Finding Text
2022-006Department 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 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Significant Deficiency in Internal Control Over Compliance and 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 claimed expenses that were incurred prior to when the Health System began to prepare for, prevent and respond to the coronavirus. This resulted in the incorrect treatment of expenses on the special report submitted to the Department of Health and Human Services (HHS) for Period 1. Cause: The terms and conditions were not properly assessed to ensure claimed expenses were allowable under the federal program and claimed on the special report submitted to HHS for Period 1. Effect: There were $144,685 of expenses claimed and reported in the special report submitted to HHS for Period 1 relating to January 2020, which is prior to when the Health System began to prepare for, prevent and respond to the coronavirus. Questioned Costs: None reported for activities allowed or unallowed and allowable costs/cost principles as there was additional lost revenue claimed in excess of $600,000 on the special report submitted to HHS for Period 1 TIN #476028103 that was tested to cover the amount of unallowed expenses. Context: A nonstatistical sample of 60 expenditures were selected for testing, which accounted for $84,077 of $3,048,891 direct program expenditures. One expenditure from the sample contained a January 2020 expenditure. All January 2020 expenditures were identified from the population to arrive at the known error. Repeat Finding from Prior Years: No Recommendation: We recommend the Health System enhance internal control policies to ensure expenditures claimed under the federal program meet the terms and conditions of the award and are properly included in the reports required to be submitted to the federal agency. We recommend management update any future special reports submitted to HHS as deemed appropriate. Views of Responsible Individuals: Management agrees with the finding.