Finding 391323 (2023-005)

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 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 selected lost revenue calculation option i which is actual to actual methodology of calculating lost revenues attributable to coronavirus. The Medical Center did not incorporate the financial audit adjustments into the actual revenue amounts reported within the HHS special report for the fiscal years 2019, 2020, and 2021. Cause: The Medical Center did not have a policy in place to incorporate the financial audit adjustments into the actual revenue amounts reported within the HHS special report for the fiscal years 2019, 2020, and 2021. These entries should have been applied on a quarterly basis. Effect: The fiscal year 2019 audit adjustments not incorporated would have reduced net patient service revenue by $34,822. The fiscal year 2020 audit adjustments would have reduced net patient service revenue by $81,355. The fiscal year 2021 audit adjustments would have increased net patient service revenue by $167,235. Overall, the effect on lost revenue after applying these quarterly to the applicable quarters resulted in the Medical Center claiming more lost revenue than it should have. These errors noted indicate there is lack of adequate policies governing the review and approval of the lost revenue calculation and the HHS Period 4 report. Without a secondary review and approval, there is a possibility that these errors occur. Questioned Costs: None reported. While lost revenue was overstated by $170,615, the Medical Center reported excess lost revenue of $521,021. Context: All key line items in the HHS report for Period 4 were tested. Repeat Finding from Prior Years: Yes, 2021‐007 Recommendation: We recommend that the Medical Center enhance internal control policies to ensure the lost revenue calculation is supported by internal financials. This would include implementing a secondary review and approval over the final lost revenue calculation. Views of Responsible Officials: Management agrees with the finding.