Finding 35373 (2022-001)

Finding Reference Number: 2022-001 Category of Finding: Reporting Type of Finding: Significant Deficiency in Internal Control Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Federal Grant Number: None Criteria U.S. Code of Federal Regulations, Title 45, Part 75, section 75.303 Internal Controls, require the non-federal entity to: 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). b) Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. Condition The amount to be reported for this program in the County?s schedule of expenditures of federal awards (Schedule) is based upon the Provider Relief Fund (PRF) report that is required to be submitted to the Health Resources and Services Administration (HRSA) reporting portal. For the year ended June 30, 2022, the County should report in the Schedule, the expenditures and lost revenues from the Period 2 and 3 PRF reports, which covered payments received in the period of July 1, 2020 to June 30, 2021. During our audit, we requested the County to provide detailed transactions that supported the expenditures reported in the Period 2 and 3 PRF reports. Our audit procedures identified $43,238 of encumbered costs that were erroneously included as expenditures. Identification as a Repeat Finding Finding 2021-001 was reported in the immediate prior year. Cause The County used a spreadsheet to accumulate and track eligible purchases. This tracking spreadsheet was also used in the analysis to determine the amounts to be reported in the PRF report. Since the spreadsheet was not reconciled against actual expenditures from the general ledger, the County did not identify purchases that did not result in actual expenditures. For the questioned transactions, purchase order amounts were used instead of the actual invoiced amounts. Due to the coronavirus pandemic, the County was challenged with staffing resources. In addition to turnover of staff, there was a need to allocate substantial County resources to address public health and safety needs while managing the significant inflow of new federal funds related to COVID-19 funding. The reporting process for this PRF program was established in fiscal year 2020/21 as the County navigated through complex program requirements and reporting protocols on the HRSA reporting portal. While the issue was identified during the fiscal year 2020/21 single audit, the Period 2 and 3 PRF reports had already been submitted. Effect The County provided evidence of other qualifying expenditures to fully support the amounts reported in the Period 2 and 3 PRF reports and the Schedule. However, the reporting process poses a risk of claiming PRF funds with costs that had not been incurred within the reporting period or at all. Questioned Costs There were no questioned costs. The County provided evidence of other qualifying expenditures to fully support the amounts reported in the Period 2 and 3 PRF reports and the Schedule. Recommendation We recommend that the County reevaluate existing processes and controls over the tracking of expenditures to be applied to PRF awards and reported in the PRF report, to ensure that only actual expenditures are included. Views of Responsible Officials The views of responsible officials are set forth in the County?s Corrective Action Plan.