Finding Text
Significant Deficiency: Identification of the Federal Program: Federal Assistance Listing Number 93.498 US Department of Health and Human Services COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control Over Compliance Reporting Significant Deficiency in Internal Control Over Compliance 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. The terms and conditions of the CARES Act Provider Relief Fund (PRF) distributions state that funds are to only be used to prevent, prepare for, and respond to coronavirus, and that funds may only be used for healthcare related expenses or lost revenue that is attributable to the coronavirus. The Health Resources and Services Administration (HRSA) provided guidance on how an organization was to report usage of PRF distributions received. Period 1 and Period 2 reporting required an organization to illustrate how PRF funds received were used. An organization was allowed to include eligible expenditures from January 1, 2020 through December 31, 2021 depending on the period reporting. Condition: During the process of identifying expenses that were incurred to prevent, prepare for, or respond to the coronavirus pandemic, management included expenses incurred which were not related to preparing, preventing, or responding to coronavirus. Cause: Mosaic?s internal control processes did not ensure that eligible expenses followed applicable reporting guidance. Due to the amount of detailed information that was required to be compiled by management in order to enter data into the PRF reporting portal, management inadvertently included in eligible expenses amounts unrelated to preparing, preventing, and responding to the coronavirus. Effect: Management included amounts in the PRF reporting portal for expenditures which were not eligible based on the terms and conditions of the PRF distributions and subsequent HRSA guidance. Questioned Costs: None reported. Context: A nonstatistical sample of 60 transactions out of 3,016 total transactions were selected for testing, which accounted for $242,622 of $4,693,960 of federal program expenditures. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance to ensure that only eligible costs are included in reporting. Views of Responsible Officials: Management agrees with the noted finding. However, Mosaic also incurred and reported unreimbursed expenses attributable to coronavirus of $3,530,376 which could be used to replace the identified costs unrelated to coronavirus. Management will continue to refine its processes to more diligently review expenditures to ensure only those eligible costs incurred are included in future reporting.