Finding Text
2021-003 Department of Health and Human Services
CFDA #93.498
COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 1 TIN #381649577
Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting
Material Weakness in Internal Control Over Compliance
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 Organization claimed expenses based on specifically identified COVID
related expenses and general and administrative expenses.
Condition: The Organization’s final expenditure listing identified as eligible and claimed
under the Provider Relief Fund program as well as the prepared lost revenue calculation
were not reviewed and approved by a separate individual outside of the preparer.
Cause: The Organization did not have an internal control process in place to ensure a
secondary review and approval of the lost revenue calculation or of eligible expenditures
that were summarized from the underlying supporting spreadsheets to the final expenditure
listing was formally documented. The summary spreadsheet was used to claim allowable
costs under the federal program. In addition, the review and approval of the report
submitted to the Department of Health and Human Services for Period 1 was not performed
by someone other than the preparer of the report.
Effect: Without a secondary review and approval, there is a possibility that ineligible
expenditures or lost revenue may have been claimed under the program and the report may
not have been accurately completed.
Questioned Costs: None reported.
Context/Sampling: A nonstatistical sample of 65 ($92,432) out of 993 expenditures
($1,198,401) was tested for activities allowed or unallowed and allowable costs/cost
principles. Lost revenue was reviewed as submitted in the special report. Additional key line
items were tested on the Period 1 Department of Health and Human Services special report
submitted.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Organization implement a control process which
includes a secondary review and approval of the summarized final expenditure listing and
lost revenue calculation used to claim the allowable costs under the federal program and a
secondary review and approval of required reports to be submitted to the federal agency.
Views of Responsible Officials: Management agrees with the finding.