Finding Text
Finding 2022-001 ? Lost Revenue Reporting U.S. Department of Health and Human Services Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (93.498) Payments received during Period 2: July 1, 2020 to December 31, 2020 Criteria: Title 2, Subtitle A Chapter II Part 200 Subpart D 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In addition, the terms and conditions of the award requires the recipient to submit reports as the secretary of the U.S. Department of Health and Human Services (HHS) determines are needed to ensure compliance with conditions that are imposed on the payment, and such reports shall be in such form, with such content, as specified by the secretary of HHS in future program instructions directed to all recipients. Specific criteria have been established by HHS in their terms and conditions related to allowable costs and reporting for this program including proper reporting of critical information, such as amounts included in reimbursed expense and lost revenues table. Condition: For the Medical Center?s Period 2 reporting in the HRSA PRF reporting portal, the Medical Center inaccurately reported lost revenues, resulting in an overstatement of lost revenues. Cause: Management did not have effective internal controls in place to ensure reporting of lost revenues were adequately reviewed before submission. Effect or potential effect: Quarterly revenues reported in the PRF reporting portal were misstated for several quarters, resulting in a total overstatement of actual 2019 revenues of $5,197,094, a total overstatement of actual 2020 revenues of $3,996,899, and a total understatement of 2021 actual revenues of $1,915,433. The total net impact of these misstatements to the lost revenue calculation resulted in an understatement of lost revenues reported of $1,903,535. The Medical Center also reported PRF expenses in Period 2 in an amount equal to Period 2 PRF funding received. Therefore, the Medical Center did not report actual revenue data for the third or fourth quarters of 2021. The portal included $100,237,417 of third and fourth quarter 2019 actual revenues in the calculated lost revenue for 2021. While reporting of lost revenue was inaccurate, there were no questioned costs. Questioned Costs: None Context: The Medical Center reported lost revenue using Option 1, comparing actual revenues for 2020 and 2021 to actual revenues for 2019. The Medical Center had errors in their formulas calculating actual revenue for the first quarter of 2019, second quarter of 2019, third quarter of 2019, and the second quarter of 2020. Additionally, the Medical Center used preliminary rather than final, audited actual revenue amounts for the second quarter of 2021. Whereas Period 2 PRF expenses were equal to Period 2 PRF distributions received and lost revenue was not needed to qualify for the Period 2 PRF distributions, the Medical Center did not submit actual revenue data for the third nor fourth quarter of 2021. As a result, the portal calculated a lost revenue amount for those quarters equal to actual revenues for the third quarter of 2019 and the fourth quarter of2019. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management develop and implement effective internal controls to ensure accurate reporting of quarterly revenue amounts in the portal. This will ensure the calculation of lost revenues complies with Terms and Conditions of the federal program. Views of responsible officials: Management agrees with the finding and recommendations.