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 (PRF)
Applicable Federal Award Number and Year – Period 6 TIN #205330283
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. The Care Center selected Option I to calculate lost revenue which consists of comparing actual quarterly revenues in calendar years 2020, 2021, 2022, and January through June 2023 to actual quarterly revenues in calendar year 2019.
Condition: The Care Center does not have an internal control system designed to ensure the amounts reported in the HHS Period 6 Special Report agreed to supporting documentation for each of those quarters. In addition, there was no evidence of review of either the supporting documentation or the HHS Period 6 Special Report by someone other than the preparer.
Cause: The Care Center did not have adequate internal controls to ensure the lost revenue calculation agreed with the supporting documentation prior to submission to HHS.
Effect: Revenue information for eighteen quarters (starting January 1, 2019, through June 30, 2023) was submitted on the HHS Period 6 Special Report. The revenue information for three quarters during that timeframe did not agree to the supporting documentation provided. The quarters with significant differences are as follows:
Quarter 2, 2021 (April through June) Variance of $27,885
Quarter 1, 2023 (January through March) Variance of $22,236
Quarter 2, 2023 (April through June) Variance of $688,293
In these three quarters, the revenue submitted on the HHS Period 6 Special Report exceeded the amount of revenue supported by the financial information. The total variance for these three quarters was $738,397.
Questioned Costs: None reported, as the Care Center used qualifying expenditures to support the provider relief funding received and not lost revenue.
Context: Key line items were tested on the HHS Period 6 Special Report.
Repeat Finding from Prior Years: No
Recommendation: We recommend management enhance internal controls to ensure the revenue calculation agrees to the supporting documentation prior to submission. In addition, we recommend that there is a review of both the supporting documentation and any reports submitted by a person other than the preparer prior to submission.
View of Responsible Officials: Management agrees with the finding.