Finding Text
Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of Provider Relief Fund and American Rescue Plan Rural Distribution (PRF) payments must also comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services. The Health Resources and Services Administration (HRSA) has established certain guidelines for the calculation and reporting of lost revenues. In accordance with this guidance, lost revenues are calculated for each quarter during a period of availability, as a standalone calculation, with 2019 quarters serving as a baseline. For each calendar year of reporting, the applicable quarters where lost revenues are demonstrated are totaled to determine the annual lost revenues amount. Condition/Context: The Organization did not complete the PRF reporting in accordance with the U.S. Department and Health and Human Services guidance. Amounts reported in the Periods 3 and 4 Health Resources and Services Administration (HRSA) submissions did not agree to the underlying calculation of lost revenue. As a result of this, lost revenue amounts reported to HRSA for the periods of availability that ended in the year ended December 31, 2022 were understated by $983,963. Effect: The amounts reported to HRSA were not in accordance with established U.S. Department of Health and Human Services reporting guidance. Cause: The Organization?s calculation of lost revenue was correctly prepared on a quarterly basis, with lost revenue amounts calculated as a standalone calculation in accordance with HRSA guidance. In preparing its Period 3 and Period 4 reports, an oversight by management led to incorrect reporting whereby lost revenue did not reflect quarterly standalone amounts (lost revenue as calculated for certain quarters was offset by amounts calculated as the excess of actual over budgeted amounts for quarters that that did not demonstrate having lost revenues. The Organization?s internal control did not detect and correct this prior to report submission. Recommendation: We recommend that management implement procedures to ensure that lost revenues be reported in accordance with HRSA reporting guidance, which under Option 3 reporting would require input of zero for a quarter where there is no lost revenue.