funds. Cause ‐ The Entity is not following its policy to ensure all mandatory training is completed as needed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the Grantor agency. Cause ‐ The Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐007 – Deficiency in Reporting Controls over Compliance with Financial Reporting – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide the annual SF‐424A or provide support it was submitted on a timely basis. All other reporting under the program was submitted timely and accurately. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned Costs ‐ Not applicable. Effect ‐ Not submitting an accurate annual report due on a timely basis could result in disallowed costs. Cause ‐ The Entity did not have sufficient controls in place to ensure all reporting is submitted to the grantor agency accurately and on a timely basis, and to retain documentation of the reporting.
Statement of Condition: During out audit, it was determined that the original supporting documentation for the PRF Period 1 and 2 Report submissions did not agree to the actual submissions and that there was no evidence retained that the PRF Period 1 report was reviewed and approved by a separate individual outside of the preparer. Further, certain personnel expenses included in total other PRF expenses were not supported by documented time studies to substantiate the percentage of salaries and fringe benefits included in PRF Periods 1 and 2 Reports. 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. Cause of Condition: There was turnover in the Chief Financial Officer position and finance department during the period that the PRF Period 1 and 2 report submissions were required to be submitted and supporting records could not be located. Although outside consultants were brought in before a new Chief Financial Officer was hired, due to the turnover and small size of the finance department, the auditee did not have an internal control process in place to ensure an independent review was done of the submission and supporting documentation, including documented time studies. Effect of Condition: While the Nursing Home incurred more than sufficient eligible expenditures and lost revenues to exhibit that the Nursing Home funds were fully utilized, the reporting of the Period 1 and Period 2 expenditures was not supported by the original documentation maintained by the former CFO and outside consultants for certain personnel and fringe benefits, including time studies for allocation of personnel. Recommendation: We recommend that management implement a control process which includes a documented secondary review of approval. Due to the untimely reporting of this finding, the Nursing Home is past the timeframe for filing revisions to Period 1 and Period 2 PRF reports. Therefore, we also recommend the Nursing Home maintain documentation that details they incurred enough eligible expenditures and lost revenues to continue to qualify for the full amount of the funding, even though certain expenses claimed on the Period 1 and Period 2 Reports are not supported by documented time studies. Views of Responsible Official: Management agrees with the recommendation. See corrective action plan.
Statement Condition: During out audit, it was determined that the original supporting documentation for the PRF Period 1 and 2 Report submissions did not agree to the actual submissions and that there was no evidence retained that the PRF Period 1 report was reviewed and approved by a separate individual outside of the preparer. Further, certain personnel expenses included in other PRF expenses were not supported by documented time studies to substantiate the percentage of salaries and fringe benefits included in PRF Periods 1 and 2 Reports. 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. Cause of Condition: There was turnover in the Chief Financial Officer (CFO) position and finance department during the period that the PRF Period 1 and 2 report submissions were required to be submitted and supporting records could not be located. Although outside consultants were brought in before a new Chief Financial Officer was hired, due to the turnover and small size of the finance department, the auditee did not have an internal control process in place to ensure an independent review was done of the submission and supporting documentation, including documented time studies. Effect of Condition: While Cottages incurred more than sufficient eligible expenditures and lost revenues to exhibit that Cottages funds were fully utilized, the reporting of the Period 1 and Period 2 expenditures was not supported by the original documentation maintained by the former CFO and outside consultants for certain personnel and fringe benefits, including time studies for allocation of personnel. Recommendation: We recommend that management implement a control process which includes a documented secondary review of approval. Due to the untimely reporting of this finding, Cottages is past the timeframe for filing revisions to Period 1 and Period 2 PRF reports. Therefore, we also recommend Cottages maintain documentation that details they incurred enough eligible expenditures and lost revenues to continue to qualify for the full amount of the funding, even though certain expenses claimed on the Period 1 and Period 2 Reports are not supported by documented time studies. Views of Responsible Official: Management agrees with the recommendation. See corrective action plan.
#2021-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2CFR 200.303) Travel (2CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with Uniform Guidance. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that Organization’s expenses are not in accordance with UGG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with Uniform Guidance. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2020-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with Uniform Guidance. View of responsible officials and planned corrective action Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.
#2021-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2CFR 200.303) Travel (2CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with Uniform Guidance. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that Organization’s expenses are not in accordance with UGG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with Uniform Guidance. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2020-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with Uniform Guidance. View of responsible officials and planned corrective action Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.
Criteria: Coronavirus Aid, Relief, and Economic Security (CARES) Act, Pub. L. No. 116-36m Division A, Title V (2020) requires that the Coronavirus Relief Fund (CRF) monies must be used to cover costs that are: 1. Necessary expenditures incurred due to the public health emergency with respect to COVID-19; 2. Not accounted for in the governments' most recently approved budget as of March 27, 2020; and 3. Incurred during the period that begins on March 1, 2020 and ends on December 31, 2021. Additionally, 2 CFR 200.303 requires the recipient of federal funds 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 awards. Condition/Context: We selected a statistically valid random sample of transactions charged to the program of 40 emergency assistance transactions and 12 general disbursement transactions to test controls of disbursement costs charged to the major program and found the following: - One general disbursement transaction was not supported with appropriate documentation. - Emergency Assistance transactions were for checks written in 2020 but inappropriately recorded in 2021. Cause: The primary factor that contributed to the deficiencies was the lack of sufficient controls implemented to appropriately review and monitor disbursement activity and ensure amounts were properly recorded in the general ledger. Effect: Disbursement transactions were being processed incorrectly. We were unable to obtain sufficient assurance over compliance, and the major program received a qualified opinion. Questioned Costs: Known and likely questioned costs did not exceed $25,000. Repeat finding: This finding is a repeat of finding 2020-005 from the prior year. Recommendation: In order to ensure disbursement transactions are properly reviewed, approved, and supporting documentation is maintained, we recommend the Tribes ensure controls over disbursement procedures are designed and operating effectively. Views of responsible officials and planned corrective action: The Tribes commit to a comprehensive corrective action plan, including a thorough review of document processes, implementing additional controls for disbursements transactions, ensuring proper documentation review in the future, enhancing controls over the timing of expenditure recognition, and providing additional training, to personnel involved in disbursement process.
Criteria: Per 2 CFR 200.303, the Tribes 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." Condition/Context: We randomly selected four performance and special reports for testing and found that one of four performance and special reports were not prepared and filed with funding agency. Cause: The Tribes do not have a process in place to ensure reports are prepared and submitted to the funding agency. Effect: Required performance and special reports were not submitted. Questioned costs: There were no reportable instances of questioned costs. Repeat finding: This is not a repeated finding from the prior year. Recommendation: The Tribe should review the terms and conditions of all grant awards to ensure they have an understanding of all reporting requirements necessary under each grant. Additionally, the Tribe should implement policies and procedures to monitor reporting deadlines to ensure that reports are prepared and submitted as applicable. Views of responsible officials and planned corrective action: The Tribes will ensure compliance with future reporting requirements, such as review and enhancement of reporting procedures, personnel training, and monitoring and oversight by management.
Criteria: American Rescue Plan Act of 2021, Pub. L. No. 117-2, requires that the Coronavirus State and Local Fiscal Recovery Fund monies must be used to cover costs that are: 1. Support public health expenditures, by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff; 2. Address negative economic impacts caused by the public health emergency, including economic harms to works, households, small business, impacted industries, and the public sector; 3. Replace lost public sector revenue to provide government services; recipients may use this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic; 4. Provide premium pay for essential works, offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors; and 5. Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet. Additionally, 2 CFR 200.303 requires the recipient of federal funds 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. Condition/Context: We selected a statistically valid random sample of transactions charged to the program of 40 emergency assistance transactions to test controls of disbursement costs charged to the major program and found the following: - One emergency assistance disbursement transaction was not supported with appropriate documentation. - There were expenses in the amount of $3,717,000 recognized for the program as of December 31, 2021 related to checks for emergency assistance payments to individuals that did not complete an application indicating eligibility. An entry was recorded by the Tribes to appropriately adjust these expenses from as of December 31, 2021. Cause: The primary factor that contributed to the deficiencies was the lack of sufficient controls implemented to appropriately review and monitor disbursement activity and ensure amounts were properly recorded in the general ledger. Effect: Emergency assistance transactions were being processed incorrectly. We were unable to obtain sufficient assurance over compliance, and the major program received a qualified opinion. Questioned costs: We tested $120,000 emergency assistance transactions out of federal expenditures of $12,768,000. Known and likely questioned costs totaled $322,200. Repeat finding: This is not a repeat finding from the prior year. Recommendation: In order to ensure disbursement transactions are properly reviewed, approved, and supporting documentation, maintained, we recommend the Tribes ensure controls over disbursement procedures are designed and operating effectively. Views of responsible officials and planned corrective action: The Tribes will ensure compliance with future program allowable costs and allowable activities requirements, such as documentation review and enhanced controls to ensure accurate recognition of expenditures.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, regulations require that in order for activities and costs to be allowed under Federal awards, 45CFR, part 75 all costs must be adequately documented. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation and evidence of approval for payment could not be verified. Of the sixty (60) transactions examined, fourteen (14) lacked supporting documentation for review, and approval for payment by a Manager. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds which did not contribute to the objective set forth for the program. (lack of approved invoices, lack of supporting documentation). Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $2,066 and likely questioned costs of $11,507 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating nature of expense, amount, authorization and approval for payment.