FAC Explorer

Audit 13756

FY End
2021-09-30
Total Expended
$5.09M
Findings
6
Programs
5
Organization: Hill & Dales General Hospital and Subsidiary (MI)
Year: 2021 Accepted: 2024-01-25
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
10109 2021-003 Material Weakness - ABL
10110 2021-004 Material Weakness - L
10111 2021-005 Material Weakness - ABL
586551 2021-003 Material Weakness - ABL
586552 2021-004 Material Weakness - L
586553 2021-005 Material Weakness - ABL

Programs

ALN Program Spent Major Findings
93.498 Covid-19 Provider Relief Fund $4.41M Yes 3
93.697 Covid-19 Testing for Rural Health Clinics $433,942 - 0
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $77,349 - 0
93.301 Small Rural Hospital Improvement Grant Program $67,500 - 0
93.889 National Bioterrorism Hospital Preparedness Program $7,000 - 0

Contacts

Name Title Type
SAP3GFQJFMW8 Renee Henry Auditee
9899126470 Renee Gravalin Auditor
No contacts on file

Notes to SEFA

Title: Provider Relief Fund and American Rescue Plan Funds Accounting Policies: The accompanying consolidated schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Hills & Dales General Hospital and Subsidiary (the Organization) under programs of the federal government for the year ended September 30, 2021. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. Expenditures reported on the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Organization does not draw for indirect administrative expense and has not elected to use the 10% de minimis cost rate. The Organization received amounts from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) program (Federal Financial Assistance Listing/CFDA #93.498) during the year ended September 30, 2020, totaling $4,414,279. The Organization incurred eligible expenditures, including lost revenue, and therefore, recognized revenues totaling $4,414,279 for the year ended September 30, 2021, on the consolidated financial statements. In accordance with the 2021 compliance supplement addendum, the PRF expenditures recognized on the Schedule are based on the reporting to HHS for Period 1, defined as payments received during April 10, 2020 to June 30, 2020, of $4,414,279, as required under the PRF program. The total amount of PRF expenditures included on the Schedule requires management to make estimates and assumptions that affect the reported amounts. Accordingly, such expenditures are considered a significant estimate. Estimates and assumptions may include reducing actual expenses by amounts that have been reimbursed or are obligated to be reimbursed by other sources and estimating marginal increases in expenses related to coronavirus. Actual amounts could differ from those estimates.

Finding Details

Finding 2021-003
2021-003 Department of Health and Human Services CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #381649577 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. The Organization claimed expenses based on specifically identified COVID related expenses and general and administrative expenses. Condition: The Organization’s final expenditure listing identified as eligible and claimed under the Provider Relief Fund program as well as the prepared lost revenue calculation were not reviewed and approved by a separate individual outside of the preparer. Cause: The Organization did not have an internal control process in place to ensure a secondary review and approval of the lost revenue calculation or of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing was formally documented. The summary spreadsheet was used to claim allowable costs under the federal program. In addition, the review and approval of the report submitted to the Department of Health and Human Services for Period 1 was not performed by someone other than the preparer of the report. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures or lost revenue may have been claimed under the program and the report may not have been accurately completed. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 65 ($92,432) out of 993 expenditures ($1,198,401) was tested for activities allowed or unallowed and allowable costs/cost principles. Lost revenue was reviewed as submitted in the special report. Additional key line items were tested on the Period 1 Department of Health and Human Services special report submitted. Repeat Finding from Prior Years: No Recommendation: We recommend the Organization implement a control process which includes a secondary review and approval of the summarized final expenditure listing and lost revenue calculation used to claim the allowable costs under the federal program and a secondary review and approval of required reports to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.
Finding 2021-004
2021-004 Department of Health and Human Services CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #381649577 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 Organization’s final lost revenue calculation identified as eligible and claimed under the Provider Relief Fund program did not agree to the amount claimed in the report submitted to the Department of Health and Human Services for Period 1. Cause: The Organization recalculated lost revenue and noted multiple adjustments to the amount that could be claimed. Effect: The difference in what was accurately calculated compared to what was reported led to an incorrect filing and a claim of more support for lost revenue than was needed. Questioned Costs: None reported. Context: Lost revenue claimed in the report to the Department of Health and Human Services totaled $3,161,203. After corrections were made to the lost revenue support calculation, lost revenues should have been $3,278,318 for a difference of $117,115. Repeat Finding from Prior Years: No Recommendation: We recommend that management reviewed their process and procedures to include monitoring over amounts reported relating to lost revenue amounts and the related calculation. Views of Responsible Officials: Management agrees with the finding.
Finding 2021-005
2021-005 Department of Health and Human Services CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #381649577 Activities Allowed or Unallowed, 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 Organization claimed expenses that were reimbursed by other funding sources. These expenses were improperly included in the HHS Special Report which caused the report to be inaccurate. Cause: The Organization submitted expenses that were to be reimbursed by other funding sources (i.e., Medicare). The Organization 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 Special Report were complete and accurate. Effect: The lack of adequate policies governing expenses and preparation and submission of the Report 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 Organization submitted expenses over their actual allowable expenses. Questioned Costs: $186,061 which was reimbursed from other sources and an additional $35,521 that was unsupported. Context: A nonstatistical sample of 65 expenditures was selected for testing, which accounted for $92,432 of $1,198,401 of direct program expenditures. Repeat Finding from Prior Years: No Recommendation: We recommend that the Organization enhance internal control policies to ensure all amounts reimbursed by other funding sources are adequately documented and reduced from the eligible expenditure listing and are properly recorded in the Special Report required to be submitted to the federal agency. We also recommend the Organization enhance internal control policies to ensure that the required Reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the Special Reports required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.
Finding 2021-003
2021-003 Department of Health and Human Services CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #381649577 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. The Organization claimed expenses based on specifically identified COVID related expenses and general and administrative expenses. Condition: The Organization’s final expenditure listing identified as eligible and claimed under the Provider Relief Fund program as well as the prepared lost revenue calculation were not reviewed and approved by a separate individual outside of the preparer. Cause: The Organization did not have an internal control process in place to ensure a secondary review and approval of the lost revenue calculation or of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing was formally documented. The summary spreadsheet was used to claim allowable costs under the federal program. In addition, the review and approval of the report submitted to the Department of Health and Human Services for Period 1 was not performed by someone other than the preparer of the report. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures or lost revenue may have been claimed under the program and the report may not have been accurately completed. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 65 ($92,432) out of 993 expenditures ($1,198,401) was tested for activities allowed or unallowed and allowable costs/cost principles. Lost revenue was reviewed as submitted in the special report. Additional key line items were tested on the Period 1 Department of Health and Human Services special report submitted. Repeat Finding from Prior Years: No Recommendation: We recommend the Organization implement a control process which includes a secondary review and approval of the summarized final expenditure listing and lost revenue calculation used to claim the allowable costs under the federal program and a secondary review and approval of required reports to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.
Finding 2021-004
2021-004 Department of Health and Human Services CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #381649577 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 Organization’s final lost revenue calculation identified as eligible and claimed under the Provider Relief Fund program did not agree to the amount claimed in the report submitted to the Department of Health and Human Services for Period 1. Cause: The Organization recalculated lost revenue and noted multiple adjustments to the amount that could be claimed. Effect: The difference in what was accurately calculated compared to what was reported led to an incorrect filing and a claim of more support for lost revenue than was needed. Questioned Costs: None reported. Context: Lost revenue claimed in the report to the Department of Health and Human Services totaled $3,161,203. After corrections were made to the lost revenue support calculation, lost revenues should have been $3,278,318 for a difference of $117,115. Repeat Finding from Prior Years: No Recommendation: We recommend that management reviewed their process and procedures to include monitoring over amounts reported relating to lost revenue amounts and the related calculation. Views of Responsible Officials: Management agrees with the finding.
Finding 2021-005
2021-005 Department of Health and Human Services CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #381649577 Activities Allowed or Unallowed, 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 Organization claimed expenses that were reimbursed by other funding sources. These expenses were improperly included in the HHS Special Report which caused the report to be inaccurate. Cause: The Organization submitted expenses that were to be reimbursed by other funding sources (i.e., Medicare). The Organization 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 Special Report were complete and accurate. Effect: The lack of adequate policies governing expenses and preparation and submission of the Report 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 Organization submitted expenses over their actual allowable expenses. Questioned Costs: $186,061 which was reimbursed from other sources and an additional $35,521 that was unsupported. Context: A nonstatistical sample of 65 expenditures was selected for testing, which accounted for $92,432 of $1,198,401 of direct program expenditures. Repeat Finding from Prior Years: No Recommendation: We recommend that the Organization enhance internal control policies to ensure all amounts reimbursed by other funding sources are adequately documented and reduced from the eligible expenditure listing and are properly recorded in the Special Report required to be submitted to the federal agency. We also recommend the Organization enhance internal control policies to ensure that the required Reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the Special Reports required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.