Finding 392112 (2021-001)

Significant Deficiency

Requirement

Questioned Costs

Year

2021

Accepted

2024-04-02

Audit: 302275

Organization: Chesapeake Hospital Authority (VA)

Auditor: Bdo USA PC

AI Summary

Core Issue: Chesapeake Hospital Authority lacked documentation showing that costs were approved before being charged to federal programs.
Impacted Requirements: This violates 2 CFR Section 200.303, which mandates effective internal controls for managing federal awards.
Recommended Follow-Up: Implement stronger policies for document retention to ensure all costs charged to federal programs are properly approved.

Finding Text

2021-001 – Internal Controls over Allowable Costs Identification of the Federal Program: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution 21.019 COVID-19 - Coronavirus Relief Fund Criteria: In accordance with 2 CFR Section 200.303, non-Federal entities must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Condition: In accordance with established internal controls, Chesapeake Hospital Authority (the Authority) did not maintain documentation evidencing that costs were approved prior to charging the federal program. Cause: Due to the initial or early years of the Federal awards, internal controls over compliance and identification of costs allowable under the Federal award did not operate as designed in certain transactions. Effect: Approval of allowable charges relating to non-salary transactions reported to the federal awarding agency via the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal may not have been adequately documented. Questioned costs: None Context: We selected 25 non-payroll costs charged to the 93.498 federal award and reported under the “Other PRF Expenses” section of the HRSA Provider Relief Fund Portal submission and 23 non-payroll costs charged to the 21.019 federal award. All costs selected in such testing were noted as allowable, however were unable to be supported by documentation of approval for charging to the federal program. Repeat finding: No Recommendation: We recommend the Authority enforce policies and procedures over document retention for approval of costs permitting charge to the federal program. View of Responsible Officials: The Authority’s management agrees with the federal award finding identified in the audit. Management’s response to this finding is described in the accompanying management’s corrective action plan.

Corrective Action Plan

2021-001 – Internal Controls over Allowable Costs Individual Responsible for Corrective Action Plan: J. Neal Bolton, Director of Revenue Management & Budget Shemaine Rose, Controller Anticipated Completion Date: Completed Management notes that all expenses charged to the federal program were reviewed by the Vice President of Human Resources and the Finance Team, with guidance obtained from independent consultants, however, the documentation of the review was not retained. Management also notes that all expenses were deemed to be appropriately charged to the federal program. In order to ensure documentation is retained evidencing approval of costs, the Authority will require physical sign off on all invoices or electronic approval of all costs charged to the federal program.

Other Findings in this Audit

392113 2021-002

Significant Deficiency
392114 2021-001

Significant Deficiency
392115 2021-002

Significant Deficiency
968554 2021-001

Significant Deficiency
968555 2021-002

Significant Deficiency
968556 2021-001

Significant Deficiency
968557 2021-002

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
93.498	Provider Relief Fund	$7.42M
21.019	Coronavirus Relief Fund	$1.55M
93.461	Covid-19 Testing for the Uninsured	$157,319
16.575	Crime Victim Assistance	$121,967