Finding 394816 (2023-006)

Material Weakness
Requirement
L
Questioned Costs
$1
Year
2023
Accepted
2024-04-26

AI Summary

  • Core Issue: The Hospital miscalculated lost revenues by including expenses in the revenue calculation, leading to an overstatement of $995,847.
  • Impacted Requirements: Compliance with PRF and ARPA fund usage mandates, specifically the requirement to reimburse only for actual lost revenues related to coronavirus.
  • Recommended Follow-Up: Strengthen policies for PRF and ARPA reporting to ensure only revenues are included, and enhance training on federal funding requirements.

Finding Text

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund and American Rescue Plan Rural Distribution (PRF); Noncompliance Finding/Material Weakness; Reporting Compliance Requirements Criteria: The Provider Relief Fund and the American Rescue Plan Rural Distribution was established under the Coronavirus, Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116-260) and the American Rescue Plan Act of 2021 (Pub. L. No. 117-2) . The PRF and ARPA funds are to be used to prevent, prepare for, and respond to coronavirus. The PRF and ARPA funds are to reimburse recipients for health care related expenses or lost revenues that are attributable to coronavirus. Condition: The Hospital did not meet the requirement that the PRF and ARPA funds be used to reimburse recipients for lost revenues that are attributable to coronavirus. Cause: The Hospital changed the methodology for calculating lost revenues from the Period 1 reporting submission to the Period 4 reporting submission. The Hospital continued to use option i, actual revenues for the quarters reported for Period 4 as compared to actual revenues for the quarters in 2019. Actual revenues for the quarters in 2019 properly included 340(b) drug program revenues. The Period 4 quarter calculations included 340(b) drug program revenues but also included 340(b) drug program expenses as part of actual revenues. Only revenues should be included in the calculation of actual revenues. Effect: The Hospital's lost revenues were overstated by $995,847. Questioned costs: $502,446 Perspective Information: We tested the calculation of lost revenues per the recreated spreadsheet to monthly internal financial statements, audited financial statements, and other supporting documentation to determine if the report was compiled accurately. Lost revenue questioned costs were arrived at by allocating the Period 4 lost revenues per the reporting submission as a percentage of the Period 4 lost revenues used per the reporting submission (excluding carryover from prior periods) to the overstatement of lost revenues. Repeat Finding: N/A Recommendations: We recommend policies and procedures over PRF and ARPA reporting be strengthened to ensure that only revenues be included in the calculation of lost revenues based on actual revenues per the applicable reporting period. Views of Responsible Officials: In the future, the Hospital will maintain adequate supporting documentation for the calculation of lost revenues and will ensure the accuracy and completeness of the amounts reported by reconciling to the audited financial statements, internal financial statements, and other source documentation. The Hospital will be cognizant of only including revenue in the calculation and that the periods being compared are calculated using the same methodology. In addition, the Hospital will be proactive in getting necessary training and education regarding allowable uses of federal funding received in future years. The Hospital has recalculated lost revenues for the quarters covered by Period 4 to exclude the 340(b) drug program expenses from the calculation, in addition to taking into consideration corrections needed for items noted in finding 2023-007.

Corrective Action Plan

In  the  future,  the  Hospital  will  maintain  adequate  supporting  documentation  for  the  calculation of lost revenues and will ensure the accuracy and completeness of the amounts reported by reconciling to the audited financial statements, internal financial statements, and other source documentation. The Hospital will be cognizant of only including revenue in the calculation and that the periods being compared are calculated using  the  same  methodology.   In  addition,  the  Hospital  will  be  proactive  in  getting  necessary  training  and  education regarding the allowable uses of federal funding received in future years. The Hospital has recalculated lost  revenues  for  the  quarters  covered  by  Period  4  to  exclude  the  340(b)  drug  program  expenses  from  the  calculation, in addition to taking into consideration corrections needed for items noted in finding 2023‐007. Responsible Individuals: Stephani Tipton, Accountant and Ken Fisher, CFO Anticipated Completion Date: Ongoing

Categories

Questioned Costs Material Weakness Reporting

Other Findings in this Audit

  • 394814 2023-004
    Material Weakness
  • 394815 2023-005
    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