Houston Methodist

Finding 2021-001 ? ALN 97.036 Public Assistance Grant ? Significant Deficiency in Controls over Compliance ? Allowable Costs Criteria: Per the grant requirements within the 2021 OMB Compliance Supplement, allowable costs should be reviewed, submitted for reimbursement, and incurred in accordance with the grant agreement in a timely manner. Condition/Context: In three instances, inventory was paid for, submitted for reimbursement, and reimbursement funds were received, but Methodist did not ultimately receive the inventory. We tested five vendors and did not identify any other instances of inventory not received. This was identified by management as part of the entity?s internal control process. Management counted inventory, reviewed all vendors, and self-identified the three vendors in June 2022, subsequent to year-end. Management communicated to Texas Division of Emergency Management (TDEM) and Federal Emergency Management Agency (FEMA) whereby the agencies indicated that reimbursement would be sufficient remediation and no further actions would be taken. Questioned Costs: $2,100,250 Cause: While expenses were submitted subsequent to payment of vendors, Methodist had not yet performed inventory counts or reviewed inventory goods received prior to requesting reimbursement. Methodist ultimately self-identified the goods not yet received, requested a reimbursement from the vendors and communicated such matters to TDEM and FEMA. Effect: Submitting for reimbursement for inventory not received could result in overcharges to expenditures to a grant. This could result in potential disallowance of costs. Recommendation: Management should perform timely reviews of inventory and expenses received prior to submission for reimbursement.

As indicated in the finding, the six instances were identified by Management as part of its internal review process. This process included Management?s audit in advance of closing its FEMA claim for the applicable period to ensure that all grant monies for personal protective equipment were for inventory items actually received. Management timely communicated its findings to the Texas Department of Emergency Management and FEMA to ensure proper handling, which included repayment to FEMA for the $2,100,250 in inventory that was not received. Finally, Management agrees that its ultimate claim for FEMA reimbursement should only include reimbursement for personal protective equipment actually received.

GSA_MIGRATION

GSA_MIGRATION