Finding Text
Statement of Condition: During out audit, it was determined that the original supporting documentation for the PRF Period 1 and 2 Report submissions did not agree to the actual submissions and that there was no evidence retained that the PRF Period 1 report was reviewed and approved by a separate individual outside of the preparer. Further, certain personnel expenses included in total other PRF expenses were not supported by documented time studies to substantiate the percentage of salaries and fringe benefits included in PRF Periods 1 and 2 Reports. Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Cause of Condition: There was turnover in the Chief Financial Officer position and finance department during the period that the PRF Period 1 and 2 report submissions were required to be submitted and supporting records could not be located. Although outside consultants were brought in before a new Chief Financial Officer was hired, due to the turnover and small size of the finance department, the auditee did not have an internal control process in place to ensure an independent review was done of the submission and supporting documentation, including documented time studies. Effect of Condition: While the Nursing Home incurred more than sufficient eligible expenditures and lost revenues to exhibit that the Nursing Home funds were fully utilized, the reporting of the Period 1 and Period 2 expenditures was not supported by the original documentation maintained by the former CFO and outside consultants for certain personnel and fringe benefits, including time studies for allocation of personnel. Recommendation: We recommend that management implement a control process which includes a documented secondary review of approval. Due to the untimely reporting of this finding, the Nursing Home is past the timeframe for filing revisions to Period 1 and Period 2 PRF reports. Therefore, we also recommend the Nursing Home maintain documentation that details they incurred enough eligible expenditures and lost revenues to continue to qualify for the full amount of the funding, even though certain expenses claimed on the Period 1 and Period 2 Reports are not supported by documented time studies. Views of Responsible Official: Management agrees with the recommendation. See corrective action plan.