Finding 1095738 (2023-004)

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 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 Hospital was not able to provide sufficient support for the total net patient care revenues that were reported to the Department of Health and Human Services. As well as the Hospital’s total net patient care revenue did not agree to the amount in the report submitted to the Department of Health and Human Services. Cause – Due to high turnover in the CFO position and multiple accounting system conversions, the Hospital was unable to provide sufficient support over the total net patient care revenues that were reported to the Department of Health and Human Services. This caused the Hospital to report revenue amounts that did not accurately reflect the net patient care revenues reported on the audited financial statements. Effect – The lost revenue difference in what was accurately calculated compared to what was reported led to an incorrect filing and a claim of more support for lost revenue than was needed. Additionally, the revenue difference in what was reported on the audited financial statements compared to what was reported led to an incorrect filing of total net patient care revenues. Questioned Costs – None reported. Context – Lost revenue reported to the Department of Health and Human Services totaled $2,104,728. Due to the lack of sufficient support, actual lost revenue was not able to be calculated and the difference is not known. Additionally, revenues reported to the Department of Health and Human Services compared to the audited financial statements differed by $2,769,931. As lost revenue was not used as a qualifying expenditure in Period 4, there was no noted questioned costs due to this. Repeat Finding from Prior Years – No Recommendation – We recommend that management review their process and procedures to include monitoring over amounts reported relating to total revenues, lost revenue amounts and the related calculation. Views of Responsible Officials – Management agrees with the finding.