Finding Text
Finding 2022-003 Federal Programs: Assistance Listing Number: 93.498 COVID 19: Provider Relief Funds and American Rescue Plan (ARP) Rural Distributions Criteria: Section 200.403(g) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, requires that costs be adequately documented. In addition, Section 200.302 requires that the financial management system of each non-Federal entity must provide for an identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received; an accurate, current, and complete disclosure of the financial results of each Federal award or program; and a comparison of expenditures with budget amounts for each Federal award. Condition: During our testing of internal controls associated with the ARP program, the Association was not able to provide evidence of the review of time records and invoices to ensure that allowable costs were charged to the program. In addition, management provided an excel spreadsheet to support the charges that were made to the program rather than reporting from their financial management system that is compliant with Section 200.302. Therefore, we could not substantiate whether the double-counting of expenses did not occur. Cause: Policies and procedures were not implemented to ensure that evidence of an appropriate level of review and approval was completed prior to charging costs to the federal programs. In addition, policies and procedures were not implemented to ensure that charges made to federal programs were properly captured in the financial management system as required in order to demonstrate that double counting did not occur. Effect: An ineffective internal control system related to approval of costs to ensure allowability can lead to noncompliance with laws and regulations and possible loss of funding. In addition, an ineffective financial management system, could lead to noncompliance with laws and regulations and possible loss of funding. Specifically, it could lead to an incorrect identification of costs charged to a federal program and an inability to substantiate that double-charging did not occur. Questioned Cost: Could not be determined Context: A total of 40 payroll and 40 non payroll transactions, associated with the Association?s major programs, were selected from a sample of charges made to each respective program. Of this sample, 20 payroll and 20 non payroll transactions associated with the Provider Relief Funds and American Rescue Plan (ARP) Rural Distributions program were selected for testing. During our testing of internal controls, in 10 out of 20 payroll transactions associated with the ARP program, the Association was not able to provide evidence for the review of time records to ensure that allowable costs were charged to the program. During our testing of internal controls, in 20 out of 20 non payroll transactions associated with the ARP program, the Association was not able to provide evidence for the review of invoices to ensure that allowable costs were charged to the program. In addition, management provided an excel spreadsheet to support the charges that were made to the program rather than reporting from their financial management system that is compliant with Section 200.302. Recommendations: We recommend that policies and procedures be implemented to ensure compliance with sections 200.403(g) and 200.302 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, in order to ensure compliance with laws and regulations associated with Uniform Guidance. View of Responsible Officials: Management concurs with this recommendation. See page 44 for Corrective Action Plan.