Finding Text
Finding 2023-001: Significant Deficiency in Internal Control Over Compliance - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting
Assistance Listing Number: 93.498 - COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution
Federal Agency: U.S. Department of Health and Human Services
Pass-Through Agency: N/A
Award Number/Year: N/A/2021
Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of
2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Recipients of Provider Relief Fund (PRF) and American Rescue Plan Rural Distribution payments (the Program) must also comply with the reporting requirements described in the Program terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services.
Condition/Context: During our testing of the Period 3 and 4 reports, we noted that the Company did not calculate and report lost revenues in accordance with the U.S. Department of Health and Human Services guidance. Specifically, the Company inadvertently excluded certain amounts related to resident services. Additionally, they incorrectly included other operating revenues that were not related to providing resident services. The adjustment needed to correct the actual revenues decreased total lost revenues from $902,099 to $688,775, of which $216,203 was used in a prior reporting resulting in total lost revenues available to be used in the Period 4 of $472,571. The Company used $213,307 of lost revenues in Period 4 resulting in $259,264 of unused lost revenues available for future reporting periods. This is not a statistically valid sample.
Effect: The amounts reported to Health Resources and Services Administration (HRSA) were not in accordance with established U.S. Department of Health and Human Services reporting guidance.
Questioned Costs: None reported.
Cause: An oversight during the review process that failed to identify the errors.
Recommendation: We recommend that management revisit their review process to ensure that amounts are reconciled back to the general ledger during the review process.
View of Responsible Officials: The Company agrees with the finding. The Company will implement a process for a member of the finance staff to prepare lost revenues calculations. The Director of Finance will then provide a second layer of detailed review of the lost revenue calculations and the financial reporting to ensure amounts captured are accurate and categorized appropriately. Sign off on preparation and review will be documented appropriately.