Finding Text
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 #736060815 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria: 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 Authority selected Option 1, as defined by HRSA, to calculate lost revenue. This option consists of reporting actual revenues from relevant quarters in the period of availability with the system calculating the lost revenues because of declines. The fiscal year 2021 single audit identified unallowable expenses totaling $263,861. The Company utilized excess lost revenues at the time to cover this difference. To capture the use of these lost revenues from Period 1, the Authority should have used Option 3, as defined by HRSA, to calculate and report lost revenues. Within that calculation, lost revenues could then be reduced by the $263,861. Cause: The Authority's Period 4 report to HRSA was filed prior to the completion of the 2021 single audit and identification of these unallowable expenses Effect: The reporting to HRSA for Period 4 was considered incorrect. The Authority did not reduce lost revenues by amounts used in the prior period on unallowable expenses. While the effects of the report errors did not result in unallowable lost revenues during Period 4, errors to amounts reported for lost revenues could result in unallowable costs. Questioned Costs: None reported. Context/Sampling: All key line items on the Period 4 report to HRSA were tested. Repeat Finding from Prior Years: Yes, finding 2022-02. Recommendation: We recommend the Authority report on lost revenues for any future reporting to HRSA utilizing Option 3 in order to show the use of the unallowable expenses from Period 1, however, no future reporting is expected. Views of Responsible Officials: Management agrees with the finding.