FAC Explorer

Audit 19062

FY End
2022-06-30
Total Expended
$5.50M
Findings
4
Programs
2
Organization: Carolinaeast Health System (NC)
Year: 2022 Accepted: 2023-07-13
Auditor: Forvis LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
20508 2022-001 Significant Deficiency Yes L
20509 2022-002 Significant Deficiency Yes AB
596950 2022-001 Significant Deficiency Yes L
596951 2022-002 Significant Deficiency Yes AB

Programs

ALN Program Spent Major Findings
93.498 Provider Relief Fund $4.50M Yes 2
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $995,975 Yes 0

Contacts

Name Title Type
EBB4MC85UG65 Tammy Sherron Auditee
2526338880 Donald McNeill Auditor
No contacts on file

Notes to SEFA

Accounting Policies: 1.Basis of PresentationThe accompanying schedule of expenditures of federal awards (SEFA) includes the federal award activity of CarolinaEast Health System (Hospital) under the programs of the federal government for the nine months ended June 30, 2022. The information in this SEFA is presented in accordance with the requirements of Title 2 US Code of Federal Regulations Part 200, Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). All federal awards received directly and indirectly from federal agencies are included in this Schedule. Because the Schedule presents only a selected portion of the operations of the Hospital, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Hospital. As outlined in the April 2022 OMB Compliance Supplement, the amounts reported in the accompanying SEFA related to the Provider Relief Fund (PRF), Assistance Listing No. 93.498, are reported based upon the PRF reporting portal submission guidelines established by the Health Resource and Service Administration (HRSA). Seven separate reporting periods were established by HRSA based on the dates of receipt of PRF payments. Each reporting period has a specific period of availability which begins on January 1, 2020 and extends through specified deadlines.The accompanying SEFA includes those qualifying expenditures and lost revenues that were reported in the HRSA PRF portal for Period 2 and Period 3. Of that amount, $ 4,500,000 in PRF payments was recognized by the Hospital in their statement of revenues, expenses and changes in net position as Cares Act provider relief funding in other non-operating revenue during the nine month period ended June 30, 2022, and fiscal years ended September 30, 2021 and 2020.2.Basis of AccountingExpenditures and lost revenues reported in the SEFA are reported on the accrual basis of accounting in accordance with the HRSA terms and conditions for PRF funding. Such expenditures are recognized following the cost principles contained in Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Lost revenues are reported based on the HRSA Option 1, reporting of lost revenues by comparing actual revenues by quarter during the period of availability to actual revenues for similar quarters during 2019 prior to the COVID-19 Pandemic.Expenditures and lost revenues for Provider Relief Fund (PRF) are based upon the PRF report for the nine month period ended June 30, 2022. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate.

Finding Details

Finding 2022-001
93.498 COVID-19 Provider Relief Fund (PRF) Compliance Other Matter and Significant Deficiency Criteria: The Department of Health and Human Services provided terms and conditions associated with the Provider Relief Fund (PRF). Those terms and conditions outlined the usages of the PRF distributions received, specifically related to expenses and lost revenues. PRF distributions should only be used for expenses to prevent, prepare for, and respond to the coronavirus that have not been reimbursed from other sources or that other sources are not obligated to reimburse and calculate lost revenues as outlined in the terms and conditions. Management should have effectively designed controls in place to prevent, or detect and correct noncompliance. Condition: The System submitted lost revenues through the Department of Health and Human Services PRF portal for the second period of availability in which lost revenue calculations did not match the basis of accounting which the System reports and lacked related controls over compliance. Effect: The System calculated lost revenue on a different basis of accounting of which the System reports and there was a reasonable possibility that the schedule could be misstated due to lack of effective controls. Questioned Costs: Unknown Cause: Lack of effectively designed and implemented controls, including oversight and detail review of the portal submission through the Department of Health and Human Services PRF portal for the first period of availability. Recommendation: Effective controls over compliance should be implemented to ensure lost revenues submitted through the Department of Health and Human Services PRF portal meet the criteria established in the terms and conditions and there is not a reasonable possibility that the schedule could be materially misstated. Management Response: See management?s corrective action plan.
Finding 2022-002
93.498 COVID-19 Provider Relief Fund (PRF) Compliance Other Matter and Significant Deficiency Criteria: The Department of Health and Human Services provided terms and conditions associated with the Provider Relief Fund (PRF). Those terms and conditions outlined the usages of the PRF distributions received, specifically related to expenses and lost revenues. PRF distributions should only be used for expenses to prevent, prepare for, and respond to the coronavirus that have not been reimbursed from other sources or that other sources are not obligated to reimburse and calculate lost revenues as outlined in the terms and conditions. Management should have effectively designed controls in place to prevent or detect and correct noncompliance. Condition: The Hospital submitted expenses related to PTO/Sick Leave. Management could not provide underlying documentation to support if paid time off submitted to the portal was related to COVID-19 diagnosis. Effect: The Hospital submitted expenses that could be misstated due to lack of effective controls. Questioned Costs: $98,715 Cause: Lack of effectively designed and implemented controls, including oversight and detail review of the portal submission through the Department of Health and Human Services PRF portal for the first period of availability. Recommendation: Effective controls over compliance should be implemented to ensure expenses submitted through the Department of Health and Human Services PRF portal meet the criteria established in the terms and conditions. Management Response: See management?s corrective action plan.
Finding 2022-001
93.498 COVID-19 Provider Relief Fund (PRF) Compliance Other Matter and Significant Deficiency Criteria: The Department of Health and Human Services provided terms and conditions associated with the Provider Relief Fund (PRF). Those terms and conditions outlined the usages of the PRF distributions received, specifically related to expenses and lost revenues. PRF distributions should only be used for expenses to prevent, prepare for, and respond to the coronavirus that have not been reimbursed from other sources or that other sources are not obligated to reimburse and calculate lost revenues as outlined in the terms and conditions. Management should have effectively designed controls in place to prevent, or detect and correct noncompliance. Condition: The System submitted lost revenues through the Department of Health and Human Services PRF portal for the second period of availability in which lost revenue calculations did not match the basis of accounting which the System reports and lacked related controls over compliance. Effect: The System calculated lost revenue on a different basis of accounting of which the System reports and there was a reasonable possibility that the schedule could be misstated due to lack of effective controls. Questioned Costs: Unknown Cause: Lack of effectively designed and implemented controls, including oversight and detail review of the portal submission through the Department of Health and Human Services PRF portal for the first period of availability. Recommendation: Effective controls over compliance should be implemented to ensure lost revenues submitted through the Department of Health and Human Services PRF portal meet the criteria established in the terms and conditions and there is not a reasonable possibility that the schedule could be materially misstated. Management Response: See management?s corrective action plan.
Finding 2022-002
93.498 COVID-19 Provider Relief Fund (PRF) Compliance Other Matter and Significant Deficiency Criteria: The Department of Health and Human Services provided terms and conditions associated with the Provider Relief Fund (PRF). Those terms and conditions outlined the usages of the PRF distributions received, specifically related to expenses and lost revenues. PRF distributions should only be used for expenses to prevent, prepare for, and respond to the coronavirus that have not been reimbursed from other sources or that other sources are not obligated to reimburse and calculate lost revenues as outlined in the terms and conditions. Management should have effectively designed controls in place to prevent or detect and correct noncompliance. Condition: The Hospital submitted expenses related to PTO/Sick Leave. Management could not provide underlying documentation to support if paid time off submitted to the portal was related to COVID-19 diagnosis. Effect: The Hospital submitted expenses that could be misstated due to lack of effective controls. Questioned Costs: $98,715 Cause: Lack of effectively designed and implemented controls, including oversight and detail review of the portal submission through the Department of Health and Human Services PRF portal for the first period of availability. Recommendation: Effective controls over compliance should be implemented to ensure expenses submitted through the Department of Health and Human Services PRF portal meet the criteria established in the terms and conditions. Management Response: See management?s corrective action plan.