Finding 601450 (2022-004)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2022
Accepted
2023-01-30
Audit: 23714
Organization: Tri Valley Health System (NE)
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The Health System lacked effective internal controls, leading to incorrect reporting for the COVID-19 Provider Relief Fund.
  • Impacted Requirements: Failure to maintain an approved budget for the entire reporting period and inadequate review processes violated 2 CFR 200.303(a).
  • Recommended Follow-Up: Implement procedures for accurate lost revenue calculations and enhance internal controls for review and approval processes.

Finding Text

2022-004Department 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 1 TIN #476028103 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 Health System selected option ii to calculate lost revenue, which consists of a comparison of actual results during the period of availability to the approved budget. The Health System did not have a budget for the entire reporting period that was approved prior to March 27, 2020. The Health System used the corresponding months from their fiscal year budget for the periods that did not have an approved budget. In addition, the internal statements net patient revenue differed from the net patient revenue in the audited financial statement due to certain cost centers being classified differently. Finally, the Health System?s report submitted to the Department of Health and Human Services (HHS) for Period 1 did not have evidence that it was reviewed and approved by a separate individual outside of the preparer. Cause: The Health System did not have an internal control process in place to ensure review and approval of the Period 1 HHS report was documented. The Health System did have an approved budget prior to March 27, 2020 for fiscal year 2020, but the approved budget did not cover the entire period of availability. The difference in net patient revenue in the audited financial statements were not reconciled with the net patient revenue on the internal statements. Effect: The reporting to HHS for Period 1 was considered incorrect. The Health System did not have a budget approved prior to March 27, 2020, for the entire period of availability. Questioned Costs: None reported. Lost revenue differences using internal financial statements rather than net patient revenue reported on the audited financial statements differed less than $25,000. Had the Health System elected to use option iii to calculate lost revenue utilizing an alternative reasonable method, lost revenues may have been allowed. Context: Key line items were tested on the Period 1 HHS report. Repeat Finding from Prior Years: No Recommendation: We recommend the Health System implement procedures to ensure the lost revenue calculation claimed meet the requirements of the federal program. In addition, we recommend that the Health System enhance internal control policies to ensure all lost revenue calculations are reviewed and approved to ensure that they are electing the appropriate methodology and in accordance with program requirements. Views of Responsible Individuals: Management agrees with the finding.

Categories

Material Weakness Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 25008 2022-004
    Material Weakness
  • 25009 2022-005
    Significant Deficiency
  • 25010 2022-006
    Significant Deficiency
  • 601451 2022-005
    Significant Deficiency
  • 601452 2022-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.128 Mortgage Insurance_hospitals $14.26M
93.498 Provider Relief Fund $4.16M
20.509 Formula Grants for Rural Areas and Tribal Transit Program $163,452
93.461 Covid-19 Testing for the Uninsured $34,258
93.697 Covid-19 Testing for Rural Health Clinics $26,410
93.301 Small Rural Hospital Improvement Grant Program $11,855