Finding 1078365 (2022-005)

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 and Material Noncompliance 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 Corporation claimed expenses that did not tie to supporting documentation and expenses that were reimbursed by other funding sources (i.e., Medicare). These expenses were improperly included in the HHS Special Report which caused the report to be inaccurate. Cause: The Corporation did not have an adequate internal control policy in place to ensure review and approval of cash disbursements claimed under the federal programs and to ensure that expenses claimed in the Special Report were complete and accurate. Effect: The lack of adequate policies governing expenses and preparation and submission of the 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. The Corporation submitted expenses over their actual allowable expenses. Questioned Costs: $268,391 which was reimbursed from other sources and an additional $2,471 that was unsupported. Context: A nonstatistical sample of 23 expenditures was selected for testing, which accounted for $680,419 of $2,067,014 of direct program expenditures. Repeat Finding from Prior Years: Yes, Finding 2021-005 Recommendation: We recommend that the Corporation enhance internal control policies to ensure all amounts reimbursed by other funding sources are adequately documented and reduced from the eligible expenditure listing and are properly recorded in the Special Report required to be submitted to the federal agency. We also recommend the Corporation enhance internal control policies to ensure that the required Reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the Special Reports required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.