Finding 622895 (2022-002)

Material Weakness
Requirement
ABL
Questioned Costs
$1
Year
2022
Accepted
2023-01-26
Audit: 45046
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The Health Center's Period 2 report to HHS included duplicate utility expenses, leading to questioned costs of $196,979.
  • Impacted Requirements: Compliance with 2 CFR 200.303(a) requires effective internal controls over federal awards to prevent errors in reporting.
  • Recommended Follow-Up: Management should enhance internal controls and ensure a thorough secondary review of supporting documents before submitting reports to the PRF portal.

Finding Text

Federal Program: Federal Assistance Listing #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 and 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 Center?s Period 2 report to HHS included duplicate amounts for utilities expenses. Cause: 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 the underlying supporting spreadsheet for utilities expenses a subtotal of the individual line items. The subtotal and the individual line items was used in the Period 2 reporting. The secondary review process did not effectively identify the error in the supporting documents. Effect: The Period 2 report submitted to HHS contained an error resulting in questioned costs. Questioned Costs: Total questioned costs related to Federal Assistance Listing #93.498 amounted to $196,979 which is a known error based on the duplicate expenses and calculation of estimated amounts reimbursed by other sources. Context: A nonstatistical sample of 60 expenditures were selected for testing. Based on errors noted related to duplicate expenditures, all such duplicate expenditures were identified from the population to arrive at the known error of $196,979. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance to ensure a detailed secondary review of underlying supporting documents occurs prior to submission of the required reports to the PRF reporting portal. Views of Responsible Officials and Planned Corrective Action: Management agrees with the noted finding. However, the Health Center included as eligible expenses in the Period 2 submission only those amounts up to the funding received, plus accrued interest. Had the noted questioned costs been identified prior to submission, the Health Center would have included additional amounts in the eligible expenses reported in the PRF reporting portal to demonstrate satisfactory use of the PRF funding received. The Health Center had $418,778 in additional eligible operating expenses which were not included in the Period 1 submission and $1,916,769 in additional eligible capital expenses not included in the Period 2 submission which would have been used to replace the identified questioned costs.

Categories

Questioned Costs Allowable Costs / Cost Principles Material Weakness Reporting

Other Findings in this Audit

  • 46453 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.766 Community Facilities Loans and Grants $13.89M
93.498 Provider Relief Fund $2.10M
93.697 Covid-19 Testing for Rural Health Clinics $516,971
93.155 Rural Health Research Centers $197,456
93.461 Covid-19 Testing for the Uninsured $13,159
93.426 Improving the Health of Americans Through Prevention and Management of Diabetes and Heart Disease and Stroke $11,855