Finding 36969 (2022-001)

Material Weakness
Requirement
BL
Questioned Costs
-
Year
2022
Accepted
2023-01-11
Audit: 27930
Organization: Kvc Health Systems, Inc. (KS)
Auditor: Forvis LLP

AI Summary

  • Core Issue: The Organization inaccurately calculated lost revenues for COVID-19 reporting, leading to material under-reporting.
  • Impacted Requirements: Reporting must adhere to 45 CFR 75.342 and related cost principles, ensuring accurate financial information is submitted.
  • Recommended Follow-Up: Enhance understanding of reporting guidance and implement stronger internal controls to ensure accurate calculations in future reports.

Finding Text

U.S. Department of Health and Human Services (HHS) Direct Program: COVID-19 Provider Relief Fund - 93.498 Criteria or Specific Requirement ? Reporting (45 CFR 75.342) and Activities Allowed/Unallowed and Cost Principles (Pub L. No. 116-136, 134 Stat. 563 and Pub L. No. 116-139, 134 Stat. 622 and 623). The Provider Relief Fund (PRF) was established in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136) to reimburse, through grants or other mechanisms, eligible health care providers for increased expenses or lost revenue attributable to Coronavirus Disease (COVID-19). Entities that received more than $10,000 (either one time or in the aggregate) are required to report the uses of their funds, including the lost revenue reimbursement and documentation of how the lost revenue was calculated. In addition, management is responsible for establishing and maintaining effective internal control over costs directly and indirectly charged to federal awards. Condition - The Organization is required to prepare and submit period two and three of Provider Relief Fund reporting to HHS. The required reporting is to be prepared using accurate financial information. The Organization incorrectly calculated their COVID-19-related lost revenues for the required reporting. Questioned Costs ? None Context ? Out of a population of three provider relief fund reports filed by the Organization, testing the Provider Relief Fund report for period two and associated lost revenue calculation for KVC hsopital entity (TIN 271672159), it was determined the lost revenues for the third and fourth quarters of 2021 were reported and calculated incorrectly. The Organization did not properly include correct amounts within the lost revenue calculations resulting in a material under-reporting of lost revenues within the quarters reported. Effect ? Lost revenue was not accurately calculated or reported. Cause ? Internal Controls were not in place to ensure the Organization's calculation was properly reviewed for the use of correct formulas or data input. Identification as a Repeat Finding ? Not applicable. Recommendation ? The Organization should continue to improve its understanding of the guidance related to this type of reporting and implement additional controls over future reporting periods to help ensure guidance is followed. View of Responsible Official and Planned Corrective Actions ? The Organization agrees with this finding. See separate auditee documentation for planned corrective action.

Corrective Action Plan

During the testing of the compliance requirements of this program, it was determined that the lost revenues were being reported incorrectly and not consistent with existing guidance provided by HHS, which led to the Organization under-reporting their lost revenues within the HHS Provider Relief Fund portal. Personnel Responsible for Corrective Action: Sherri Lohe, Chief Financial Officer Anticipated Completion Date: Change is in process and full adoption is anticipated by December 31, 2022 Corrective Action Plan: The Organization is going to continue and improve its understanding of the guidance related to this type of reporting and work with their external advisors to ensure future portal submissions are compliant with said guidance. Going forward, the Organization will continue to improve its internal controls related to lost revenue calculations and reporting and work with their external advisors to ensure future portal submissions, if any, are compliant with said guidance. The under-reporting of lost revenues had no impact on the Organization?s ability to cover the total Provider Relief Fund payments received.

Categories

Allowable Costs / Cost Principles Cash Management Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 613411 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.558 Temporary Assistance for Needy Families (tanf) State Programs $5.77M
93.667 Social Services Block Grant $3.94M
93.472 Title IV-E Prevention Program $2.53M
93.498 Covid-19 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $1.16M
93.658 Foster Care - Title IV-E $1.07M
10.555 National School Lunch Program $230,901
93.659 Adoption Assistance $228,814
93.556 Marylee Allen Promoting Safe and Stable Families Program $204,869
93.087 Enhance Safety of Children Affected by Substance Abuse $153,337
93.603 Adoption and Legal Guardianship Incentive Payments $142,380
10.553 School Breakfast Program $115,154
93.674 John H. Chafee Foster Care Program for Successful Transition to Adulthood $52,416
93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (sed) $41,718
93.645 Covid-19 Stephanie Tubbs Jones Child Welfare Services Program $28,364
93.645 Stephanie Tubbs Jones Child Welfare Services Program $14,458
93.652 Adoption Opportunities $6,660