Finding Text
Internal control deficiency and noncompliance over reporting of lost revenues attributable to coronavirus reported in the provider relief fund report.
Identification of the federal program:
Assistance Listing Number 93.498:
• COVID-19 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
• U.S. Department of Health and Human Services
• Federal award identification number – Not Applicable
• Federal award year – January 1, 2020 to December 31, 2023
Criteria or specific requirement (including statutory, regulatory or other citation):
Title 2, Subtitle A, Chapter II, Part 200, Subpart D, Section 200.303 Internal controls. The non-Federal entity must: (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).
The terms and conditions of the award requires the following:
• The recipient certifies that the payment will only be used to prevent, prepare for, and respond to coronavirus, and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus.
• The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.
• The recipient shall adhere to the reporting requirements on provider relief fund payments for payments received exceeding $10,000 in the aggregate during the payment received period. The recipient must register in the provider relief fund reporting portal and submit reports as specified by HHS.
• The recipient certifies that all information it provides as part of any application for the payment, as well as all information and reports relating to the payment that it provides in the future at the request of HHS or the HHS inspector general, are true, accurate and complete, to the best of its knowledge.
The Provider Relief Programs: Provider Relief Fund and ARP Rural Payments Frequently Asked Questions states the following:
• Duplication of expenses and lost revenues is not permitted.
• Expenses and lost revenues may not be duplicated: payments may not be applied to the same expenses and lost revenues that were reported on in prior reporting period.
Condition:
During our testing over reporting, we observed management did not have effective internal controls in place to ensure lost revenues reported in the provider relief fund report were not duplicated. This resulted in an overstatement of lost revenues reported in the provider relief fund report.
Cause:
Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirements section above.
Effect or potential effect:
The lost revenues attributable to coronavirus were reported incorrectly in the provider relief fund report.
Questioned costs:
$404,529 – Assistance Listing Number 93.498, Award Identification Number – Not Applicable
Questioned costs were computed by taking the total lost revenues available to be used in the current reporting period of $29,770,743 reported in the provider relief fund report compared to the actual total lost revenues available to be used in the current reporting period of $29,366,214.
Context:
During our testing over the calculation of lost revenues attributable to coronavirus, we observed management used $404,529 in lost revenues related to a subsidiary of Banner to substantiate the payments received; however, the Banner parent lost revenues were not reduced by $404,529 in lost revenues that were already used by the subsidiary of Banner.
Management’s control regarding the review of the provider relief fund report did not identify this overstatement.
Identification as a repeat finding, if applicable:
No.
Recommendation:
Management should develop and implement effective internal controls to ensure the total lost revenues reported in the provider relief fund report are reflective of the entity’s consolidated lost revenues and are not duplicated. In addition, management should review the identified questioned costs to identify if any improper payments were made to the entity.
Views of responsible officials:
There will be no additional provider relief fund reports submitted given this was the final report submitted to substantiate the payments received. However, if this program begins again, management will implement a control to ensure lost revenues are not duplicated. The entity will work with the grantor regarding the questioned costs identified.