Finding Text
III. Section III – Federal Award Findings and Questioned Costs
Finding 2021-001 – Internal Control over Reporting (Significant Deficiency)
Federal agency: U.S. Department of Health and Human Services
Federal program title: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural
Distribution
AL Number: 93.498
Award Period: Period 1 and 2 Reporting (Period of availability January 1, 2020 – December 31, 2021)
Type of Finding: Significant Deficiency in Internal Control over Compliance
Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the
nonfederal entity’s financial management systems, including records documenting compliance with
Federal Statutes, regulations, and the terms and conditions of the federal award, must be sufficient to
permit the preparation of reports required by general and program-specific terms and conditions. Further,
the financial management system of each non-federal entity must provide accurate, current, and
complete disclosure of the financial results of each federal award or program, in accordance with the
reporting requirements.
Condition/Context: It was noted that the Other Provider Relief Fund (PRF) Expenses section was
completed for the by-period program report, however the amounts did not agree to the final expenditure
support. The final expenditure support exceeded the direct expenditures reported in the Other PRF
Expenses and Unreimbursed Expenses Attributable to Coronavirus sections of the reports. In addition,
the classification of the expenses by category and between periods per the final support did not match the
period 1 and 2 reports.
Questioned costs: None noted.
Cause: Evolving guidance contributed to the condition. Management was diligent about segregating
funding and expenditures for COVID-19 funding in total, but that approach made reporting for individual
programs more difficult.
Effect: The District did not accurately complete the program reporting as noted in the condition; however,
the final support compiled for Other PRF Expenses exceeded the amounts reported in total for period 1
and 2 by $3.4 million. In addition, there was a total of $35 million of lost revenue in addition to the Other
PRF Expenses. PRF was only applied to $6.5 million, which left unused lost revenue of $28.5 million at
the end of period 2. Due to the condition noted above, the exact PRF that should have been applied to
lost revenue in period 1 and 2 is not certain; however, there were no related questioned costs as there
were unused lost revenues and supported Other PRF Expenses totaling $32 million.
Repeat Finding: This is not a repeat finding. Recommendation: If the District continues to accept grant funding, we recommend that they create a
process to ensure that expenditures are segregated by funding sources at the beginning of the grant
period and the plan for individual program reporting requirement compliance is established and
monitored.
Views of Responsible Officials: The District believed they were following the reporting requirements at
the time of submission based on the guidance available. After the submission they went through the
process to segregate the PRF support more completely from other COVID-19 funding. While the
classifications and PRF applied to Other PRF Expenses versus lost revenues within the program reports
would have changed based on that process, in total amounts in excess of program expenditures for both
periods were supported.