Finding Text
2023-002 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 4 TIN #463364672, Period 4 TIN #410721640, Period 4 TIN #450275011, and Period 5 TIN #272608086
Reporting
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 2 CFR 200.33(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 statues, regulations, and conditions of the federal award. The Organization is required to submit an accurate report to HHS for each filing period that funds were received.
Condition: The Organization claimed lost revenues attributable to coronavirus in which the resident revenue calculation did not agree to the HHS special report for two key line items.
Cause: The Organization had a resident revenue calculation error of $269,085 on the HHS special report with no impact to the actual lost revenues (i.e. lost revenue claimed was accurate on the HHS special report but key line items were misstated).
Effect: While the calculation error did not provide a difference in total between the lost revenues utilized on the HHS special report and the lost revenue calculation, the Organization’s reported quarterly resident revenues were inaccurate. This calculation error also indicated there is a lack of policies governing the review and approval of the lost revenue calculation to the HHS special report.
Questioned Costs: None reported.
Context: There were 66 lost revenue key line items tested on which two key line items contained errors which totaled $269,085 (resident revenue was understated for both quarters). The errors had no impact on the amount of lost revenue as the two quarters impacted did not result in any lost revenue.
Repeat Finding from Prior Years: Yes, Finding 2022-003.
Recommendation: We recommend that the Organization enhance internal control policies to ensure the HHS special report is supported by accurate revenue calculations. This would include implementing a secondary review and approval over the lost revenue calculation.
Views of Responsible Officials: Management agrees with the finding.