Finding Text
2022-006 Period 1 revised lost revenue calculation
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Reporting Compliance Requirement
Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). Eligible health care providers received PRF appropriations for health care related expenses or lost revenues attributable to coronavirus. Recipients who received one or more payments exceeding $10,000 are required to report in each applicable reporting period.
Condition: The Medical Center elected to calculate lost revenues under option iii, "Alternate Reasonable Methodology" for the Period 1 and the Period 4 reporting submissions. The Medical Center, however, changed the methodology for calculating lost revenues for the Period 4 reporting submission. The change in the methodology resulted in the revenues reported for the Period 1 (January 1, 2020 through June 30, 2021) to be $1,491,516 lower than what was needed to cover the total funding received for the Period 1 when combined with the healthcare related expenses for Period 1.
Cause: The Medical Center did not review the total revised lost revenues for Period 1 to ensure that the change in methodology for the calculation of lost revenues resulted in an amount equal to or greater than what was reported and needed to cover the Period 1 funding received.
Effect: The Medical Center changed its lost revenue calculation for Period 1 which resulted in $1,491,516 in unused Period 1 funds.
Questioned Costs: Known $1,038,921. The reported lost revenue computation for Period 1 was changed which resulted in $1,491,516 of unused Period 1 provider relief funds. When you net the $452,595 understatement error in the lost revenue calculation noted in 2022-005, it results in $1,038,921 in unused Period 1 funds.
Perspective Information: We tested the information reported for Period 1 within the Period 4 reporting submission to supporting documentation to determine if the report was calculated based on underlying accounting data.
Repeat Finding: This finding was not reported in previous year.
Recommendations: We recommend policies and procedures over federal grant reporting to be strengthened to ensure that changes in the methodology for the calculation of lost revenues results in total lost revenues equal to or greater than what was reported and needed to cover prior funding received.
Views of Responsible Officials: The Medical Center experienced turnover in key accounting personnel during the month leading up to the deadline for the Period 4 reporting submission. It was not the intent of management to change Period 1 reporting methodology, however, we encountered difficulties in transitioning the PRF accounting from the prior CFO to the interim CFO. Prior to completing future submissions, we will implement a procedure to double check the computations and review revised lost revenue calculations for prior reporting periods.