Finding 58486 (2022-007)

Identification of the Federal Program: U.S. Department of Health and Human Services ? COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Distribution ? 93.498 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. Condition: RWHS selected option I to calculate lost revenue for its subsidiary, which consists of reporting quarterly net revenue by payor during the period of availability. Net revenue was determined by projecting payor deductions instead of using actual deductions as required by the terms and conditions of the award. Cause: RWHS did not have an effective internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the use of option I was accurate and in accordance with the terms and conditions of the federal award. Effect: The reporting to HHS for Period 4 was considered incorrect. Quarterly amounts reported were not based on actual net revenue by payor. Questioned Costs: None reported. Context: Key line items were tested on the Period 4 PRF report. Repeat Finding from Prior Year: No Recommendation: We recommend RWHS enhance its existing internal control processes to ensure the lost revenue calculation claimed meets the requirements of the federal program. Views of Responsible Officials: Management agrees with the noted finding and will continue to refine processes to more diligently review the lost revenue calculation to ensure such amounts are in accordance with the terms and conditions of the federal award.