Finding Text
Federal Assistance Listing/CFDA #93.498
COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 1 TIN # 730570773
Activities Allowed or Unallowed, Allowable Costs/Cost 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 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 Authority did not have internal controls established over the federal
award to ensure the federal award has been managed in compliance with federal
states, regulations and conditions of the federal award.
Cause: The Authority's federal award tracking over eligible expenditures, including lost
revenues, and reporting to the Department of Health and Human Services (HHS) was
performed by a management team that is no longer employed at the Authority. Adequate
records were not maintained by that team to support the amounts reported, or internal
controls over the program. This includes the identification of eligible expenditures,
consideration of amounts reimbursed from another source, calculation of lost revenues, and
tracking of information reported to HHS. The information needed to be regenerated,
reviewed, and approved by current management in order to provide supporting information
associated with this program.
Effect: There is a potential risk that amounts claimed for the federal award are not
allowable, not supported, or were reimbursed by another source. There is also a risk of error
associated with calculations of eligible expenditures, including lost revenues, and reporting
to HHS. These errors could result in noncompliance with the federal program and potentially
questioned costs. Ultimately, management's report of eligible expenditures, after
consideration of reimbursement from another source, exceeded the amounts reported to
HHS.
Questioned Costs: None
Context: While sampling was used to test compliance with the major federal program,
there was no evidence of internal controls with this program and this was determined
prior to any detail testing.
Repeat Finding from Prior Years: No Recommendation: We recommend management develop and implement internal
controls over federal award programs. The internal controls should provide assurance
that the Authority is managing the federal award in conjunction with federal statutes,
regulations, and conditions of the federal award. Additionally, the internal controls
should include documentation and data retention provisions so that adequate
information is available to support compliance with the federal award as well as
internal controls being effective and operational.
Views of Responsible Officials: Management agrees with the finding.