PEMBINA COUNTY MEMORIAL HOSPITAL

Federal agency: U.S. Department of Health and Human Services Federal program title: Provider Relief Fund Assistance Listing Number: 93.498 Award Period: Reporting Period 1 and 2 for funds received prior to December 31, 2020, used through December 31, 2021 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR 200.303(a) states that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Association did not have documented formal controls and procedures over compliance with federal awards. Condition: The Association did not have documented formal review processes over the use of the federal awards or required reporting for the federal awards. Eligible uses of federal awards were tracked in detail and reviewed, with formal approval documented on certain larger expenditures, but there was not a formal documented review process over whether expenditures were eligible under the federal award in all cases. Required reporting under the federal award was completed, but there was not a formal review or approval process in place. Context: The Association maintained detailed records of eligible uses of federal funds for tracking and required reporting purposes. The Association's CEO maintained this schedule as eligible uses of funds were identified throughout the organization, reviewed activity, and the Association CFO reconciled the schedule to the general ledger. There was not, however, documentation of a formal review or approval, outside of the schedule being maintained and reconciled. Similarly, the Association CFO completed the required reporting under the federal award based on the schedule discussed above, a lost revenue calculation, and other supporting documentation, but there was no formal review or approval process for that report. Management did also make regular reports to governance in monthly financial reports, including the use of COVID relief funds. These reports only covered more significant uses of funds and overall status updates on remaining funding, not a comprehensive report of all uses. The Association does have in place review processes and controls over all expenditures (AP, Payroll), they are just not designed specifically to consider compliance with federal programs. Cause: The Association has not previously received federal awards in an amount sufficient to require an audit under Uniform Guidance. Therefore, more formal controls and procedures around the use of federal awards had not been in place. The Provider Relief Fund, and certain other federal funds received in response to the COVID-19 pandemic were an unexpected occurrence. As the relief funds were distributed to the Association, the focus of Association management and governance was on responding to the pandemic, and tracking use of related relief funds, and not necessarily on incorporating formal policies and procedures due to the time sensitive nature of the pandemic. In addition, detailed guidance surrounding the Provider Relief Fund was not immediately available, and changed quite frequently over the period of the award, making it difficult for organizations to properly incorporate more formal policies and procedures. Effect: Without formal control and review processes in place over use of federal funds or required reporting under those awards, there is a greater risk of improper use of funds or misstatement in required reporting. Repeat finding: No Recommendation: We recommend that management implement more formal control process surrounding the use of federal awards where there is segregation between individuals identifying or proposing expenditures/uses of funds and an individual reviewing and approving that expenditure/use. We also recommend for any formal reporting required under federal awards that there be a formal review process where an individual is reviewing and approving the report who did not prepare the report. Documentation of review and approval should be retained in both cases. Views of responsible officials: There is no disagreement with the audit finding.