Finding Text
Finding 2022-005 ? A. Activities Allowed or Unallowed and B. Allowable Costs/Cost Principles Identification of the federal program: Federal Agency: U.S. Department of Health and Human Services, Health Resources and Services Administration (HRSA) Federal Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (Assistance Listing No. 93.498) (PRF) BJC HealthCare Location: Various Tax Identification Numbers: Various Payment Received Period: 07/01/2021?06/30/2021 (Period 3) and 07/01/2021?12/31/2021 (Period 4) Deadline to Use Funds: December 31, 2022 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303(a) of the Uniform Guidance states the following regarding the auditee and internal control: ?The 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 or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: Evidence was not consistently retained to show review and approval of employee incentive pay expenses. In addition, we were unable to validate the control activities performed by the reviewer/approver for employee incentive pay expenses that were based on unit vacancy rates. Cause: Time cards can be processed without manager approval. Evidence of control activities performed by the reviewer/approver for employee incentive pay expenses that were based on unit vacancy rates was not retained. Effect or potential effect: BJC HealthCare may incur unallowable expenses or not be in compliance with the terms and conditions of the federal program, including relevant cost principles. Questioned costs: None. Context: Payroll-related expenses are $3,627,526, representing 10.9% of total PRF expenditures reported on the schedule of expenditures of federal awards of $33,214,104 for the year ended December 31, 2022. Identification as a repeat finding: This finding is not a repeat finding from the prior year. Recommendation: Management should reassess the design of internal controls over the review and approval of time cards. Evidence of control activities performed should be retained. Views of responsible officials: Management agrees with the finding as reported. Expenses will not be utilized in future PRF reporting periods. If, at some future date, additional funds are received and expenses are utilized for the PRF funds, BJC HealthCare will implement appropriate internal controls around review and approval of allowable activities and allowable costs.