Finding 35340 (2022-004)

Finding 2022-004 ? Allowable Costs U.S. Department of Health and Human Services COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing # 93.498 Significant Deficiency and Allowable Costs Noncompliance Criteria: 2 CFR 200.303 requires that a 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 and the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our testing of compliance and internal controls over allowability of costs and reporting of expenditures, it was determined that internal controls over reporting are not designed to prevent and detect errors in expenditures being reported on the Department of Health Resources and Services Administration (HRSA) portal (the Portal). Consequently, we noted approximately $246,000 of ineligible expenditures related to physician compensation were submitted on the Portal for period 4 due to errors in the PRF Grants Reported Payroll Costs reports. Cause: Lack of effectively designed and implemented internal controls over allowability of expenditures and reporting of expenditures in the Portal for period 4. Effect: Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be relied upon to effectively prevent or detect noncompliance. Questioned costs: $246,000. Context: Our testing noted approximately $246,000 of ineligible expenditures for physician compensation out of a total of approximately $336,000 in physician compensation out of a total of approximately $5,440,000 in expenditures that were reported on the Portal for period 4. Our sample was not intended to be statistically valid. Repeat finding from prior year: No Recommendation: Effective supervisory review internal controls over reporting should be implemented to ensure expenditures submitted in the Portal meet the criteria established in the terms and conditions. Views of responsible officials and planned corrective actions: Management agrees with this finding. Please refer to pages 64 and 65 for the Corrective Action Plan.