Finding 969027 (2021-003)

Finding 2021-003 – Noncompliance with Allowable Costs and Reporting Material Noncompliance and Material Weakness Department of Health and Human Services COVID-19 Provider Relief Funds Assistance Listing 93.498 Criteria: The Department of Health and Human Services provided terms and conditions associated with the Provider Relief Fund (PRF). Those terms and conditions outlined the usages of the PRF distributions received, specifically related to expenses. PRF distributions should only be used to prevent, prepare for, and respond to the coronavirus that have not been reimbursed from other sources or that other sources are not obligated to reimburse. Management should have effectively designed controls to review, approve, prevent, or detect and correct, material noncompliance with major federal programs. Condition: The Authority submitted expenses through the Department of Health and Human Services PRF portal for the first period of availability that did not meet the criteria of allowable expenditures in accordance with the terms and conditions and lacked related controls over compliance with major federal programs. Context and Questioned Costs: A sample of 60 payroll expenditures and 60 non-payroll expenditures were selected. The sample of 60 identified $85,288 of questioned costs in the sample population to not be in compliance. The sample of 60 non-payroll expenditures were tested and 34 sample selections identified $1,164,098 of questioned costs in the non-payroll population to not be in compliance. The sample was not and was not intended to be statistically valid. Effect: The Authority overstated the expenses submitted through the Department of Health and Human Services PRF portal for the period of availability, resulting in material noncompliance. Cause: A control was not in place to review, approve, prevent, or detect and correct, ineligible expenditures from being identified and reported as qualifying expenditures for the Provider Relief Funds. Qualifying expenditures should have been determined based on the terms and conditions associated with the PRF. Identification of Prior Year Audit Findings: N/A Recommendation: Effective controls over compliance and financial reporting should be implemented to ensure payroll and non-payroll expenses are accumulated in accordance with the terms and conditions prior to claiming such expenditures as being allowable and being submitted through the Department of Health and Human Services PRF portal. Views of responsible officials: Management agrees with the findings and has put in to place a process to review all qualifying expenses monthly moving forward. See Management’s Corrective Action Plan.