Finding No: 2023-001
Federal Agency:
U.S. Department of Health and Human Services
Assistance Listing Number:
93.498
Program:
COVID 19 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Compliance Requirement:
Activities allowed or unallowed/allowable costs
Award Year:
January 1, 2020 through December 31, 2022
(a) Criteria or Requirement
2 CFR 200.303 requires non-federal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal control should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA.
(b) Condition Found
The System did not have adequate controls related to determining allowability of expenditures for the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Grant. Our testing identified one charge within the population that had been charged incorrectly to the federal program. This charge was for government contract labor totaling $126,313 that was determined to be an unallowable expenditure that should have been removed prior to submission to the federal agency. In addition, during our testwork over expenses, we selected for testing a sample of 40 expenses charged to the program. One of our samples related to COVID lab tests was identified with a cost that should have been zero as the tests were voided and the vendor invoice reflected a zero balance; however, a standard test was inappropriately charged to the federal program in excess of the vendor invoice.
Further, one sample was identified as having the incorrect price applied to the cost due to the drug being purchased from a different vendor, which had a lower price. This resulted in a higher price being charged to the federal program.The resulting impact of the above two items was $508 inappropriately charged to the federal program.
In addition, the System was unable to provide evidence of management review and approval for three of the 40 expenses sampled. These three disbursements were for allowable costs under the terms and conditions of the program.
(c) Cause
The System’s review process in place over the recording of these costs did not operate effectively to prevent unallowable charges and inaccurate amounts from being submitted for reimbursement by the federal agency. The System was unable to provide evidence of certain management reviews and approvals due to system limitations that only maintain electronic approvals (via email) for 365 days.
(d) Effect
Federal funds were expended for unallowable purposes or for inaccurate amounts and evidence of the effective operation of management review controls was not maintained in accordance with Federal requirements.
(e) Questioned Cost
Expenditures related to contract labor and other costs of $126,821.
(f) Statistical Sample
The sample was not intended to be, and was not, a statistically valid sample.
(g) Repeat Finding in the Prior Year
Not a repeat finding
(h) Recommendation
We recommend that the System strengthen controls over the management review process to prevent unallowable costs and inaccurate amounts from being charged to Federal programs.
(i) View of Responsible Officials
The Monthly Cost Capture detail for the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (ALN No. 93.498) reporting was developed to appropriately track expenditures that qualified under the grant. A wide variety of costs from across the company were charged to a COVID cost department. These costs originated in a variety of ways. While the overall amounts were tracked and reviewed, a comprehensive 100% review was not conducted. As a result, the government labor expenditure and the cost for a COVID lab specimen that spilled in transit were inappropriately included. Additionally, a higher cost per unit was used to allocate for a specific drug used by COVID inpatients.
Furthermore, there were three Morris and Dickson invoices that were submitted to AP electronically approving payment via email, but the emails automatically delete after 365 days.
(j) Corrective Action Plan
The expenditures for the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (ALN No. 93.498) were reported through the PRF Reporting Portal using quarterly financial data. The portal restricted the entry of expenses up to the awarded amount plus interest earned. Consequently, we have sufficient expenses to cover any ineligible expenditures identified in this audit.
As the program has concluded, no further actions are required for COVID drug and COVID lab test findings, as these were already accounted for in system reports that are now obsolete due to surpassing the Period of Availability dates.
A new process will be implemented for manager sign-off on Morris and Dickson invoices submitted to AP electronically to ensure proper approval evidence is captured and documented correctly.
Anticipated Completion Date: 6/30/2024
Name of Contact Person for Corrective Action: Sharon Nobles, Chief Financial Officer