Finding Text
Finding 2022-002 Program Name: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Assistance Listing Number: 93.498 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs Questioned Cost: $406,035 (Known Questioned Cost) Condition: In Provider Relief Fund reporting period 2, the Moore Center Services, Inc. reported expenditures of $406,035 related to an HVAC capital project that was not yet complete and placed into service by the end of the period of availability, of December 31, 2021. Criteria: The Provider Relief Fund Frequently Asked Questions (FAQs) state ?For projects that are a bundle of services and purchases of tangible items that cannot be separated, such as capital projects, construction projects, or alteration and renovation projects, the project costs cannot be reimbursed using Provider Relief Fund payments unless the project was fully completed by the end of the Period of Availability associated with the Payment Received Period.? This language was added to the FAQs, on August 30, 2021. Section III ? Federal Award Findings (Continued) Cause: The Provider Relief Fund Post-Payment Notice of Reporting Requirements state that updates to HVAC systems are an allowable use of the funds. The Agency began discussions of the HVAC project in Spring 2021, and entered into an agreement with a contractor during October 2021 and work on the project commenced in April 2022, but the project was not fully completed by the end of the Period of Availability (December 31, 2021) as required by the Provider Relief Fund FAQs. Effect: Expenditures for a capital project that was not complete by the end of the Period of Availability, were claimed in reporting period 2, which has resulted in a reportable finding. Recommendation: Management should implement procedures to ensure grant funds are expended on allowable costs during the applicable periods of availability. View of Responsible Officials: The Agency began discussions of the need for on HVAC update in the Spring of 2021. After receiving various proposals, the Agency entered into an agreement in October 2021 for an HVAC update. According to the Post-Payment Notice of Reporting Requirements HVAC updates are considered to be an allowable cost. The Agency relied on FAQ dated July 15, 2021, during their planning of the capital expenditure, which did not include a requirement that the capital project be fully complete by the end of the Period of Availability to be allowable. This requirement was added on August 30, 2021. The FAQ the Agency referred to, stated ?For purchases of tangible items made using Provider Relief Funds payments, the purchase does not need to be in the Reporting Entity?s possession (i.e. backordered personal protective equipment, capital equipment) to be considered an eligible expense.? HVAC projects at facilities require a significant amount of time to plan, design, and build under normal circumstances, even before taking into consideration complications added by the pandemic, which included contractor shortages, labor availability issues, and supply chain issues. The Agency in good faith, started the process of receiving bids for the project, entered into the contract, and committed funds to the project, using the guidance available at the time of the commitment. The project was part of the Agency?s initiative to prevent, prepare for, and respond to coronavirus and, accordingly, the Provider Relief Fund grants were used to help fund the initiative.