Davis County HospitalLocal Government

Activities Allowed or Unallowed, Allowable Cost/Cost Principles - Material Weakness in Internal Control Over Compliance Reporting - Material Weakness in Internal Control Over Compliance and Material Noncompliance Federal Program: Federal Financial Assistance Listing #93.498 US Department of Health and Human Services COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Criteria: The terms and conditions of the CARES Act Provider Relief Fund (PRF) distributions state that funds are not to be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Condition: During the process of identifying expenses that were incurred to prevent, prepare for or respond to the coronavirus pandemic, it was noted that payroll expenses were not reduced by amounts reimbursable from other sources, namely Medicare. 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 in eligible expenses certain costs that were not reduced by amounts reimbursable from Medicare. Effect: Management included amounts in the PRF reporting portal which were not eligible based on the terms and conditions of the PRF distributions. Questioned Costs: None. Context: Activities Allowed or Unallowed, Allowable Cost/Cost Principles – While agreeing the expenses reported in the HRSA reporting portal submission, we identified expenses not reduced for amounts reimbursed from other sources. Reporting – Key line items were tested on the Period 4 HHS report. 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 amounts expended and that the same expenses are not reimbursed by other sources. Views of Responsible Officials and Planned Corrective Action: Management agrees with the noted finding. Management will continue to refine processes to more diligently review expenses to ensure that expenses are not being utilized for reimbursement from multiple sources.

Finding No. 2021-001 Federal Program: CFDA #93.498 US Department of Health and Human Services COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Criteria: The terms and conditions of the CARES Act Provider Relief Fund (PRF) distributions state that funds are to only be used to prevent, prepare for and respond to coronavirus, and that funds may only be used for healthcare related expenses or lost revenue that is attributable to the coronavirus. Subsequent guidance issued by the Health Resources and Services Administration (HRSA) states that pay rates in excess of Executive Level II are not eligible. Condition: During the process of testing claimed pandemic related healthcare expenses, it was noted that wage rates in excess of Executive Level II were claimed. Cause: Due to the amount of detailed information that was required to be compiled by management to enter data into the PRF reporting portal, management did not notice the inclusion of wage rates in excess of Executive Level II which was an oversite. Effect: Management included amounts in the PRF reporting portal which were not eligible based on the terms and conditions of the PRF distributions and subsequent HRSA guidance. Questioned Costs: Total questioned costs related to CFDA #93.498 amounted to $29,659 related to wage rates in excess of Executive Level II (reduced for Medicare cost-based reimbursement). Context: The PRF and HRSA guidance states that pay rates in excess of Executive Level II are not eligible. Wage rates in excess of Executive Level II were claimed by the Hospital in Q4 (2020). 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 amounts expended. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding summarized above. However, management notes that lost revenue was claimed during the reporting period in excess of the questioned costs identified above. As a result, had the questioned costs noted above not been included in the PRF submission, there would be no change in the amount of PRF expended by the Hospital during the reporting period.