Finding Text
Finding 2023-001
Identification of the federal program:
Federal Grantor: United States Department of Homeland Security
Assistance Listing No.: 97.036, COVID-19 Disaster Grants – Public Assistance (Presidentially
Declared Disasters)
Pass-Through Grantor: State of Minnesota
Pass-Through Award Period: 01/20/2020 – 05/11/2023
Criteria or specific requirement (including statutory, regulatory, or other citation):
Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).”
The Uniform Guidance 2 CRF Subpart E Section 200.403 states the following: “Costs must meet
the following general criteria in order to be allowable under Federal awards: (c) be consistent with
policies and procedures that apply uniformly to both federally financed and other activities of the
non-Federal entity; and (g) be adequately documented.”
Condition:
Fairview Health Services (the Company) did not retain sufficient documentation of its review of
the allowability lab percentage calculation (which represents the total unreimbursed lab revenue
as a percentage of total lab revenue to address duplication of benefits) used in determining lab
supplies expense to be charged to FEMA.
Cause:
The Company did not have internal controls in place to formally document its review of the
allowability percentage calculation applied to the lab supplies.
Effect or potential effect:
Lab supplies expenses may be charged to the federal award that are not consistent with the
methodology adopted by the Company.
Questioned costs:
None.
Context:
We selected a sample of five of eight allowability percentage calculations for lab supplies and
noted that for four of the calculations, there was no supporting documentation of the review and approval performed of the allowability percentage calculation.
For Assistance Listing No. 97.036, total lab supplies to which the allowability percentage was
applied were $8,432,353, representing 17% of total federal expenditures of $49,821,059 for the
year ended December 31, 2023.
Identification as a repeat finding, if applicable:
The finding is not a repeat finding from the prior year.
Recommendation:
The Company should retain formal documentation of review and approval controls related to the
lab supplies calculation.
Views of responsible officials:
“Management agrees with the finding. In May 2023, the COVID-19 emergency ended and,
therefore, remediation of internal controls specific to allowability of costs for the FEMA program
is no longer applicable. However, remediation steps were taken to improve documentation of
review of internal controls over all federal expenditures, not limited to the FEMA program.”
Fairview revised its internal control processes to improve the retention and documentation of the
review and approval of inputs to the calculation of federal expenditures.