Finding Text
Finding 2022-001 ? Internal Control Deficiency and Noncompliance Over Activities Allowed or Unallowed and Activities Allowed/Allowable Costs Identification of the federal program: Federal Grantor: Department of Homeland Security; Federal Emergency Management Agency (FEMA) Assistance Listing No.: 97.036, Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Award Period of Performance: January 20, 2020 ? various dates through 2023 Criteria or Specific Requirement (including statutory, regulatory, or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: ?The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under cost principles, costs of one federal program cannot be included as a cost of any other federally financed program in either the current or a prior period. Condition: Per discussion with management, OU Medicine, Inc. has processes and internal controls in place to ensure personnel expenses submitted to the FEMA program were allowable COVID-19-related expenses and that expenses are not charged to more than one federal program. These internal controls include ensuring completeness and accuracy of the expenses to ensure the expenses comply with the terms and conditions of the award. However, management did not consistently retain documentation evidencing the performance of these controls and the precision of the control to evaluate if expenses are charged to more than one federal program was not precise enough. Contract labor costs in the current year charged to the FEMA program were charged to the Provider Relief Program in 2021. Cause: OU Medicine, Inc. did not consistently retain documentation to evidence the performance of internal controls over the personnel expenses charged to the federal program. OU Medicine, Inc. had procedures in place to reduce the contract labor costs submitted to the PRF program for costs that were recorded to a COVID-19 cost center in the general ledger and charged to the FEMA program; however, due to a formula error and certain contract labor costs not being recorded to a COVID-19 cost center, certain contract labor costs were charged to both the FEMA and PRF programs. Effect or potential effect: There is no consistent documentation to support the performance of internal controls for personnel costs charged to the federal program. Internal controls to review that costs were not charged to more than one federal program were not precise enough and thus, OU Medicine, Inc. charged both federal programs for the same costs. Questioned Costs: $661,878 Context: Total FEMA expenditures for Assistance Listing 97.036 were $17,932,967, of which $3,848,428 were personnel costs, of which management did not retain documentation of the performance of controls. Duplicate contract labor costs charged to the FEMA and PRF program totaled $661,878. Total contract labor costs charged to the PRF program in 2021 were $34,083,477 and total contract labor costs charged to the FEMA program in 2022 were $1,983,098. Identification as a repeat finding, if applicable: The finding is not a repeat finding. Recommendation: OU Medicine, Inc. should refine its process and retain documentation evidencing that management reviewed each expense charged to the federal program to ensure the cost is allowable and has not been reimbursed under another federal program. View of Responsible Officials: OU Medicine, Inc. agrees with the finding and has developed a plan to correct the finding and will implement procedures to ensure controls are operating effectively and documentation is retained.