MARIA JOSEPH MANOR

2021-001: Material Weakness in Internal Control Over Compliance, Material Noncompliance Federal Program: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: N/A Award Number: N/A Award Year: 2020 Compliance Requirements: Activities Allowed and Unallowed; and Allowable Costs/Cost Principles Questioned Costs: $2,908 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund (PRF) payments must be used for allowable expenses and lost revenue as described in the PRF terms and conditions and specified guidance issued by the U.S. Department of Health and Human Services. Activities allowed have been defined as expenses used to prevent, prepare for, and respond to coronavirus, domestically and internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. Condition and Context: Upon review of the initial population of expenses claimed for reimbursement from the Period 1 and 2 submission, it was noted that there were certain items of cost that did not meet the criteria of an allowable expenses as defined by the U.S. Department of Health and Human Services guidance. Such items included: -Several amounts applied to the funding were related to pay dates that were within an old payroll system to which the client no longer has access. As such, the Manor was not able to provide information as to the specific employees who worked the identified hours applied to the funding and therefore the proper approval procedures for such amounts were unable to be substantiated. Additionally, the Manor was unable to substantiate the pay rates since the individuals who worked these hours were not able to be identified. As such, the full amount of these costs applied to the funding are designated as questioned costs. -The Manor did not maintain sufficient documentation to provide information as to the specific employees who worked the identified hours applied to the funding and therefore the proper approval procedures for such amounts were unable to substantiated. Additionally, the Manor was unable to substantiate the pay rates since the individuals who worked these hours were not able to be identified. As such, the full amount of these costs applied to the funding are designated as questioned costs. -The Manor utilized average rate calculations to determine the rates applied to hours in the calculation of allowable payroll costs. The Manor was unable to provide the information necessary to substantiate these average rate calculations. The Manor was able to provide rate support for the specific employees that worked the designated hours. The average rates utilized in the Manor's analysis and the actual rates for each of the employees resulted in variances, which are designated as questioned costs. -The Manor was unable to provide supporting documentation for a non-payroll expensed charged to the program, as an invoice was not able to be located. In the aggregate, these issues resulted in known questioned costs of $2,908, which were then extrapolated from a sample population. This was not a statistically valid sample. Effect: The Manor claimed expenses that were not in accordance with established U.S. Department of Health and Human Services guidance and are therefore deemed unallowable. Cause: Management did not maintain adequate supporting documentation related to underlying calculations and costs applied to the program to substantiate cost allowability. Management misinterpreted the guidance established by U.S. Department of Health and Human Services and claimed unallowable expenses in their reporting of qualified expenses. Recommendation: We recommend that management should maintain all supporting documentation related to underlying calculations and costs applied to the program so that they can be properly substantiated. Additionally, management should implement procedures to ensure that the most recent guidance is reviewed and understood, and that information used in accumulating allowable expenses is reviewed, with errors addressed. Procedures should be performed on a regular basis with previously recognized expenses being reviewed to ensure they qualify as an allowable expense under the most recent guidance. Finally, management should correct such issues in future submissions to ensure proper reporting of allowable expenses. Views of Responsible Officials: Management agrees with the finding and will correct in future submissions but acknowledges that it has sufficient lost revenues and infection control expenses to cover the questioned costs.