Finding Text
FINDING 2023-001 – Material Weakness in Internal Controls over Compliance and Material
Noncompliance
Federal award: U.S. Department of Health and Human Services Provider Relief Fund and American
Rescue Plan Rural Distribution – Assistance Listing Number 93.498
Criteria: According to the Single Audit Act and the Office of Management and Budget (OMB) Uniform
Guidance (2 CFR §200.501), non-federal entities that expend $750,000 of more in federal awards in a year
are required to have a single audit. Schedule of Expenditures of Federal Awards (SEFA) reporting amounts
for the Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution program are based
upon the PRF report that is required to be submitted to the HRSA reporting portal. The last day a provider
can use the funds drives inclusion of the PRF amount on the SEFA (OMB Compliance Supplement 2023
4-93.498-9.)
Condition: The Hospital omitted $6,955,649 of Period 4 Provider Relief Funds in its draft SEFA for the
year-ended June 30, 2023. The Hospital did not engage an auditor to perform a single audit of the June 30,
2023 financial statements in a timely manner because the SEFA omissions led it to believe its federal
expenditures were below the threshold that required a single audit.
Cause: The Hospital's current accounting team was unaware of the PRF funds, as they had been fully
expended in a prior fiscal year under a different accounting team and the employee responsible for
monitoring the funds had departed. The team's unfamiliarity with the unique SEFA reporting requirements
for PRF funds, which differ from most other federal programs, led to the oversight.
Effect: The Hospital did not engage an auditor to perform a single audit within the timeline required for
timely single audit submission.
Questioned Costs: None.
Context: The Hospital's staff accountants not aware of the PRF funds, as they had been entirely spent in
a previous fiscal year by a previous accounting team. Unfamiliar with the unique SEFA reporting
requirements for PRF funds, the current team didn't consider reviewing prior year expenditures for potential
inclusion in the current year's SEFA. Typically, federal programs are reported on the SEFA in the year of
expenditure, but PRF funds are an exception, needing to be reported on the last day a provider could use
the funds. The 2023 SEFA draft, prepared by staff accountants without senior management review and
without knowledge of the PRF reporting requirement, led the Hospital to mistakenly believe they were under
the threshold for single audit reporting for the year-ended June 30, 2023.
Repeat finding: No.
Recommendation: We recommend that the Hospital implement controls to review the SEFA prepared by
lower-level accounting staff. We also recommend that the Hospital monitor reporting requirements for
awards of federal funds through the entire life of the award, including identifying changes in reporting
requirements and special reporting requirements imposed by the federal government, and ensuring those
reporting requirements are communicated to those responsible for reviewing the SEFA and determining
whether a Single Audit is required.
Views of responsible officials: Management concurs with the finding and has developed a corrective
action plan.