Finding Text
Department of Health and Human Services
Federal Assistance Listing/CFDA #93.498
COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution
Criteria
2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over
the federal award that provides assurance that the entity is managing the federal award in compliance
with federal statutes, regulations, and conditions of the federal award.
Condition
The Association had 26 invoices identified as eligible that were not reviewed and approved. The
Associations had 6 timesheets that were not reviewed and approved. In addition, the Association’s final
expenditure listing, lost revenue calculation identified as eligible and claimed under the Provider Relief
Fund program, and special report submitted to the Department of Health and Human Services for Period
1 did not have evidence of being reviewed and approved by a separate individual outside of the preparer.
Cause
The Association did not have an adequate internal control policy in place to ensure review and approval
over specifically identified invoices and timesheets, the final expenditure listing, the lost revenue
calculation, or preparation of HHS Period 1 reporting were documented.
Effect
The lack of adequate policies governing the review and approval of invoices, timesheets, expenditure
listings, lost revenue calculation and the HHS Period 1 report increases the risk that employees
participating in the federal award administration may not be able to detect and correct noncompliance in
a timely manner. Without a secondary review and approval, there is a possibility that ineligible
expenditures may be claimed under the program.
Context
Detail testing was completed over $777,856 of the expenses along with the calculation for lost revenue
for activities allowed and unallowable and allowable cost/cost principles. A nonstatistical sample of 40
expenditures (29 nonpayroll and 11 payroll) were selected for detailed testing, 26 invoices did not have
evidence of being reviewed and approved and 6 timesheets didn’t have evidence of being reviewed. The
overall expense listings and lost revenue worksheet did not have evidence of a review by someone other
than the preparer (i.e., population of two). The Report submitted to HHS also did not have a documented
secondary review and approval (i.e., population of one).
Recommendation
We recommend the Association enhance internal controls policies to ensure all invoices are reviewed
and approved to ensure all expenses claimed under the federal program are necessary, correct and meet
the requirements of the federal program. We also recommend the Association implement a control
process which includes a secondary review and approval of the final expenditure listing and lost revenue
calculation used to claim the allowable costs under the federal program and that there is documented
evidence of the review and approval. In addition, the Report submitted to HHS should have a secondary
review and approval that is documented.Views of Responsible Officials and Planned Corrective Actions
Management agrees with the finding, has prepared an assessment of the root causes of this material
weakness, and has developed a corrective action plan.
Indication of Repeat Finding
This is not a repeat finding in the current year.