Finding Text
Department of Health and Human Services
Federal Assistance Listing #93.498
COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 2 TIN#4550559322
Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting
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 federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award.
Condition: During our testing, it was noted that the original expenditure listing which would have included the review of the expenditure listing, was not retained. As a part of the single audit, the Clinic recreated the expenditure listing to support the expenditures reported on the special report submitted to the Department of Health and Human Services for Period 2, however there was no control in place to retain the original documentation of the determination of expenditures and their related review. In addition, there was no retained documentation of the review and approval of the Clinic’s special report submitted to the Department of Health and Human Services for Period 2 TIN #4550559322.
Cause: The Clinic did not have an internal control policy in place to ensure the review and approval of the expenditure listing and special report was documented and retained. In addition, the Clinic did not have an internal control policy in place to retain the original expenditure listing used to support the expenditures claimed on the special report.
Effect: The lack of adequate policies governing review and approval over the expenditure listing and special report, and the retention of that listing and review and approval increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner.
Questioned Costs: None reported.
Context/Sampling: A nonstatistical sample of 60 expenditures were selected for testing, which accounted for $100,891 of $157,739 direct program expenditures. None of the expenditures contained evidence of a secondary review to verify that expenditures met the terms and conditions of the program. There was one special report which was tested.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Clinic enhance internal control policies to ensure the expenditure listing, and special report are reviewed and approved and all of that information is retained to ensure that all payments are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency.
View of Responsible Officials: Management agrees with the finding.