Finding Text
2023-007 Department of Health and Human Services
Federal Financial Assistance Listing #93.498
COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #460255944
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Reporting
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award.
Condition: The Hospital’s final expenditure listing identified as eligible and claimed under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution program (the program) was not reviewed and approved by a separate individual outside of the preparer. Additionally, the Hospital claimed mortgage reimbursements as expenditures under the program.
Cause: The Hospital did not have an internal control process in place to ensure a secondary review and approval of the final expenditure listing and to ensure the expenditures claimed on the report were for expenditures incurred. Some amounts claimed under the program were mortgage reimbursements.
Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures are claimed under the program and included within the special report. Expenses included within the special report submitted to the Department of Health and Human Services for Period 4 TIN#460255944 relating to the mortgage reimbursements were overstated by $66,094.
Questioned Costs: $66,094.
Context/Sampling: Summary level testing was performed over mortgage and insurance expenses. In addition, a nonstatistical sample of 8 ($185,866) out of a population of 31 transactions ($302,202) relating to general and administrative and healthcare related expenses, including personnel, lease payments, supplies, equipment and other healthcare expenses were tested.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Hospital implement a control process which includes a secondary review and approval of the final expenditure listing used to claim the allowable costs under the program.
Views of Responsible Officials: Management agrees with the finding.