Finding 561086 (2023-001)

Finding No. 2023‐001 Calculation of Provider Relief Funds Allowable Costs‐Direct Expenses – Deficiency in Internal Control over Compliance (Activities Allowed) Federal Agency: Department of Health and Human Services Federal Program: COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (“Provider Relief Fund”) ‐ Periods 4 and 5 Assistance Listing #: 93.498 Award Number(s): Not applicable Pass‐through Number: Not applicable Criteria: Costs submitted to the U.S. Department of Health and Human Services Health Resources and Services Administration (“HRSA”) must be for expenditures incurred to prevent, prepare for, and respond to coronavirus and COVID-19 for necessary expenses to reimburse eligible health care provides for health care related expenses that are attributable to coronavirus. The Post-Payment Notice of Reporting Requirements states that PRF payments can be used towards health care-related expenses which may include general & administrative or health care-related operating expenses. General & administrative expenses may include personnel expenses as well as fringe benefits, inclusive of recruitment and retention payments. Condition and Perspective: During our testing we noted three instances out of sixty expenditure selections in which the amount of additional Paid Annual Leave (“PAL”) calculated and included as a direct expense was calculated based on the incorrect hourly rate for an employee. Cause: The PAL award was communicated to employees in June 2022 and the entity’s traditional cycle for annual wage increases occurs prior to June 1. The report used to calculate the cost of PAL to be submitted for reimbursement was created in November 2022. When creating the report for the PAL calculation the entity created the report in November which included unique instances of hourly rate increases for certain employees, rather than utilizing hourly rates as of June, resulting in overcharges of PAL for 598 employees and undercharges of PAL for 192 employees for reporting Periods 4 and 5. Effect: Improper report parameters can result in unallowable costs charged to HRSA and the recognition of incorrect funding amounts. Questioned Costs: $284.87, computed based on the difference between employee’s June 2022 total pay rate and November 2022 total pay rate for three instances with errors. The total error across all employees exceeds the reportable threshold. Recommendation: We recommend that management continue to monitor and enhance its internal controls for preparing reports for allowable expenses, including performing appropriate due diligence over report parameters. View of Responsible Officials: See Corrective Action Plan.