North Memorial Health

Finding No. 2021-001 Allowable Activities and Reporting Significant Deficiency in Internal Controls Over Compliance Federal Program: Federal Financial Assistance Listing #93.498 US Department of Health and Human Services COVID-19 Provider Relief Fund Criteria: The terms and conditions of the CARES Act Provider Relief Fund (PRF) require funds received to be used to prevent, prepare for, and respond to coronavirus and that the payment shall reimburse the recipient only for health care related expenses and lost revenues that are attributable to the coronavirus. Condition: During the process of identifying expenses that were incurred to prevent, prepare for or respond to the coronavirus pandemic, management included expenses for which there was a lack of supporting documentation. Cause: Due to the amount of detailed information that was required to be compiled by management in order to enter data into the PRF Reporting Portal, management inadvertently included unallowable expenses that could not be supported by auditable evidence as expenses incurred to prevent, prepare for or respond to the coronavirus pandemic. Effect: Management included amounts in the PRF Reporting Portal which were not eligible based on the terms and conditions of the PRF award. Questioned costs: Total questions costs amounted to $82,836 and were calculated based off amounts for which there was a lack of supporting documentation, but which were claimed as eligible expenses in the PRF Reporting Portal. Context: During the audit, 2 expenses were identified that were included in the PRF Reporting Portal submission which could not be supported by auditable evidence as expenses incurred to prevent, prepare for or respond to the coronavirus pandemic by audit evidence. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance to ensure that only eligible costs are included in the amount expended. Views of Responsible Official and Planned Correction Action Management agrees with the finding noted. However, North Memorial also incurred and reported sufficient lost revenue in the PRF reporting portal that if the noted expenses were not to be reported, North Memorial would have satisfactorily incurred eligible expenses and lost revenue in excess of the PRF funds received, including interest earned on such funds. Management will continue to refine processes to more diligently review expenses to ensure only those costs incurred and supported by underlying documentation are included in future reporting.