Finding 391322 (2023-004)

Material Weakness Repeat Finding
Requirement
ABL
Questioned Costs
-
Year
2023
Accepted
2024-04-01
Audit: 301891
Organization: Ashley Medical Center (ND)
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The Medical Center lacks adequate internal controls for reviewing and approving financial documents related to the COVID-19 Provider Relief Fund.
  • Impacted Requirements: Compliance with 2 CFR 200.303(a) is compromised, increasing the risk of unapproved or ineligible expenditures.
  • Recommended Follow-Up: Enhance internal control policies to ensure all financial documents undergo a documented secondary review and approval process.

Finding Text

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #450255914 Activities Allowed or Unallowed, Allowable Costs/Costs Principles, and Reporting Material Weakness in Internal Control Over Compliance 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 Medical Center’s final expenditure listing, lost revenue calculation identified as eligible and claimed under the Provider Relief Fund program, and special report submitted to the Department of Health and Human Services for Period 4 did not have evidence of being reviewed and approved by a separate individual outside of the preparer. Cause: The Medical Center did not have an adequate internal control policy in place to ensure review and approval over specifically identified invoices, the final expenditure listing, the lost revenue calculation, or preparation of HHS Period 4 reporting were documented. Effect: The lack of adequate policies governing the review and approval of invoices, expenditure listing, lost revenue calculation and the HHS Period 4 report increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program. Questioned Costs: None reported. Context: Detail testing was completed over the final expenditure listing of the expenses along with the calculation for lost revenue for activities allowed and unallowable and allowable cost/cost principles. The overall expense listing and lost revenue worksheet did not have evidence of a review by someone other than the preparer (i.e., population of two). The Report submitted to HHS also did not have a documented secondary review and approval (i.e., population of one). Repeat Finding from Prior Years: Yes, 2021‐006 Recommendation: We recommend that the Medical Center enhance internal control policies to ensure all invoices are reviewed and approved to ensure all expenses claimed under the federal program are necessary, correct, and meet the requirements of the federal program. We also recommend the Medical Center implement a control process which includes a secondary review and approval of the final expenditure listing and lost revenue calculation used to claim the allowable costs under the federal program and that there is documented evidence of the review and approval. In addition, the Report submitted to HHS should have a secondary review and approval that is documented. Views of Responsible Officials: Management agrees with the finding.

Corrective Action Plan

Activities Allowed or Unallowed, Allowable Costs/Costs Principles, and Reporting Federal Agency Name: Department of Health and Human Services Program Name: COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Federal Assistance Listing #93.498 Finding Summary: The Medical Center's final expenditure listing, lost revenue calculation identified as eligible and claimed under the Provider Relief Fund program, and special report submitted to the Department of Health and Human Services for Period 4 did not have evidence of being reviewed and approved by a separate individual outside of the preparer. Responsible Individuals: Cory Ulmer, CFO Corrective Action Plan: We will implement internal control policies to ensure all invoices are reviewed and approved to ensure all expenses claimed under the federal program are necessary, correct, and meet the requirements of the federal program. We will also implement a control process which includes a secondary review and approval of the final expenditure listing and lost revenue calculation used to claim the allowable costs under the federal program and that there is documented evidence of the review and approval. In addition, the Report submitted to HHS will have a secondary review and approval that is documented. Anticipated Completion Date: 6/30/2024

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 391321 2023-003
    Material Weakness Repeat
  • 391323 2023-005
    Material Weakness Repeat
  • 391324 2023-006
    Material Weakness Repeat
  • 967763 2023-003
    Material Weakness Repeat
  • 967764 2023-004
    Material Weakness Repeat
  • 967765 2023-005
    Material Weakness Repeat
  • 967766 2023-006
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.498 Provider Relief Fund $388,309
93.697 Covid-19 Testing for Rural Health Clinics $200,000
10.766 Community Facilities Loans and Grants $186,979
93.391 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $100,000
93.301 Small Rural Hospital Improvement Grant Program $10,695