Finding 394814 (2023-004)

Material Weakness
Requirement
ABL
Questioned Costs
-
Year
2023
Accepted
2024-04-26

AI Summary

  • Core Issue: Weak internal controls over financial reporting led to problems with revenue recognition and general ledger reconciliation.
  • Impacted Requirements: Compliance with 2 CFR 200.302 and 93.498 regarding financial management and allowable costs.
  • Recommended Follow-Up: Review Financial Statement Findings 2023-001, 2023-002, and 2023-003 for detailed deficiencies and management's responses.

Finding Text

Identification: 2 CFR 200.302 Financial Management; 93.498 United States Department of Health and Human Services, Provider Relief Fund (PRF) and American Rescue Plan Rural Distribution (ARPA); Material weaknesses/Activities Allowed or Unallowed, Allowable Cost/Cost Principle and Reporting Compliance Requirements There was inadequate internal controls in place over financial reporting related to revenue recognition and reconciling general ledger balances to supporting documentation which caused inadequate controls over compliance related to federal programs. See Financial Statement Findings 2023-001, 2023-002, and 2023-003 for a description of these deficiencies, including the views of responsible officials.

Corrective Action Plan

The Hospital recognizes the importance of having a methodology in place for estimating  the allowance for contractual adjustments in accounts receivable and the estimate for third‐party payor settlements.   The  Hospital  will  work  on  strengthening  procedures  for  the  allowance  for  contractual  adjustment  estimate and develop an estimate for the Medicaid lump sum payments. Our goal will be to use our Medicare cost report model to estimate the Medicare cost report settlement on a quarterly basis. In addition, our goal is to have the model tested against the most recently submitted Medicare cost report on an annual basis. An accountant was hired on February 13, 2024, to assist the Chief Financial Officer (CFO)   in the monthly accounting duties. The accountant immediately began reconciling cash accounts and is caught up on  all  prior  month  reconciliations.   The  accountant  is  working  with  CFO  to  post  activity  and  corrections  to  the  general ledger. The accountant will ensure that cash and investment accounts are reconciled monthly in a timely manner going forward. Now that the cash reconciliations are caught up, the accountant will begin reconciling all other balance sheet accounts. Responsible Individuals: Stephani Tipton, Accountant and Ken Fisher, CFO Anticipated Completion Date: Ongoing

Categories

Allowable Costs / Cost Principles Material Weakness Reporting

Other Findings in this Audit

  • 394815 2023-005
    Material Weakness
  • 394816 2023-006
    Material Weakness
  • 394817 2023-007
    Material Weakness
  • 394818 2023-008
    Material Weakness
  • 971256 2023-004
    Material Weakness
  • 971257 2023-005
    Material Weakness
  • 971258 2023-006
    Material Weakness
  • 971259 2023-007
    Material Weakness
  • 971260 2023-008
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.498 Provider Relief Fund $968,885
93.301 Small Rural Hospital Improvement Grant Program $11,388