Finding 1056958 (2022-002)

Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “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.” The terms and conditions of the award require the recipient to submit reports to the secretary of HHS for each reporting period to ensure compliance with conditions that are imposed on the payment, and such report shall be in such form, with such content, as specified by the secretary of HHS in program instructions directed to all recipients. Condition Management did not have sufficiently designed internal controls to review the supporting documentation used in the lost revenue calculation and the data submitted in the HHS portal. The amount of the revenue reported to HRSA in the HHS portal for Periods 2 and 3 for July 1, 2021 to June 30, 2022 did not agree to the amounts recorded in the general ledger. Cause The Authority did not retain sufficient appropriate evidence of review and approval of amounts quantified as lost revenues attributable to COVID-19 that have not been reimbursed from other sources or that other sources are not obligated to reimburse. Management entered the incorrect information into the HHS portal. Management’s internal controls over the review and approval of the HHS portal data was not sufficiently robust to identify data input errors. Effect or potential effect A lack of internal control over the review of the lost revenue calculation submitted in the HHS portal could result in a misstatement of the amounts reported in the HHS portal. Potential effects include inappropriate amounts of lost revenue quantified that could impact the complete and accurate reporting of such amounts submitted to HRSA’s PRF Reporting Portal and amounts ultimately received by the Authority that could result in funds ultimately being required to be returned to HRSA. Questioned costs None. Context There was a total of 5 HHS portal submissions for the year ended June 30, 2022. The lost revenue reported on the Authority’s submission to HRSA’s PRF Reporting Portal amounted to $299,136,237. The total lost revenue supported by the Authority’s underlying calculations of lost revenue amounted to $251,893,540 for the year ended June 30, 2022. Therefore, Management reported $47,242,697 more in lost revenues in the portal than their supporting calculation. This difference had no impact on the amount received by the Authority from HHS under this Program. Identification of a repeat finding This is a repeat finding of Finding 2021-003 in the prior year. Recommendation We recommend that Management develop and implement effective internal controls to ensure lost revenue calculations are reviewed and approved to ensure that the report submissions are accurate. The Authority should retain sufficient supporting documentation to support the lost revenue calculation was reviewed, approved, and calculated in accordance with the terms of the federal program during the period. View of responsible officials There is no disagreement with the audit finding.