Finding 588366 (2023-004)

Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #411271856 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 Organization is required to submit an accurate report to HHS for each filing period that funds were received. Condition: The Organization utilized net revenues and gross revenues in the lost revenue calculation causing errors in the lost revenue calculation which resulted in key line items being reported incorrectly in the Period 4 HHS Report. Cause: These key line item errors indicate there is a lack of policies governing the review and approval of the HHS Report to its supporting documents (i.e. lost revenue calculations). Effect: The Organization did not follow their methodology for calculating lost revenues, resulting in overstating the amount of lost revenues to be claimed by $282,934. While the Organization had an error in the total amount of lost revenue calculated, the Organization has excess amounts of lost revenues to carryforward of $3,663,347. As a result of the error in calculation, there were three key line items on the Period 4 HHS Report that were incorrect. Questioned Costs: None reported. Context: All key line items on the HHS Period 4 Report were tested. Of the twelve key line items tested related to lost revenue, three line items contained errors. Repeat Finding from Prior Years: No Recommendation: We recommend the Organization enhance internal control policies to ensure the HHS Report is properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly supported. Views of Responsible Officials: Management agrees with the finding.