Finding 1226305 (2023-001)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2023
Accepted
2026-08-12

AI Summary

  • Core Issue: The Hospital lacks proper segregation of duties for approving and tracking federal program expenditures.
  • Impacted Requirements: This affects compliance with federal guidelines, risking improper charges and inaccurate reporting.
  • Recommended Follow-Up: The Hospital should establish and document internal controls to ensure duties are properly segregated for federal expenditure reviews.

Finding Text

Federal Program – COVID-19 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution; ALN 93.948; U.S. Department of Health and Human Services; FAIN – None; Award Year 2021 Criteria or Specific Requirement – Activities Allowed/Allowable Costs – Pub. L. No. 116-136, 134 Stat. 563 Condition – The Hospital has a lack of segregation of duties around approving, tracking, and reporting expenditures under the federal program. Cause – The Hospital did not have effective internal control processes and segregation of duties in place to ensure accurate review and approval of program expenditures. Effect – The Hospital has insufficient segregation of duties around approving, tracking, and reporting expenditures under the program, which could cause expenditures being charged to the award that are not allowable and incorrect reporting of expenditures to the Health Resources and Services Administrator (HRSA). Questioned Costs – N/A Context – In testing internal controls around the compliance requirement, expenditures were being purchased and approved by the same individual. No additional review of federal expenditures took place. Identification as a Repeat Finding, if Applicable – 2021-001 Recommendation – The Hospital should review and implement documented internal control processes that include proper segregation of duties around the review and approval of federal expenditures. Views of Responsible Officials and Planned Corrective Actions – The Hospital agrees with the finding and implemented a policy in September 2023 to ensure that any future funding is appropriately handled.

Corrective Action Plan

Finding Reference Number 2023-001 Finding The Hospital’s internal control processes regarding usage of funds received under the Provider Relief Fund allocation within the American Rescue Plan Act, 2021, did not provide for adequate segregation of duties. Internal controls around approving, tracking, and reporting expenses were not sufficient. Management agrees with the finding. Corrective Action Plan In September 2023, the Hospital implemented a policy regarding the usage of grant funding received through HRSA. This policy includes review of program guidelines, education of responsible staff, maintenance of separate general ledger accounts for program expenditures, approval of purchase orders by appropriate levels of management, and establishment of logs for program expenditures. It also provides for review of general ledger accounts and review of reports submitted to granting agencies. These changes were implemented to ensure allowable costs are properly approved, tracked, reviewed, and reported in accordance with federal requirements and to provide for adequate segregation of duties in these responsibilities. Responsible Personnel Lisa Hart, former Chief Executive Officer (responsible for implementation of corrective action). Megan Corbin, Chief Executive Officer (current contact for any follow-up regarding corrective action). Completion Date Corrective action was completed in September 2023.

Categories

Internal Control / Segregation of Duties Questioned Costs Procurement, Suspension & Debarment Allowable Costs / Cost Principles Reporting

Programs in Audit

ALN Program Name Expenditures
93.498 COVID-19 - PROVIDER RELIEF FUND AND AMERICAN RESCUE PLAN (ARP) RURAL DISTRIBUTION $838,213
93.301 SMALL RURAL HOSPITAL IMPROVEMENT GRANT PROGRAM $11,520