Finding Text
Finding 2022-001: Internal control deficiency and noncompliance over the calculation of lost revenues attributable to coronavirus. Identification of the federal program: Assistance Listing Number 93.498: ? COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution ? U.S. Department of Health and Human Services ? Federal award identification number ? Not Applicable ? Federal award year: o Period 3 ? January 1, 2020 to June 30, 2022 o Period 4 ? January 1, 2020 to December 31, 2022 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 ? Internal controls. 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). The terms and conditions of the award requires the following: ? The recipient shall adhere to the reporting requirements on provider relief fund payments for payments received exceeding $10,000 in the aggregate during the payment received period. The recipient must register in the provider relief fund reporting portal and submit reports as specified by HHS. ? The recipient certifies that all information it provides as part of any application for the payment, as well as all information and reports relating to the payment that it provides in the future at the request of HHS or the HHS inspector general, are true, accurate and complete, to the best of its knowledge. ? The recipient shall maintain appropriate records and cost documentation including, as applicable, documentation described in 45 CFR 75.302 ? financial management and 45 CFR 75.361 through 75.365 ? record retention and access, and other information required by future program instructions to substantiate the reimbursement of costs under this award. Condition: Emanate Health and Affiliates incorrectly reported lost revenues attributable to coronavirus in the HRSA PRF Reporting Portal (the ?Portal?) due to errors made in the calculation of lost revenues which resulted in an overstatement of lost revenues of $8,123,440. Cause: Management did not have effective internal controls in place to ensure the reported lost revenues attributable to coronavirus reported in the Portal were calculated according to terms and conditions of the award and free from error. Effect or potential effect: The calculation of lost revenues attributable to coronavirus was reported incorrectly in the Portal which resulted in an overstatement of lost revenues of $8,123,440. Questioned costs: None. Context: During our testing over reporting, we obtained a listing of 3 PRF reports submitted to the Portal and selected 2 PRF reports for testing. We observed the calculation of lost revenues incorrectly excluded hospital fee revenues in 2022 actuals but did include hospital fee revenues in 2019 actuals resulting in the comparison of actuals to actuals under the option 1 method to be performed on a non-comparable basis (as the entity should include the same types of revenues in both years being compared). This resulted in an overstatement of lost revenues of $8,123,440. After taking the errors into consideration, Emanate Health and Affiliates still had excess lost revenues to substantiate the payments received. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management develop and implement effective internal controls to ensure accurate reporting in the Portal in accordance with terms and conditions of the award. This will ensure the calculation of lost revenues attributable to coronavirus is reported correctly. Views of responsible officials: In future reporting periods, management will add an additional layer of review of the lost revenue calculation before submission through the Portal. Through this review, management will ensure the lost revenue calculation is performed on a comparable basis which would include the same types of revenues being compared. Management will correct the lost revenues attributable to coronavirus in the next Portal submission, as applicable and ensure any other Portal submissions have the correct lost revenue calculation and is reported correctly.