Finding 568831 (2024-003)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2024
Accepted
2025-06-30
Audit: 360565
Organization: Rolette Community Care Center (ND)
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The Care Center lacks effective internal controls to ensure that reported revenue figures match supporting documentation for federal funding.
  • Impacted Requirements: Compliance with 2 CFR 200.303(a) is not met, leading to discrepancies in revenue reporting for three specific quarters.
  • Recommended Follow-Up: Enhance internal controls and implement a review process by someone other than the preparer before submitting reports to HHS.

Finding Text

Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) Applicable Federal Award Number and Year – Period 6 TIN #205330283 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Care Center selected Option I to calculate lost revenue which consists of comparing actual quarterly revenues in calendar years 2020, 2021, 2022, and January through June 2023 to actual quarterly revenues in calendar year 2019. Condition: The Care Center does not have an internal control system designed to ensure the amounts reported in the HHS Period 6 Special Report agreed to supporting documentation for each of those quarters. In addition, there was no evidence of review of either the supporting documentation or the HHS Period 6 Special Report by someone other than the preparer. Cause: The Care Center did not have adequate internal controls to ensure the lost revenue calculation agreed with the supporting documentation prior to submission to HHS. Effect: Revenue information for eighteen quarters (starting January 1, 2019, through June 30, 2023) was submitted on the HHS Period 6 Special Report. The revenue information for three quarters during that timeframe did not agree to the supporting documentation provided. The quarters with significant differences are as follows: Quarter 2, 2021 (April through June) Variance of $27,885 Quarter 1, 2023 (January through March) Variance of $22,236 Quarter 2, 2023 (April through June) Variance of $688,293 In these three quarters, the revenue submitted on the HHS Period 6 Special Report exceeded the amount of revenue supported by the financial information. The total variance for these three quarters was $738,397. Questioned Costs: None reported, as the Care Center used qualifying expenditures to support the provider relief funding received and not lost revenue. Context: Key line items were tested on the HHS Period 6 Special Report. Repeat Finding from Prior Years: No Recommendation: We recommend management enhance internal controls to ensure the revenue calculation agrees to the supporting documentation prior to submission. In addition, we recommend that there is a review of both the supporting documentation and any reports submitted by a person other than the preparer prior to submission. View of Responsible Officials: Management agrees with the finding.

Corrective Action Plan

Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) Applicable Federal Award Number and Year - Period 6 TIN #205330283 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Finding Summary: Rolette Community Care Center does not have an internal control system to ensure the amounts reported in the HHS Period 6 Special Report agreed to supporting documentation for each of the quarters included. In addition, there was no evidence of review of either the supporting documentation or the HHS Period 6 Special Report by someone other than the preparer. Responsible Individuals: Kathy Morrow, Business Office Manager Corrective Action Plan: Management will ensure that the information contained in the reports agrees to the supporting documentation and both documentation and the reports submitted are reviewed by someone other than the preparer. Anticipated Completion Date: December 31, 2025

Categories

Material Weakness Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 568832 2024-004
    Material Weakness
  • 1145273 2024-003
    Material Weakness
  • 1145274 2024-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.766 Community Facilities Loans and Grants $4.30M
93.498 Covid-19 - Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $211,843