Finding 58864 (2022-004)

2022-004 Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #840428757 Activities Allowed or Unallowed, Allowable Costs/Costs 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. Condition ? The Hospital?s calculation of lost revenue claimed under the federal program as an allowable cost contained no formal review or approval by a separate individual outside of the preparer. This led to an improper offset of lost revenues. In addition, there was no evidence retained that the Hospital?s special report submitted to the Department of Health and Human Services for Period 4 was reviewed and approved by a separate individual outside of the preparer. Cause ? The Hospital did not have an adequate internal control policy in place to ensure review and approval of the calculation of lost revenue or preparation of HHS Period 4 reporting was documented. Effect ? The lack of adequate policies governing review and approval increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs ? None reported. Context/Sampling ? The lost revenue calculation for all applicable quarters was tested and key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Year - Yes, 2021-004 Recommendation ? We recommend that the Hospital enhance internal control policies to ensure that formal documentation of review and approval is present. Views of Responsible Officials ? Management agrees with the finding.