Finding Text
Department of Health and Human Services
Federal Assistance Listing #93.498
COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 4 TIN#420680467
Reporting
Material Weakness in Internal Control Over Compliance and Material Noncompliance
Criteria: 2 CFR 200.303 (a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award.
Condition: The Medical Center’s lost revenue calculation did not take into consideration budgeted 340B revenue, but included actual 340B revenue, and did not take into consideration Period 1 questioned costs that were replaced with excess lost revenue. In addition, the calculation was not reviewed and approved by a separate individual outside of the preparer. The Medical Center’s special report submitted to the Department of Health and Human Services for Period 4 TIN #420680487 was not reviewed and approved by a separate individual outside of the preparer.
Cause: The Medical Center did not have an internal control process in place to ensure effective review and approval of the lost revenue calculation, and the report submitted to the Department of Health and Human Services for Period 4 was completed and documented.
Effect: Without an effective secondary review and approval, the lost revenue calculation and amounts claimed under the program were not calculated properly, and the report was not accurately completed.
Questioned Costs: None as the Medical Center’s lost revenue calculation would have increased by $559,737 due to the calculation errors.
Context/Sampling: The lost revenue calculation for all applicable quarters was tested and reviewed. Key line items were tested on the Period 4 Department of Health and Human Services special report.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Medical Center implement a control process which includes a secondary review and approval of required reports to be submitted to the federal agency. We also recommend the Medical Center implement a control process which includes a secondary review and approval of the lost revenue calculation to ensure all required revenue streams are included for both actual and budget within the lost revenue calculation.
Views of Responsible Officials: Management agrees with the finding.