Finding 50782 (2022-001)

Finding No: 2022-001 Activities Allowed or Unallowed/Allowable Costs Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.498 Program: COVID -19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Year: January 1, 2020 through June 30, 2022 (a) Criteria or Requirement Per 2 CFR 200.303, the non-Federal entity must 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. (b) Condition Found, Including Perspective During our test work, we selected a sample of 60 non-payroll disbursements made during the fiscal year 2022 reporting period. We noted seven instances in which expenditures were approved for payment based on vendor invoices which included inaccurate calculations. In an eighth instance, a moving expense that was paid during June 2020, but authorized prior to January 1, 2020 was approved for payment. In addition, the University was unable to provide evidence of management review and approval for 14 of the 60 disbursements sampled. These 14 disbursements were for allowable costs under the terms and conditions of the program. (c) Possible Cause The University has a management review process to review invoices and related documentation before payments are disbursed. The University management review control that was in place did not operate effectively to prevent unallowable charges and inaccurate amounts from being submitted for reimbursement by the federal agency. In addition, the University was unable to provide evidence of certain management reviews and approvals due to employee turnover subsequent to the time that the underlying activity occurred. (d) Questioned Cost None reportable. (e) Effect Federal funds were expended for unallowable purposes or for inaccurate amounts and evidence of the effective operation of management review controls was not maintained in accordance with Federal requirements. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year Not a repeat finding. (h) Recommendation We recommend that the University strengthen controls over the management review process to prevent unallowable costs and inaccurate amounts from being charged to Federal programs and to enhance the retention of evidence of management review and approval. (i) View of Responsible Officials Management concurs with the finding. While appropriate controls exist relative to management review and recalculation of expenditures, opportunity exists to retrain staff and further enhance controls. (j) Corrective Action Plan Management will ensure communication of the finding with its Accounts Payable Department and provide appropriate retraining for all levels of staff. Training will emphasize allowable versus unallowable expenditures, recalculation of expenditure amounts, and documentation of management review/approval. The moving expense in question will be removed and we are not charging any moving expenses to the PRF going forward. Management approvals are now uploaded along with the documentation into our general ledger so that if employee turnover occurs, we are still able to see the documentation of review. (k) Anticipated Completion Date Completion of corrective action anticipated by December 1, 2022. (l) Name of Contact Person for Corrective Action Brian Courtney, Assistant Chief Financial Officer: (251) 405-9969