Finding Text
2022-004 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 #860096775 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. Condition: The Hospital did not properly include 340B revenues and audit adjustments in net patient service revenue. In addition, the Hospital did not properly report payor categories for quarters in which the net patient service revenues were negative. Cause: Due to limited reporting guidance available, specific to negative net patient service revenue, the established internal controls did not consider all revenue streams included in net patient service revenue or the impact of the negative payor revenue amounts on the lost revenue calculation and ensure accurate quarterly reporting of net patient revenue. 340B revenues and final audit adjustments were excluded in error. Effect: Lost revenue on the report submitted to the Department of Health and Human Services for Period 4 was understated by $920,201. The lack of adequate policies to calculate allowable costs caused the report to be filed incorrectly. Total corrected lost revenues for 2020 are $5,550,661 compared to the $5,356,295 that was reported. The corrected lost revenues for 2021 are $1,073,776 compared to the $534,414 reported. The corrected lost revenues for 2022 are $2,982,013 compared to the $2,795,540 reported. Questioned Costs: None reported relating to Period 4 as eligible expenses identified exceeded Period 4 funds received. Context: There are 96 key line items related to lost revenue which were tested on the Period 4 Department of Health and Human Services special report. 21 of the 96 key line items did not actually agree to net patient service revenue on the general ledger. Repeat Finding from Prior Years: Yes, 2021-004. Recommendation: We recommend the Hospital implement a control process which verified that net patient revenue included in the lost revenue calculation is reconciled with the audited financial statements. In addition, a formal review and approval process should be implemented to ensure calculations are in accordance with applicable requirements. The Hospital should modify the lost revenue reported on future reports, if any, to reflect the total lost revenue amount. Views of Responsible Officials: Management agrees with the finding.