Finding 50626 (2022-001)

FINDING 2022-001 ? Reporting Requirements Federal program: U.S. Department of Health and Human Services ? ALN 93.498, Provider Relief Fund and American Rescue Plan (`ARP?) Rural Distribution Criteria: Specific criteria are established by the U.S. Department of Health and Human Services (`HHS?) with respect to allowable cost and reporting requirements for this program, including: - Funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. - Entities may elect to calculate and report lost revenue using one of three options. For entities electing to report lost revenues using Option iii, the alternative method used to calculate lost revenue should be consistent with a narrative description of the methodology as submitted in the PRF reporting portal. Condition: In the Medical Center?s Period 2 and Period 3 reporting in the PRF reporting portal, the Medical Center reported lost revenue using Option iii for each affiliated entity included in the schedule of expenditures of federal awards that received PRF. The alternative method used to calculate lost revenues was budget-to-actual revenues for the period from January 2020 through August 2020 and year-over-year actual revenues for the period from September 2020 through August 2021. In the lost revenue calculation for the third quarter of calendar year 2021 for each entity, the Medical Center understated actual revenues by $9,693,882 in total. Context: The Medical Center did not report lost revenues for the third quarter of 2021 for any entity, because actual revenue exceeded the prior year?s actual revenue for each entity. Had the correct amounts of actual revenue been reported for the third quarter of 2021, actual revenue for the quarter still would have exceeded the prior year?s actual revenue for each entity and no lost revenue would be reported. Cause: In preparing the reports, management used preliminary estimates of revenue for the month of August 2021 in error. Additionally for one entity, the method used to calculate actual revenue for the month of July 2021 was not consistent with other months. Review processes were performed before the reports were submitted, but these reviews did not detect and correct the errors before submission. Effect: The Medical Center?s reporting in the PRF reporting portal for each affiliated entity included an inaccurate amount of actual revenue for the third quarter of calendar year 2021, which was not consistent with methodology described in the Option iii narrative submitted. The PRF reporting correctly reported no lost revenue for the quarter. Questioned costs: None Repeat finding: No Recommendation: We recommend that management correct the error in the Period 4 PRF reporting submissions. We also recommend that management?s review of the lost revenue calculations and reporting in the PRF reporting portal include review of documentation supporting each dollar amount included in the calculation. Views of responsible officials of the auditee: Management agrees with the finding and the auditor?s recommendation.