Finding Text
Finding 2022-002 - Significant Deficiency in Internal Control - Activities Allowed and Unallowed; Allowable Costs/Cost Principles Assistance Listing Number: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-Through Agency: Not applicable Award Number/Year: N/A / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by HHS. Activities allowed have been defined as health care related expenses used to prevent, prepare for, and respond to coronavirus or lost revenues that are attributable to coronavirus. Condition/Context: A sample of 40 items were selected for testing. During our testing, we noted one item selected for testing that was deemed an unallowable expense as it was not used to prevent, prepare for, and respond to coronavirus. This was not a statistically valid sample. Effect: There were costs charged to the program that were for unallowable purposes. Questioned Costs: $40,323 related to the items that were not clearly identified as being used to prevent, prepare for, or respond to coronavirus, and the invoice that did not contain any supporting documentation. Cause: The Company lacked formal approved policies and procedures related to the administration of the award. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program. Views of Responsible Officials: The Company will implement procedures to ensure an individual who is reviewing and approving invoices has the appropriate skill set to ensure costs that are incurred are being used to prevent, prepare for, or respond to the coronavirus.