Finding Text
Federal agency: U.S. Department of Health and Human Services
Federal program title: American Rescue Plan Rural Distribution, Provider Relief Fund
Assistance Listing Number: 93.498
Award Period: Reporting Period 4 for funds received from July 1, 2021, to June 30, 2022, used through December 31, 2022
Type of Finding:
• Significant Deficiency in Internal Control over Compliance
Criteria or specific requirement: Management is responsible for establishing and maintaining effective internal control over the Schedule of Expenditures of Federal Awards (SEFA) and ensuring completeness of information presented.
Condition: The Hospital did not have a process in place to prepare a complete and accurate SEFA, and the SEFA required adjustments or additions to be in conformity with the accounting principles generally accepted in the United States of America (GAAP) and Uniform Guidance.
Questioned Costs: None
Context: Prior to the Provider Relief Fund (PRF) and ARP rural funding, the Hospital had not previously obtained federal awards sufficient to require an audit under Uniform Guidance prior to PRF, and therefore did not have formal procedures in place for preparation of a SEFA. Federal funding received came unexpectedly as a response to the COVID-19 pandemic, and the Hospital's focus was on response to the pandemic. All grant funds received, and related uses were tracked and reconciled to the general ledger, just not in the form of a SEFA with all required elements. A SEFA was prepared, but adjustments were required during the audit to properly present all federal awards.
Cause: The Hospital did not have formal procedures in place for SEFA preparation as this was the second year receiving federal awards sufficient to require an audit under Uniform Guidance.
Effect: Certain corrections or additions to the SEFA were proposed during the audit. Hospital management reviewed and accepted the proposed corrections. Without corrections to the SEFA, the SEFA would have been misstated, which could affect the decision-making process for users of the SEFA.
Repeat Finding: No
Recommendation: We recommend that management implement a process for preparing the SEFA and implement controls to ensure federal awards are not missed in the future, and that SEFA is fully reconciled to the general ledger at year-end. We recommend a thorough review of all grant agreements to capture all federal assistance listing numbers, pass-through awards, pass-through award numbers, and related expenditures that should be reported on the SEFA.
Views of responsible officials: There is no disagreement with the audit finding.