Finding 34938 (2022-002)

2022-002 Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 3 and Period 4 TIN #411419064 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Organization?s calculation of lost revenue claimed under the federal program as an allowable cost was not subjected to formal review or approval by a separate individual outside of the preparer. Cause: The Organization did not have an adequate internal control policy to ensure review and approval of the lost revenue calculation claimed under the federal program was documented in accordance with guidance. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: The lost revenue calculation for all applicable quarters was tested. Repeat Finding from Prior Year: No Recommendation: We recommend the Organization implement a control process which includes a secondary review and documented approval of the lost revenue calculation under the federal program. Views of Responsible Officials: Management agrees with this finding.