Finding Text
2023-003 U.S. Department of Health and Human Services
Federal Assistance Listing #93.498
COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 3 and Period 4 TIN #237293874;
#810413632; #371518772; #810420653; and #810540517
Material Weakness in Internal Control over Compliance – Activities Allowed or
Unallowed, Allowable Costs/Costs Principles, and Reporting; Material Noncompliance
- Reporting
Criteria – 2 CFR 200.303(a) establishes 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 Corporation selected Option i to calculate lost
revenue for the LHMC and NWH entities which consists of comparing actual quarterly
revenues in calendar years 2020, 2021, and 2022 to actual quarterly revenues in
calendar year 2019. Note that the revenue calculations also included AHS, NOSM, and
HC which were acquired by LHMC effective December 31, 2020.
Condition – In some of the quarters for certain entities, it was noted that bad debt
expenses were higher than revenues, creating a negative revenue for the quarter. As the
HHS reporting portal would not allow negative amounts to be entered, a zero was
entered into the HHS reporting portal. These negative amounts should have been offset
to other quarters or other revenue line items, but were not, which resulted in higher
revenue amounts being reported than the detailed reports supported.
Cause – The Corporation did not have adequate internal controls to ensure the lost
revenue calculation was done in accordance with terms and conditions of the grant.
Effect – Two of the entities included in the revenue calculation were impacted by this
issue and the impact was as follows:
Entity
Revenue Amount
Reported in HHS
Special Report
Amounts that Should
Have Been Reported
in HHS Special Report
Excess Revenue
Reported
LHMC $ 1,810,255,440 $ 1,802,735,657 $ 7,519,783
Entity
Revenue Amount
Reported in HHS
Special Report
Amounts that Should
Have Been Reported
in HHS Special Report
Excess Revenue
Reported
NWH 42,763,145 42,623,775 139,370
Period 3
Period 4
Questioned Costs – None reported. After recalculating the revenue by correcting the
above amounts, the amount of lost revenue still exceeded the amount of provider relief
funds retained.
Context/Sampling – Key line items were tested on the Period 3 and Period 4 Department
of Human Services (HHS) special report.
Repeat Findings from Prior Years – Yes, Finding #2022-003.
Recommendation – We recommend that the Corporation enhance internal controls to
ensure the revenue calculation is in compliance with the terms and conditions of the
grant. The HHS Hotline is available to assist with concerns with the HHS portal or the
calculations.
Views of Responsible Officials – Management agrees with the finding.