Finding Text
Finding No. 2022-001 Federal Program: Federal Assistance Listing #93.498 US Department of Health and Human Services Provider Relief Fund Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance. Activities Allowed/Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control 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: SAH selected option I to calculate lost revenue, which consists of a comparison of actual results during the period of availability to the base calendar year of 2019. For all periods reported in SAH?s Period 2 submission, the reported patient service revenue amounts did not agree to the underlying internal financial statements. Furthermore, SAH did not report actual revenue for Quarter 3 2021 and Quarter 4 2021. Cause: SAH did not have an effective internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the report submitted for Period 2 was accurate and in accordance with the terms and conditions of the federal award. Effect: The reporting to HHS for Period 2 was considered incorrect. Amounts reported for quarter 1 through quarter 4 for 2019 and 2020 and quarters 1 and 2 for 2021 did not agree to the underlying internal financial statements. SAH also did not report actual revenue for quarter 3 2021 and quarter 4 2021. Had the proper amounts been reported, the impact would have been to decrease the reported lost revenue by $10,601,620. Questioned Costs: None. Had SAH properly reported patient service revenue for all required quarters, the total calculated lost revenue would have been $1,319,041 versus the $11,920,661 reported, which exceeded the total funds received in period 2. Context: Key line items were tested on the Period 2 HHS report. Recommendation: We recommend SAH enhance its existing internal control processes to ensure the lost revenue calculation claimed meets the requirements of the federal program. Views of Responsible Officials and Planned Corrective Action: Management agrees with the noted finding. However, had SAH reported the correct lost revenue figures, SAH satisfactorily incurred eligible expenses and lost revenue in excess of funding expended. Management will continue to refine processes to more diligently review the lost revenue calculation to ensure such amounts are in accordance with the terms and conditions of the federal award.