Finding 481194 (2023-005)

Federal agency: U.S. Department of Health and Human Services Federal program title: American Rescue Plan (ARP) and Provider Relief Fund (PRF) Assistance Listing Number: 93.498 Award Period: Reporting Period 4 for funds received from July 1, 2021 to December 31, 2021, used through December 31, 2022 Type of Finding: 􀁸 Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: 2 CFR 200.303(a) states 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. The Hospital did not have a process of review over the reporting of funds to HRSA, and as a result, reported interest earned on funds received that was materially incorrect. Condition: The Hospital did not have a sufficient control or review process in place to ensure an accurate report on American Rescue Plan and Provider Relief Funds received from and submitted to HRSA. Specifically, there was an error in the interest calculation used for reporting to HRSA. Context: As part of the submission process to HRSA on the American Rescue Plan (ARP) and Provider Relief Funds (PRF) received for Period 4, the Hospital imputed interest on the funds, which was required to be reported and justified with allowable costs or lost revenues. However, the interest calculation that the Hospital performed materially overstated the amount of interest received on the funds. The Hospital then justified those additional funds from interest received with sufficient expenses reported to HRSA. Since the amounts received from HRSA plus the interest earned on the funds are required to be reported on the SEFA, the SEFA was corrected for the reasonably stated interest earned amounts for the ARP and PRF. Questioned Costs: Since interest income reported was only imputed and not actually received by the Hospital, there are no questioned costs. Cause: The Hospital did not have a sufficient control process around preparation of the submission to HRSA for the American Rescue Plan and Provider Relief Fund. Effect: The amount of ARP and PRF payments and expenses reported by the Hospital is materially overstated on the Hospital's Period 4 report to HRSA. Error specifically related to the reported interest earned on ARP Rural and PRF payments. Had the interest calculation been corrected in the reporting, it would not have impacted the total amount of funds retained and recognized by the Hospital. Repeat finding: No Recommendation: We recommend that management implement a process for preparing and reviewing reports of funds from federal sources, especially pertaining to estimates. Views of responsible officials: There is no disagreement with the audit finding.