Finding Text
ALN, Federal Agency, and Program Name - 21.027, U.S. Department of Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Federal Award Identification Number and Year - N/A - 2023
Pass-through Entity - Michigan Health and Hospital Association
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - Per Uniform Grant Guidance 2 CFR 200.303 paragraph (a) Holland Hospital must "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".
Additionally, per the grant agreement signed with the Michigan Hospital Association, "Retention bonuses for employees/employee groups at risk of leaving (not to exceed 20% of total funds awarded to each health care provider), are deemed to be eligible costs under the grant terms.
Condition - The Hospital's controls in place for submitting expenses did not identify that several invoices and related expense amounts were duplicated in the addendum to the period 1 submission. As a result, period 1 addendum submission included expenses that were deemed unallowable as they had already been utilized to support funding received. Reimbursement for, the original period 1 submission contained retention bonus costs that exceeded 20% of total funds awarded.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A, refer to context below for additional information.
Context - The Hospital submitted $227,879 in contract labor costs for reimbursements in the period 1 submission and on the period 1 addendum. Additionally, retention bonuses submitted for reimbursement exceeded the 20% bonus cap outlined in the grant agreed by $273,825. The Hospital was able to replace these costs with other allowable costs, thereby creating no questioned costs.
Cause and Effect - The lack of appropriate level of review resulted in ineligible costs being submitted for reimbursement.
Recommendation - We recommend that the Hospital implement controls, including levels of review, to ensure that expenses submitted are allowable in accordance with the grant agreement and uniform guidance requirements.
Views of Responsible Officials and Corrective Action Plan - The Hospital agrees that it submitted duplicate invoices for reimbursements in the addendum to period 1 submission to MHA and that our preventative controls did not catch this, however we want to clearly state that our detective controls found the error post submission. At that time we immediately contacted and corrected the error with MHA. We will continue to monitor our preventative controls and review processes to avoid this in the future.