Finding Text
Rural Healthcare Services Programs Assistance Listing Number 93.912 U.S. Department of Health and Human Services Award No. 6 UK9RH43497-03-02, September 1, 2023 – August 31, 2024 Award No. 4 UK9RH43497-04-05, September 1, 2024 – August 31, 2026 Criteria or specific requirement – Cash Management (45 CFR 75.305) Condition – Funds available from program income were not disbursed before the Organization requested additional drawdowns. Cause – The Organization was not appropriately with tracking and utilizing program income. Effect or potential effect – The Organization had a balance in deferred grant revenue at May 31, 2025, due to cumulative program income and drawdowns exceeding cumulative expenditures. Questioned costs – $46,093. Questioned costs was determined to be the balance in deferred grant revenue at May 31, 2025, which relates to Award No. 4 UK9RH43497-04-05. Context – The Organization began generating program income with the federal award during 2025. The Organization implemented a process of calculating program income earned consistent with its methodology for valuation of patient service revenue. Due to the complexity of the program income calculation, grant funds were drawn in advance of the completion of the calculation. Identification as a repeat finding, if applicable – Not a repeat finding. Recommendation – The Organization should ensure its internal controls over compliance address the disbursement of program income prior to use of grant funds and conduct training of staff involved in drawdowns of federal awards. Views of responsible officials and planned corrective actions – Issues identified during the audit were indicative of an overall lack of controls and processes due to the change in Finance department staff and loss of knowledge. As of August 2025, program income is no longer being generated by the grant. The new CFO and Finance staff have also implemented processes and controls to ensure proper tracking and utilization of program income related to grants. The CEO will provide ongoing oversight to ensure processes and controls are being adhered to by the Finance Department.