Finding 386209 (2023-003)

2023-003 Department of Health and Human Services FAL #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting Material Weakness in Internal Control over Compliance Criteria: 2CFR 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 Health System’s final expenditure listing identified as eligible and claimed under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution program were not reviewed and approved by a separate individual outside of the preparer. In addition, the Health System’s special report submitted to the Department of Health and Human Services for Period 4 was not reviewed and approved by a separate individual outside of the preparer. Cause: The Health System did not have an internal control process in place and documented to ensure a secondary review and approval of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing. The summary spreadsheet was used to claim allowable costs under the federal program. In addition, the review and approval of the report submitted to the Department of Health and Human Services for Period 4 was not performed by someone other than the prepared of the report. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program and the report may not be accurately completed. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 items were tested for activities allowed or unallowed and allowable costs/cost principles. Key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Year(s): No. Recommendation: We recommend the Health System implement a control process which includes a secondary review and approval of the summarized final expenditure listing used to claim the allowable costs under the federal program and a secondary review and approval of required reports to be submitted to the federal agency. Views of Responsible Individuals: Management agrees with the finding.