Finding 611379 (2022-001)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2022
Accepted
2023-09-05
Audit: 35230
Organization: Nexus Family Healing (MN)
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The Organization failed to maintain effective internal controls, leading to a significant calculation error of $1,698,708 in lost revenues reported to HHS.
  • Impacted Requirements: Compliance with 2 CFR 200.33(a) was not met, as there was no documented review and approval process for the HHS special report.
  • Recommended Follow-Up: Implement stronger internal control policies, including a secondary review and approval process for lost revenue calculations submitted to HHS.

Finding Text

2022-001 Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 4 TIN #411419064 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.33(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 statues, regulations, and conditions of the federal award. The Organization is required to submit an accurate report to HHS for each filing period of funds were received. Condition: The Organization claimed lost revenues attributable to coronavirus in which the final lost revenue calculation did not tie to the HHS Report. In addition, the Organization?s special report submitted to the Department of Health and Human Services (HHS) for Period 4 TIN #411419064 did not have documented review and approval by a separate individual outside of the preparer. Cause: The Organization did not have an internal control process in place to ensure documentation of the review and approval of the report submitted to the Department of Health and Human Services for Period 4. The Organization had a lost revenue calculation error of $1,698,708 on the HHS special report causing a difference to the actual lost revenues (i.e. there were more lost revenues reported on the HHS special report). Effect: While the calculation error provided a difference between the lost revenues on the HHS special report and the lost revenue calculation, the Organization had excess lost revenues available to be applied. This calculation error also indicated there is a lack of policies governing the review and approval of the lost revenue calculation to the HHS special report. Questioned Costs: None reported. The Organization had excess lost revenues available to be applied. Context: Key line items were tested on the Period 4 Department of Health and Human Services special report. The HHS special reports included total lost revenue calculation errors of $1,698,708. The Organization had excess lost revenues from the period 3 and period 4 HHS reports that totaled $17,305,791. Repeat Finding from Prior Year: No Recommendation: We recommend that the Organization enhance internal control policies to ensure the HHS special report is supported by accurate lost revenue calculations. This should include implementing a secondary review and approval over the lost revenue calculation. Views of Responsible Officials: Management agrees with this finding.

Categories

Material Weakness Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 34937 2022-001
    Material Weakness
  • 34938 2022-002
    Material Weakness
  • 611380 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.498 Provider Relief Fund $1.35M
84.215 Fund for the Improvement of Education $411,886
93.674 John H. Chafee Foster Care Program for Successful Transition to Adulthood $200,000
84.013 Title I State Agency Program for Neglected and Delinquent Children and Youth $165,182
10.559 Summer Food Service Program for Children $69,509
10.555 National School Lunch Program $19,054
84.126 Rehabilitation Services_vocational Rehabilitation Grants to States $12,256
93.958 Block Grants for Community Mental Health Services $10,000
10.553 School Breakfast Program $8,982