Finding Text
Department of Health and Human Services
Federal Financial Assistance Listing #93.498
COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 3 and Period 4 TIN #382628943 and
TIN #381649577
Activities Allowed or Unallowed, Allowable Costs/Cost 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 general and administrative expenses.
Condition: The Corporation’s final expenditure listing identified as eligible and claimed under the Provider Relief Fund program as well as the prepared lost revenue calculation were not reviewed and approved by a separate individual outside of the preparer.
Cause: The Corporation did not have an internal control process in place to ensure a secondary review and approval of the lost revenue calculation or of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing was formally documented. The summary spreadsheet was used to claim allowable costs under the federal program. In addition, the review and approval of the report submitted to the Department of Health and Human Services for Period 3 and Period 4 were not performed by someone other than the preparer of the report.
Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures or lost revenue may have been claimed under the program and the report may not have been accurately completed.
Questioned Costs: None reported.
Context/Sampling: Both the final expenditure listing and the lost revenue calculation were obtained and did not have evidence of review by someone other than the preparer (i.e., population of two). In addition, a nonstatistical sample of 23 ($680,419) out of 113 expenditures ($2,067,114) were tested and the 23 expenditures did not show evidence of a review to ensure the expenditures were qualified COVID-19 related expenditures.
Repeat Finding from Prior Years: Yes, Finding 2021-003
Recommendation: We recommend the Corporation implement a control process which includes a secondary review and approval of the summarized final expenditure listing and lost revenue calculation used to claim the allowable costs under the federal program and a secondary review and approval of required reports to be submitted to the federal agency.
Views of Responsible Officials: Management agrees with the finding.