Finding Text
Department of Health and Human Services
Federal Assistance Listing/CFDA #93.498
Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 1 TIN #730929722
Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting
Material Weakness in Internal Control Over Compliance and Noncompliance
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 Hospital claimed expenditures that were not incurred during the reporting period. These expenditures were identified as unallowed on the Hospital’s schedule of expenditures, but inadvertently included in the amounts ultimately reported on the Period 1 report to HHS.
Cause: The Hospital did not have an adequate internal control process in place to ensure expenditures claimed were being in the proper period. The Hospital also did not have a control to ensure the reporting was reviewed and approved by someone other than the preparer.
Effect: The Hospital claimed and reported expenditures in the incorrect reporting period.
Questioned Costs: None. While there were $240,637 of expenditures considered to be reported in the incorrect reporting period, the Hospital had excess lost revenues of $268,046 and additional underreported lost revenues of $459,421, which covers the error.
Context: We sampled 60 of 382 expenditure transactions. We noted five selections resulting in a specific error totaling $240,637. Upon discovery of the error, we reviewed all purchase dates of expenditures to ensure no additional expenditures were outside the reporting period.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Hospital create an internal control policy to ensure expenditures are reported in the correct period.
Views of Responsible Officials: Management agrees with the finding.