Finding 31032 (2022-002)

Significant Deficiency
Requirement
L
Questioned Costs
$1
Year
2022
Accepted
2022-12-20

AI Summary

  • Core Issue: The Organization misreported lost revenues by using the wrong calculation method for COVID-19 relief funds.
  • Impacted Requirements: Reporting did not comply with U.S. Department of Health and Human Services guidelines.
  • Recommended Follow-Up: Implement procedures to review guidance and correct errors before finalizing reports.

Finding Text

Section III - Federal Award Findings and Questioned Costs Finding 2022-002: Significant Deficiency in Internal Control over Compliance ? Reporting Federal Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: N/A Award Number: N/A Award Year: 2020 Compliance Requirement: Reporting Questioned Costs: Not determinable Criteria: Provider Relief Fund (PRF) payment amounts (excluding Skilled Nursing Facility (SNF) and Nursing Home Infection Control Distribution payments) not fully expended on health care-related expenses attributable to coronavirus may be applied to patient care lost revenues, if applicable. Recipients may choose to apply PRF payments toward lost revenues using one of three options: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted and actual patient care revenues. Option iii: calculated by any reasonable method of estimating revenues. Condition: In the Organization?s reporting submissions, the Organization incorrectly reported lost revenues under Option ii rather than their selected Option iii. The Organization?s methodology for option iii was to use budget-to-actual patient revenues utilizing the fiscal year 2020, 2021, and 2022 budgets that cover calendar years 2021 and 2022 as the base period. Cause: The Organization has insufficient controls in place to identify and correct errors before reporting is completed. Effect: The amounts reported to Health Resources & Services Administration (HRSA) were not in accordance with established U.S. Department of Health and Human Services reporting guidance. Recommendation: We recommend that management implement procedures to ensure that the most recent guidance is reviewed and understood, and that information used in preparation of the reports is reviewed, with errors addressed, prior to reporting. Views of Responsible Officials: Management of the Organization agrees with the finding.

Corrective Action Plan

To whom it may concern, We have included the correction action plans for both findings included in the Schedule of Findings and Questions costs which accompanies the audited financial statements and supplementary information submitted along with the data collection form used to summarize the results of audits performed in accordance with Government Auditing Standards and Uniform Guidance. Corrective Action Plan for Findings Reported in Accordance with Government Auditing Standards Financial Statement Finding 2022-001: Significant Deficiency, Accounts Receivable and Revenue Recognition Condition During the audit, it was discovered that patient accounts receivable associated with the Medical and Educational Development Foundation Physicians Corporation (MEDF) was understated by $734,127. Corrective Action Plan Corrective Action Planned: Our management team evaluated two options to solve the issue that resulted in finding 2022-001. The first option is to record and report MEDF's net patient accounts receivable on a monthly or annually basis, which is consistent with how management reports hospital patient accounts receivable. The second option is for management to monitor MEDF's patient accounts receivable balance monthly or annually to determine the significance of estimated net patient receivable to the financial reporting, if deemed to be significant management would record and report the balance. We believe both options are reasonable solutions that will resolve the finding moving forward. Management has concluded to implement the first option and report MEDF's net patient accounts receivable on an annual basis. Names of Contact Persons Responsible for Corrective Action: Jon Dingledine, Chief Financial and Operating Officer Cory Albers, Vice President of FinanceAnticipated Completion Date: We plan to implement the corrective action plan beginning with fiscal year ending 3/31/2022. The start of the year is April 1, 2022. Corrective Action Plan for Findings Reported in Accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Federal Award Finding 2022-002: Significant Deficiency in Internal Control over Compliance, Reporting Condition During the audit performed in accordance with the Uniform Guidance, it was discovered that lost revenues was mistakenly reported using option two in our Provider Relief Fund submissions for reporting periods one and two. Option three should have been selected to report lost revenues since we utilized budget-to-actual patient revenues utilizing 2020, 2021, and 2022 fiscal year budgets which covered the periods of availability; but were not all approved prior to the March 27, 2020 deadline. Corrective Action Plan Corrective Action Planned: Currently, our management team has reviewed the methods used to measure lost revenue for Provider Relief Fund reporting and plans to amend the option used to report past Provider Relief Fund submissions from option two to option three. Our management team plans to continue the use option three for future reporting periods. Names of Contact Persons Responsible for Corrective Action: Jon Dingledine, Chief Financial and Operating Officer Cory Albers, Vice President of Finance Anticipated Completion Date: Management plans to implement the corrective action plan beginning with the next applicable Provider Relief Fund reporting period. This should take place on or before March 31, 2023.

Categories

Questioned Costs Reporting Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 607474 2022-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.498 Provider Relief Fund $7.16M
93.461 Covid-19 Testing for the Uninsured $243,539