Finding Text
Department of Health and Human Services
Federal Assistance Listing #93.498
COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
Applicable Federal Award Number and Year – Period 4 TIN#420680467
Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting
Material Weakness in Internal Control Over Compliance and Material Noncompliance
Criteria: 2 CFR 200.303 (a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award.
Condition: The Medical Center claimed expenses that had been reimbursed by another source. The Medical Center is a critical access hospital which means that a portion of their expenditures are covered by Medicare. The Medical Center did not decrease their expenses for the portion that was reimbursed by Medicare. The Medical Center’s special report submitted to the Department of Health and Human Services for Period 4 TIN #420680487 reported these expenses that were reimbursed by other sources which made the report inaccurate as well.
Cause: The Medical Center did not have an internal control process in place to ensure the expenses reported were eligible expenditures under the federal program, and the report submitted to the Department of Health and Human Services for Period 4 was complete and accurate. The Medical Center did not consider Medicare reimbursement when claiming expenses under the federal program.
Effect: Without reducing expenses by Medicare reimbursement, ineligible expenditures were claimed under the program, and the report was not accurately completed.
Questioned Costs: The Medical Center had questioned costs of $580,669; however, the Medical Center had lost revenue carryforward on their submitted report of $234,595 and as noted in finding 2023-005, there was additional calculated lost revenue of $559,737 that could be used to cover these questioned costs. If the $580,669 of costs identified here are applied to the total remaining lost revenue, there is $213,633 of excess lost revenue remaining. Therefore, the Medical Center does not expect to have to return any funds.
Context/Sampling: Sampling was not used
Repeat Finding from Prior Years: No
Recommendation: We recommend the Medical Center review the requirements of the federal program prior to compiling the expenditures claimed under the federal program. We also recommend the Medical Center implement a control process which includes a secondary review and approval of expenditures claimed under the federal program and a secondary review and approval of required reports to be submitted to the federal agency by and individual familiar with the requirements of the federal program.
Views of Responsible Officials: Management agrees with the finding.