Finding 12251 (2022-001)

Identification of the Federal Program: Grantor: U.S. Department of Health and Human Services Program Name: COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing No. / FAIN / Pass-Through Entity / Pass-Through Entity Identifying Number: 93.498 / Not Applicable / Not Applicable / Not Applicable Section III?Federal Award Findings and Questioned Costs (continued) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Provider Relief Funds were provided under the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and are to be used to prevent, prepare for, and respond to coronavirus. The funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. 2 CFR 200.303 requires that a non-federal entity must ?(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States and the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: During our testing we observed management did not have effective internal controls in place to ensure expenses reported in the Health Resources and Services Administration PRF Reporting Portal (the Portal) were not duplicated. This resulted in an overstatement of expenses reported in the Portal. Cause: Management did not have effective internal controls in place to ensure the reported expenses attributable to Coronavirus reported in the Portal were not duplicated. Effect or Potential Effect: The result of the condition caused overreporting of eligible expenses reported within the Corporation?s PRF ? Reporting Period 2 submission. Section III?Federal Award Findings and Questioned Costs (continued) Questioned Costs: $592,928 Context: During our internal control and compliance testing, we obtained listings of payroll expenses management had identified as eligible expenditures. In order to aggregate and report total eligible expenses, the Corporation used system reports which detailed payroll, supplies and related expenditures. Certain system reports contained expenses that were duplicated. While duplication of these expenses resulted in an overstatement of eligible expenses in the Portal submission, the amount of lost revenues reported was far in excess of the Provider Relief Funding received. As such, there is no impact on meeting the requirements to retain the funding received as expenses and lost revenues attributable to COVID-19 significantly exceeded the Provider Relief Funds received. Recommendation: We recommend that management develop and implement effective internal controls to ensure accurate reporting in the Portal. This will ensure the expenses reported in the Portal are not duplicated.