Finding 2023-001
material weaknessmodified opinion
- Program
- PROVIDER RELIEF FUND (93.498)
- Compliance requirement
- Reporting
- FAC record
- FY2023 audit on fac.gov
Finding text from the filing
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 #860554593
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 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 selected Option iii to calculate lost revenue, which consists of utilizing an alternative reasonable method.
Condition ‐ The Organization selected option iii to calculate lost revenue using budgeted gross revenues to actual gross revenues. The Organization’s HHS Period 4 Report included lost revenues for three quarters that did not agree to the supporting calculation of lost revenues.
Cause ‐ The budgeted amounts were updated after the HHH Period 4 Report was submitted. Those changes decreased the budgeted amounts for three quarters in 2022 resulting in lost revenues being under‐reported by $278,644.
Effect ‐ The Organization understated the amount of lost revenues claimed in the HHS Period 4 Report by $278,446. While the Organization had an error in the total amount of lost revenues reported, the Organization has unused lost revenues of $4,563,025. Should the lost revenue reported by the Organization be corrected, the unused lost revenues would be $4,841,669.
Questioned Costs ‐ None reported.
Context ‐ Lost revenue was tested for all twelve quarters included in the HHS Period 4 Report. Three of the quarters had lost revenues which were reported incorrectly (Quarters 1, 2, and 3 in 2022).
Repeat Finding from Prior Years ‐ No
Recommendation ‐ We recommend that the Organization enhance internal control policies over the budget to ensure that the lost revenue calculation is not changed after submission and follows the Option iii methodology utilized to calculate lost revenues.
Views of Responsible Officials ‐ Management agrees with the finding.