Finding 478405 (2023-002)

Program: COVID-19 - Provider Relief Fund Assistance Listing Number: 93.498 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs and Reporting Federal Agency: Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed/Unallowed and Cost Principles (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) and Reporting (45 CFR 75.342). Federal awards are only to be expended for allowable activities. In addition, the City is required to prepare and submit the period five provider relief fund report to the U.S. Department of Health and Human Services. This report is to be prepared using accurate financial information and submitted by the deadline established. Condition – The City reported COVID-19-related expenditures, including supplies, within the HHS Provider Relief Fund (PRF) portal that did not have sufficient supporting documentation showing expenditures were related to the prevention, preparation or response to COVID-19. In addition, the City reported fringe benefit amounts based on budgeted allocations and not actual expenditures. Questioned Costs – $163,700. Questioned costs were determined by the amount of allocated supplies and fringe benefit costs included within the federal awards expended. Context – Management made certain estimates related to allowable program costs that did not have adequate underlying supporting documentation to determine proper allocation of claimed program expenditures. Effect – The City submitted expenses under the PRF program based on allocations and not actual expenditures. As a result, the City did not have support that they were reasonably related to the prevention, preparation or response to COVID-19. Cause – Internal controls were not in place to ensure federal awards were expended only for allowable activities. Identification as a Repeat Finding – N/A Recommendation – Policies and procedures over federal grant expenditure and reporting should be modified to ensure that allowable costs are supported by expenditures and reports that include indirect costs have sufficient supporting documentation that is retained in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions – We agree with the finding. See separate report for planned corrective actions.