CLAYTON HEALTH SYSTEMS, INC. D/B/A UNION COUNTY GENERAL HOSPITAL

2021-003 Department of Health and Human Services Federal Financial Assistance Listing/CFDA 93.498 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #850442957 Activities Allowed or Unallowed, 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, and conditions of the federal award. Condition: The lost revenue narrative submitted included an error in the description of 2019 data included. The Hospital?s controls in place did not detect the error. Cause: The Hospital?s calculation of lost revenue initially utilized financial information from 2019 based on the Hospital?s fiscal year. There were multiple changes from the Health Resources and Services Administration (HRSA) describing the allowable methods of determining lost revenue. The final guidance related to Options i and ii, as defined by HRSA, require comparison by quarter by calendar year, regardless of an entity?s fiscal year. The Hospital updated the lost revenue calculation to use 2019 calendar year financial information, however, the narrative was not updated. The Hospital?s controls to provide for an adequate review of the report submitted to HRSA for Period 1 (including the lost revenue narrative) by a separate individual outside of the preparer did not detect the error. Effect: The lost revenue narrative submitted to HRSA for Period 1 contained an error in the description of the 2019 information included. Errors in the lost revenue calculation or narrative have the potential to cause errors in the expenditures claimed and reported. Questioned Costs: None reported. Context: The description of the calculation of lost revenue under Option 3 was reviewed and compared to the lost revenue calculation. The memo described using 2019 fiscal year information as the basis and the calculation appropriately utilized 2019 calendar year information. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital review its process over the review and approval of the lost revenue calculation and related narrative to ensure that the narrative document accurately reflects what is in the lost revenue calculation and vice versa. Views of Responsible Officials: Management agrees with the finding.