Lexington Regional Health Center

Federal Program: Federal Assistance Listing #93.498 US Department of Health and Human Services COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes 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. Condition: The Health Center?s Period 2 report to HHS included duplicate amounts for utilities expenses. 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 the underlying supporting spreadsheet for utilities expenses a subtotal of the individual line items. The subtotal and the individual line items was used in the Period 2 reporting. The secondary review process did not effectively identify the error in the supporting documents. Effect: The Period 2 report submitted to HHS contained an error resulting in questioned costs. Questioned Costs: Total questioned costs related to Federal Assistance Listing #93.498 amounted to $196,979 which is a known error based on the duplicate expenses and calculation of estimated amounts reimbursed by other sources. Context: A nonstatistical sample of 60 expenditures were selected for testing. Based on errors noted related to duplicate expenditures, all such duplicate expenditures were identified from the population to arrive at the known error of $196,979. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance to ensure a detailed secondary review of underlying supporting documents occurs prior to submission of the required reports to the PRF reporting portal. Views of Responsible Officials and Planned Corrective Action: Management agrees with the noted finding. However, the Health Center included as eligible expenses in the Period 2 submission only those amounts up to the funding received, plus accrued interest. Had the noted questioned costs been identified prior to submission, the Health Center would have included additional amounts in the eligible expenses reported in the PRF reporting portal to demonstrate satisfactory use of the PRF funding received. The Health Center had $418,778 in additional eligible operating expenses which were not included in the Period 1 submission and $1,916,769 in additional eligible capital expenses not included in the Period 2 submission which would have been used to replace the identified questioned costs.