Finding 971319 (2023-006)

Significant Deficiency Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2023
Accepted
2024-04-26

AI Summary

  • Core Issue: The Organization lacks effective internal controls for reviewing and approving COVID-related expenditures, leading to potential miscalculations and noncompliance.
  • Impacted Requirements: Compliance with 2 CFR 200.303(a) is compromised due to inadequate documentation and policies for managing federal awards.
  • Recommended Follow-Up: Enhance internal control policies to ensure thorough review and approval of expenditures and revenue calculations to align with federal program requirements.

Finding Text

Department of Health and Human Services Federal Financial 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 #370645239 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control Over Compliance 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. The Organization claimed expenses based on specifically identified COVID related expenses and general and administrative expenses. Condition: During our testing, there was no documentation of review and approval of the expenditure listing or lost revenue calculation. The Organization also miscalculated the portion of an expense that was reimbursed by another source. Cause: The Organization did not have an adequate internal control policy in place to ensure review and approval of expenditures and lost revenue claimed under the federal programs was documented and that all claimed expenditures were accurately calculated and claimed. Effect: The lack of adequate policies governing review and approval over the expenditure listing and lost revenue calculation increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance and miscalculation of reimbursement by other sources in a timely manner. Question Costs: None reported. Context/Sampling: A nonstatistical sample of 65 expenditures were selected for testing, which accounted for $172,298 of $940,628 direct program expenditures. Of these 65, the Medicare reimbursement was miscalculated for one selected item. There was one lost revenue calculation and one expenditure detail and both were tested. Repeat Finding from Prior Year: Yes, Finding 2021‐008. Recommendation: We recommend that the Organization enhance internal control policies to ensure the expenditure listing and lost revenue calculation are reviewed and approved to ensure that all payments are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.

Categories

Allowable Costs / Cost Principles Cash Management Significant Deficiency

Other Findings in this Audit

  • 394873 2023-003
    Material Weakness Repeat
  • 394874 2023-003
    Material Weakness Repeat
  • 394875 2023-004
    Material Weakness Repeat
  • 394876 2023-005
    Material Weakness Repeat
  • 394877 2023-006
    Significant Deficiency Repeat
  • 971315 2023-003
    Material Weakness Repeat
  • 971316 2023-003
    Material Weakness Repeat
  • 971317 2023-004
    Material Weakness Repeat
  • 971318 2023-005
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.128 Mortgage Insurance_hospitals $12.75M
93.498 Provider Relief Fund $940,628