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 4 TIN #450222079
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 Hospital claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Hospital selected Option i to calculate lost revenue. The methodology chosen utilized actual quarterly revenues from 2019, 2020, 2021, and 2022. The 2019 revenue amounts were compared to 2020, 2021, and 2022 to calculate the Hospital’s lost revenue.
Condition – During our testing, the Hospital’s calculation of lost revenue claimed under the federal program as an allowable cost contained no formal review or approval by a separate individual outside of the preparer. In addition, there was no evidence retained that the Hospital’s special report submitted to the Department of Health and Human Services for Period 4 was reviewed and approved by a separate individual outside of the preparer.
Cause – The Hospital did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented.
Effect – The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner.
Questioned Costs – None reported.
Context – The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 4 Reporting were tested. No review outside of the preparer was noted on the lost revenue calculation, or the submission of the reporting to the Department of Health and Human Services outside of the preparer.
Repeat Finding from Prior Years – No
Recommendation – We recommend that the Hospital enhance internal control policies to ensure that formal documentation of reviews is present.
Views of Responsible Officials – Management agrees with the finding.