MAHNOMEN HEALTH CENTERNon-Profit

2021-004 Allowability ? Internal Control over Payroll and General Disbursements (Material Weakness and Noncompliance) Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Provider Relief Fund AL Number: 93.498 Award Period: Phase 1 and 2 Reporting (4/1/2020 - 12/31/2021) Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to ?200.303 Internal Controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: As part of our testing we noted that the Organization had a number of issues related to how it estimated and reported costs in the Phase 1 and Phase 2 Provider Relief Fund (PRF) reports which resulted in questions costs. We have outlined the questioned costs below: ? The Organization didn?t reduced costs charged to PRF by the amount reimbursed through the Medicare cost report resulting in an overstatement of costs of $82,383. ? The Organization included estimated payroll expense incurred related to time spent on COVID-19 related activities. We were able to confirm payroll expenses were incurred during the time period, in excess of the costs claimed, but the Organization was unable to produce support that the time included was related to prepare, respond and prevent COVID-19. Additionally, payroll expense was included during Q2 and Q3 of 2020 which overlapped with the PPP program. Total questioned cost related to payroll was $414,193. ? There was a difference between the listing of expenses received from the Organization and what was reported which overstated expenses by $55,032. Questioned Costs: $551,608 Context: The costs were identified during general disbursement and payroll testing. Cause: Management oversight and lack of clarity of the program terms and conditions. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: N/A Recommendation: We recommend the Organization review the Provider Relief Fund Terms and Conditions and the Frequently Asked Questions to ensure the funds are being used in compliance with the requirements. Views of Responsible Officials: There is no disagreement with the audit finding. Management?s Response: During the onset of the COVID-19 pandemic and the distribution of the PRF dollars, there were many unknowns and many elements changed including criteria and timelines. These unknowns and changes resulted in confusion and uncertainty in allowable costs and tracking for payroll. The Organization will continue to review the PRF Terms and Conditions and understand these to the best of our knowledge. The Organization feels that because has loss of revenue in excess of the questioned costs, no funds need to be returned. We will apply the questioned costs against the loss of revenue in a future reporting period.