MARSHALL COUNTY HEALTHCARE CENTER

2021-003 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #460380552 Preparation of the Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance - Other Criteria: Proper controls over financial reporting includes a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the accompanying notes to the schedule. Condition: The Center does not have an internal control system designed for the preparation of the schedule. As auditors, we were requested to assist with the preparation of the schedule. Cause: Auditor assistance with preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Center meets specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Center would not be able to draft a complete and accurate schedule without the assistance for the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: Wile we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Center is aware of this condition for financial reporting requirements relating to the Center?s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

2021-004 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #460380552 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Material Weakness in Internal Control over Compliance and 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: In one instance, a personnel expense claimed under the program did not agree to supporting documentation. The Center also claimed consulting fees twice under the program and claimed payments made directly to employees to assist with personal hardships during the pandemic. The Center did not retain all supporting documentation initially used to identify and claim eligible expenses under the program. In addition, no documentation was retained to support the Center?s final expenditures listing, identified as eligible and claimed under the program, was reviewed and approved by a separate individual outside of the preparer. The Center?s special report submitted to the Department of Health and Human Services for Period 1 TIN #460380552 was not reviewed and approved by a separate individual outside of the preparer or individual who inputted and submitted the report. Cause: The personnel expense claimed under the program did not agree to supporting documentation and management overlooked the consulting fees claimed under the program in duplicate. The employee assistance payments were believed to be eligible PRF expenditures, however the guidance states the funding shall be used only for healthcare related expenses that are attributable to preventing, preparing for, and responding to the coronavirus. The Center did not retain all supporting documentation initially used to identify and claim eligible expenses under the program. In addition, the Center did not retain formal documentation to support a secondary review and approval over the Center?s final expenditures listing. The Center did not have an internal control process in place to ensure a secondary review and approval of the special report submitted to the Department of Health and Human Services for Period 1 TIN #460380552 was formally documented. Effect: Without documentation to support a secondary review and approval, there is a possibility that ineligible expenditures are claimed under the program and included within the special report. Management recompiled supporting documentation to substantiate eligible expenses claimed under the program. Expenses included within the special report submitted to the Department of Health and Human Services for Period 1 TIN #460380552 relating to a personnel expense, duplicative consulting fees, and payments made directly to employees to assist with personal hardships were overstated by $29,856. Questioned Costs: Total personnel expense, consulting fees and employee assistance payments totaled $29,856. However, the Center?s special report for Period 1 included approximately $62,500 of additional unreimbursed healthcare related expenses that more than offset the personnel expense and duplicative consulting fees referred to above. As a result, there are no questioned costs for activities allowed or unallowed and allowable costs/cost principles. Context: A nonstatistical sample of 60 ($318,103) out of a population greater than 250 transactions relating to COVID-19 specific personnel, fringe benefits, equipment, information technology, supplies, utilities/operations, and other general and administrative expenses ($679,983) were tested. Summary level testing was also performed as it relates to general and administrative and healthcare related expenses, including insurance, personnel, fringe benefits, lease payments, utilities/operations, supplies, equipment, information technology, and facilities. Repeat Finding from Prior Years: No Recommendation: We recommend the Center implement a control process which includes a formally documented secondary review and approval of the final expenditures listing used to claim the allowable costs under the program. We also recommend the Center maintain all supporting documentation that is used to claim eligible costs included within the final expenditures listing. In addition, we recommend the Center implement a control process to ensure the special report is reviewed and formally documented as approved prior to submission by a separate individual outside of the preparer. We also recommend the Center update any future special reports submitted to the Department of Health and Human Services as deemed appropriate. Views of Responsible Officials: Management agrees with the finding.