Finding 47190 (2022-001)

Significant Deficiency Repeat Finding
Requirement
ABL
Questioned Costs
-
Year
2022
Accepted
2023-09-28
Audit: 52826
Organization: Menno Haven, Inc. (PA)
Auditor: Baker Tilly US

AI Summary

  • Core Issue: There was a significant deficiency in internal controls over compliance, specifically regarding the reporting of lost revenues related to the Provider Relief Fund.
  • Impacted Requirements: The organization failed to adjust reported lost revenues by $30,174 for known questioned costs from the previous audit, violating federal guidance.
  • Recommended Follow-Up: Management should enhance their review process before submissions to HRSA and correct the lost revenue error in the next filing.

Finding Text

Finding 2022-001: Significant Deficiency in Internal Control Over Compliance - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Assistance Listing Number: 93.498 - COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Repeat of Prior Year Finding: 2021-001 Award Number / Year: N/A / 2021 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 the U.S. Department of Health and Human Services (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: During the audit of the program in the prior year, known questioned costs of $30,174 were identified related to expenses improperly applied to the funding. In the Period 4 submission, the Organization should have corrected the error by reducing lost revenues reported for the amount of known questioned costs identified in the prior year as instructed by the Health Resources and Service Administration (HRSA). Lost revenues reported in the Period 4 submission were not properly reduced for the known questioned costs identified. In addition, the Period 4 submission and lost revenue calculation did not contain a review and approval prior to submission to detect potential errors of this nature. This is not a statistically valid sample. Effect: The lost revenue amount reported to HRSA was not in accordance with established U.S. Department of Health and Human Services reporting guidance. The error identified above would have reduced lost revenues from $4,087,274 to $4,057,100 on funding received of $1,078,957. Questioned Costs: None reported Cause: An oversight by management during the review process that failed to identify that lost revenues were not adjusted for the known questioned costs identified in the prior year audit in the Period 4 submission. Recommendation: We recommend that management revisit their review process to ensure that the submissions and underlying details are reviewed prior to filing with HRSA. In addition, the organization should correct the error identified on their next submission to reduce lost revenues reported for the known questioned costs identified above. View of Responsible Officials: The Organization agrees with this finding. The next required filing will be reduced by the $30,174 which should have been done in Period 4. Segregation of duties between the preparation of the reports and the review/approval of them, including reviewing all supporting documents, is in place. Going forward once the information is reviewed it will be clearly stated that everything has been reviewed and to the best of the reviewer?s knowledge everything is correct, dated and signed prior to filing the information. This will be reported to the Finance Committee and Board so that it will be in the minutes.

Corrective Action Plan

Finding 2022-001 Condition/Context During the audit of the program in the prior year, known questioned costs of $30,174 were identified related to expenses improperly applied to the funding. In the Period 4 submission, the Organization should have corrected the error by reducing lost revenues reported for the amount of known questioned costs identified in the prior year as instructed by the Health Resources and Service Administration (HRSA). Lost revenues reported in the Period 4 submission were not properly reduced for the known questioned costs identified. In addition, the Period 4 submission and lost revenue calculation did not contain a review and approval prior to submission to detect potential errors of this nature. This is not a statistically valid sample. Corrective Action Plan Corrective Action Planned: The Organization agrees with the finding. The next required filing will be reduced by the $30,174 which should have been done in Period 4. Segregation of duties between the preparation of the reports and the review/approval of them, including reviewing all supporting documents, is in place. Going forward once the information is reviewed it will be clearly stated that everything has been reviewed and to the best of the reviewer?s knowledge everything is correct, dated and signed prior to filing the information. This will be reported to the Finance Committee and Board so that it will be in the minutes. Name(s) of Contact Person(s) Responsible for Corrective Action: Ryan Fritz, Chief Financial Officer Anticipated Completion Date: This will be corrected on the next required submission.

Categories

Internal Control / Segregation of Duties Allowable Costs / Cost Principles Reporting Significant Deficiency Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 623632 2022-001
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
93.498 Provider Relief Fund (prf) and American Rescue Plan Rural Distribution $1.08M