MCCONE COUNTY HEALTH CENTERNon-Profit

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 #810269223 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.301 Small Rural Health Center Improvement Grant Program Auditor Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance ? Other Criteria ? Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition ? The Health Center does not have an internal control system designed to provide 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 Health Center meets a specified threshold of federal expenditures. Effect ? There is a reasonable possibility that the Health Center would not be able to draft the Schedule that is correct without the assistance of the auditors. Questioned Costs ? None reported. Context ? Sampling was not used. Repeat Finding from Prior Years ? No. Recommendation ? While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Health Center?s Schedule and the internal controls that impact financial reporting. Views of Responsible Officials ? Management agrees with the finding.

2021-005 ? 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 #810269223 Activities Allowed or Unallowed, Allowable Costs/Costs 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 claimed expenses that were reimbursed by other funding sources. These expenses were improperly included withing the HHS Special Report ? Period 1 (Report) which caused the Report to be inaccurate. Cause ? The Health Center submitted expenses that were to be reimbursed by other funding sources (i.e., Medicare) through cost-based reimbursement as a Critical Access Health Center. The Health Center did not have an adequate internal control policy in place to ensure review and approval of cash disbursements claimed under the federal programs were documented and to ensure that expenses claimed were complete and accurate. Effect ? The reporting to HHS for Period 1 was considered incorrect, as expenses were not reduced by other funding sources. The Other PRF Expenses of the Period 1 report included expenses that were reimbursed or will be reimbursed by other funding sources. Questioned Costs ? There are questioned costs of $605,984 (actual) that were reimbursed or will be reimbursed by other funding sources. Context ? A nonstatistical sample of 30 expenditures were selected for testing, which accounted for $898,835 of $1,442,819 direct program expenditures. Within the $898,835 sample, $377,613 of costs were reimbursed by a different funding source (i.e. Medicare cost reimbursed percentage estimated using the filed cost report for fiscal year 2020). The Report section, Other PRF Expenses, included expenses that were reimbursed or would be reimbursed by other funding sources. See also Financial Statement Finding 2021-003. Repeat Finding from Prior Years ? No. Recommendation ? We recommend the Health Center implement procedures to ensure expenses claimed meet the requirements of the federal program. In addition, we recommend that the Health Center enhance internal control policies to ensure expenses claimed are reviewed and approved to ensure that they are appropriate and in accordance with program requirements.

2021-006 ? 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 #810269223 Activities Allowed or Unallowed, Allowable Costs/Costs 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 claimed expenses that were considered unallowed. These expenses were improperly included within the HHS Special Report ? Period 1 (Report) which caused the Report to be inaccurate. Cause ? The Health Center submitted capital expenses that were unallowed as the costs did not meet the terms and conditions of the federal program. The Health Center did not have an adequate internal control policy in place to ensure review and approval of cash disbursements claimed under the federal programs were documented and to ensure that expenses claimed in the Report were complete and accurate. Effect ? The lack of adequate policies governing cash disbursements and Report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. The Health Center submitted expenses in excess of actual allowable expenses. Questioned Costs ? There are questioned costs of $116,006 (actual). Context ? A nonstatistical sample of 30 expenditures were selected for testing, which accounted for $898,907 of $1,442,819 direct program expenditures. Within the $898,907 sample, $116,006 of the costs were unallowable. Repeat Finding from Prior Years ? No. Recommendation ? We recommend the Health Center implement procedures to ensure expenses claimed meet the requirements of the federal program. In addition, we recommend that the Health Center enhance internal control policies to ensure expenses claimed are reviewed and approved to ensure that they are appropriate and in accordance with program requirements. Views of Responsible Officials ? Management agrees with the finding.

2021-007 ? 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 #810269223 Activities Allowed or Unallowed and Allowable Costs/Cost Principles, and Reporting Material Weakness in Internal Control Over Compliance 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, terms and conditions of the federal award. The Health Center selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual results to 2020 and 2021 actual results by quarter. Patient care-related revenue should be reported net of adjustments for all third-party payers, charity care adjustments, bad debt, and any other discounts or adjustments, as applicable when reporting patient care related revenue sources. Condition ? The Health Center excluded contractual adjustments and bad debts from the amounts reported for lost revenue. Additionally, the Health Center?s lost revenue claimed under the program as an allowable cost was not reviewed and approved by a separate individual outside of the preparer. Cause ? The Health Center?s internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the report submitted to the Department of Health and Human Services (HHS) for Period 1, did not detect an error. Effect ? The reporting to HHS for Period 1 was considered incorrect. The Health Center reported amounts which were considered incorrect since patient revenue was not reduced by contractual adjustments and bad debts. The impact of including the contractual adjustments and bad debts would have been to increase lost revenues eligible for reimbursement by $29,334 from $544,496 to $573,830. Total unused lost revenues would increase $29,334 from $23,410 to $52,744. Questioned Costs ? None. There are no questioned costs as there is enough lost revenue and identified expenses in excess of funds received by the Health Center. Context ? Key line items were tested on the Period 1 HHS report. Repeat Finding from Prior Years ? No. Recommendation ? We recommend the Health Center implement procedures to ensure the lost revenue is calculated in accordance with the terms and conditions of the federal program. Views of Responsible Officials ? Management agrees with the finding.