Dawson County Hospital District dba Medical Arts Hospital

U.S. Department of Health and Human Services COVID-19 - Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution - Period 1 Activities Allowed/Unallowed and Allowable Costs - Assistance Listing Number 93.498 Condition: The District reported expenditures to the U.S. Department of Health and Human Services through the PRF reporting portal for the first period of availability that did not meet the criteria of allowable costs in accordance with the terms and conditions. Additionally, the District did not establish adequate internal controls over compliance related to a major federal award program with respect to the allowable costs compliance requirement. Criteria: Specific terms and conditions were provided by the U.S. Department of Health and Human Services associated with the Provider Relief Fund (PRF). In accordance with the terms and conditions, PRF distributions can only be used to reimburse expenditures incurred to prevent, prepare for, or respond to the coronavirus that have not been reimbursed from other sources, and that other sources are not obligated to reimburse. Management is responsible for establishing effective internal controls over compliance requirements related to each major federal award program. Cause: Proper internal controls over compliance were not in place to identify unallowable costs in accordance with the PRF terms and conditions. Effect: The District reported costs that were not allowable to the U.S. Department of Health and Human Services through the PRF reporting portal for the first period of availability, resulting in a material noncompliance with respect to a major federal award program. Questioned Costs: For the year ended March 31, 2022, the District reported unallowable costs in the amount of $710,269. Recommendation: Effective internal controls over compliance should be designed and implemented to ensure all expenses being reported to the U.S. Department of Health and Human Services are allowable in accordance with the terms and conditions prior to claiming and reporting the expense as allowable through the PRF reporting portal. Views of Responsible Officials - See attached corrective action plan for the District's response to finding.

Plan of Corrective Action: Management agrees with the finding. We have implemented a process to review all expenditures on a monthly basis to determine the allowability of each expense charged to the federal award in accordance with the terms and conditions prior to claiming the expense as allowable through the PRF reporting portal. Anticipated Completion Date: January 23, 2023