Finding Text
FINDING 2023-002 – Reporting – 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: Non-federal entities must maintain internal control to provide reasonable assurance of compliance
with laws, regulations and the provisions of grant agreements and contracts, including reporting
requirements (2 CFR §200.303.) Recipients of Provider Relief Fund payments must submit reports and
maintain documentation as the Secretary determines are needed to ensure compliance with conditions that
are imposed by the Terms and Conditions for the General and Targeted Distributions, the Coronavirus Aid,
relief and Economic Security Act (P.L. 116-136), the Paycheck Protection Program and Health Care
Enhancement Act (P.L. 116-136), and the Consolidated Appropriations Act (Division M of P.L. 116-260.)
Condition: The Hospital’s internal controls over compliance did not consider continuity when key personnel
responsible for performing controls depart. As a result, the Hospital did not timely file the PRF report for
Period 4 PRF funds.
Effect: The Hospital submitted the Period 4 PRF report after the reporting deadline.
Cause: The Hospital’s internal controls over compliance were not designed to ensure continuity of controls
when key personnel departed.
Questioned costs: None.
Context: The CFO was the authorized reporter for the PRF funds and departed the Hospital before filing
the PRF report. There was no process in place to monitor the PRF reporting requirements after the
departure of the authorized reporter. A backup control to monitor the email of former employees for
important emails failed when the personnel responsible for that control also departed. As a result, the
Hospital did not file the Period 4 PRF report and was unaware of the missed deadline until February 2,
2024 when it received two letters of non-compliance from the Health Resources and Services
Administration (HRSA) with a demand for repayment. The Hospital submitted the Phase 4 submission late
on April 30, 2024 and after review, the HRSA rescinded its demand for repayment.
Repeat finding: No.
Recommendation: We recommend the Hospital redesign its internal controls to consider continuity of
controls when key personnel depart.
Views of responsible officials: Management concurs with the finding and has developed a corrective
action plan.