Finding Text
2023-004 U.S. Department of Health and Human Services
Federal Assistance Listing #93.498
COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 3 TIN #237293874, #810413632;
#371518772; #810420653; and #810540517
Material Weakness in Internal Control over Compliance – Activities Allowed or
Unallowed, Allowable Costs/Costs Principles, and Reporting; Material Noncompliance
- Reporting
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 selected Option i to calculate lost
revenue for LHMC which consists of comparing actual quarterly revenues in calendar
years 2020, 2021, and 2022 to actual quarterly revenues in calendar year 2019.
Condition – The operations of HC were consolidated into LHMC as of December 31,
2020. When LHMC calculated their lost revenues, they included HC’s revenue for 2020,
2021, and 2022 instead of only the 2021 and 2022 information. This resulted in LHMC
reporting higher lost revenues than the detailed reports supported in Period 3. LHMC
selected Option iii for Period 4 and amounts were properly updated.
Cause – The Corporation did not have adequate internal controls to ensure the lost
revenue calculation was done in accordance with the terms and conditions of the grant.
Effect – The impact of the above condition was as follows:
Entity
Lost Revenue Amount
Reported in HHS
Special Report
Amounts that Should
Have Been Reported in
HHS Special Report
Excess Lost
Revenue
Reported
LHMC $ 26,318,146 $ 17,377,554 $ 8,940,592
Period 3
Questioned Costs – None reported. After recalculating the lost revenue, the amount still
exceeded the amount of provider relief funds retained.
Context/Sampling – Key line items were tested on the Period 3 HHS special report.
Repeat Findings from Prior Years – Yes, Finding #2022-004.
Recommendation – We recommend that the Corporation enhance internal controls to
ensure the lost revenue calculation is completed according to the terms and conditions.
Views of Responsible Officials – Management agrees with the finding.