Audit 22203

FY End

2022-06-30

Total Expended

$19.91M

Findings

2

Programs

7

Organization: University Hospital (NJ)

Year: 2022 Accepted: 2023-04-23

Auditor: Kpmg LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
23286	2022-001	Material Weakness	-	ABCL
599728	2022-001	Material Weakness	-	ABCL

ALN	Program	Spent	Major	Findings
93.498	Provider Relief Fund	$9.24M	Yes	0
93.323	Epidemiology and Laboratory Capacity for Infectious Diseases (elc)	$2.73M	Yes	1
14.269	Hurricane Sandy Community Development Block Grant Disaster Recovery Grants (cdbg-Dr)	$2.73M	-	0
93.461	Covid-19 Testing for the Uninsured	$2.22M	Yes	0
97.067	Homeland Security Grant Program	$123,922	Yes	0
16.575	Crime Victim Assistance	$106,723	Yes	0
93.889	National Bioterrorism Hospital Preparedness Program	$95,917	-	0

Contacts

Name	Title	Type
V1KUYE6BAKY3	Mohamed Ishmael	Auditee
9739725916	Jason E. Spiegel	Auditor
No contacts on file

Notes to SEFA

Title: Note 3 - Subrecipients Accounting Policies: The accompanying schedule of expenditures of Federal awards (SEFA) and schedules of expenditures for State of New Jersey Department of Health grants include the Federal grant activity (both direct and pass through from the State of New Jersey Department of Health) of University Hospital (the Hospital) and are presented on the accrual basis of accounting, except for the following programs: ? Homeland Security Grant Program (Assistance Listing Number (ALN 97.067) and Hurricane Sandy Community Development Block Grant Disaster Recovery Grant (CDBG-DR) Co-Generation Project Activities (ALN 14.269) are presented based on the reimbursement amount requested and approved by the State of New Jersey. ? HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (ALN 93.461) is presented based on the date of service performed on or prior to June 30, 2022 and for the eligible patients that the Hospital received payments from U.S. Department of Health and Human Services. ? COVID-19 Provider Relief Funds (ALN 93.498) represents the total expenditures and/or lost revenues from the Period 2 and Period 3 report submission to the PRF Reporting Portal. Period 2 is based on payments received from July 1, 2020 to December 31, 2020, with a period of availability of expenses and/or lost revenues from January 1, 2020 through December 31, 2021. Period 3 is based on payments received from January 1, 2021 to June 31, 2021, with a period of availability of expenses and/or lost revenues from January 1, 2021 through June 30, 2022, where unused expenditures and/or lost revenues from previous periods may be applied for funds. The information in these schedules 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). Therefore, some amounts presented in these schedules may differ from amounts presented in, or used in the preparation of, the basic financial statements. Because the schedules present only a selected portion of the activities of the Hospital, they are not intended to and do not present either the financial position, changes in financial position, or cash flows of the Hospital. The Hospital has included expenditures and adjustments on prior-year grant awards whereextensions have been granted from funding agencies or additional funding is expected from funding agencies. De Minimis Rate Used: N Rate Explanation: The Hospital did not elect to use the 10% de minimis indirect cost rate for the year ended June 30, 2022 aspermitted by Federal Uniform Guidance. The Hospital did not pass any amounts through to subrecipients for the year ended June 30, 2022.

Title: Note 4 - Loan Accounting Policies: The accompanying schedule of expenditures of Federal awards (SEFA) and schedules of expenditures for State of New Jersey Department of Health grants include the Federal grant activity (both direct and pass through from the State of New Jersey Department of Health) of University Hospital (the Hospital) and are presented on the accrual basis of accounting, except for the following programs: ? Homeland Security Grant Program (Assistance Listing Number (ALN 97.067) and Hurricane Sandy Community Development Block Grant Disaster Recovery Grant (CDBG-DR) Co-Generation Project Activities (ALN 14.269) are presented based on the reimbursement amount requested and approved by the State of New Jersey. ? HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (ALN 93.461) is presented based on the date of service performed on or prior to June 30, 2022 and for the eligible patients that the Hospital received payments from U.S. Department of Health and Human Services. ? COVID-19 Provider Relief Funds (ALN 93.498) represents the total expenditures and/or lost revenues from the Period 2 and Period 3 report submission to the PRF Reporting Portal. Period 2 is based on payments received from July 1, 2020 to December 31, 2020, with a period of availability of expenses and/or lost revenues from January 1, 2020 through December 31, 2021. Period 3 is based on payments received from January 1, 2021 to June 31, 2021, with a period of availability of expenses and/or lost revenues from January 1, 2021 through June 30, 2022, where unused expenditures and/or lost revenues from previous periods may be applied for funds. The information in these schedules 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). Therefore, some amounts presented in these schedules may differ from amounts presented in, or used in the preparation of, the basic financial statements. Because the schedules present only a selected portion of the activities of the Hospital, they are not intended to and do not present either the financial position, changes in financial position, or cash flows of the Hospital. The Hospital has included expenditures and adjustments on prior-year grant awards whereextensions have been granted from funding agencies or additional funding is expected from funding agencies. De Minimis Rate Used: N Rate Explanation: The Hospital did not elect to use the 10% de minimis indirect cost rate for the year ended June 30, 2022 aspermitted by Federal Uniform Guidance. On December 4, 2019, the Hospital entered into a subrecipient New Jersey Energy Resiliency Bank Funding Agreement with the New Jersey Economic Development Authority (the Authority). The Authority has agreed to provide funding for the development of a new combined heat and power system on the campus of the Hospital. The maximum project cost is estimated to be $48.0 million. The funding of this project consists of a pass-through Federal grant portion of $27.3 million and Federal loan proceeds of $11.8 million from the Hurricane Sandy Community Development Block Grant Disaster Recovery Grant (CDBG DR) (ALN 14.269) from the Authority. Other funding consists of loans of $7.4 million from the Infrastructure Bank of New Jersey and $1.5 million from Public Service Enterprise Group, which are neither Federal nor State of New Jersey funding.The total expenditures incurred for the project were $2,728,525 for the year ended June 30, 2022, which is reported on the SEFA. Out of the total expenditures, $1,903,419 is related to the grant portion of the program. The remaining expenditures are funded through the Hospitals draw down of the Federal loan proceeds of $825,106. No repayment was made on the Federal loan for the year ended June 30, 2022. The loan outstanding balance for the CDBG-DR Energy Resilience Bank Program (ALN 14.269) is$10,234,735 as of June 30, 2022.

Finding Details

Finding 2022-001

2022-001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles / Types of Services Allowed or Disallowed, Cash Management, and Reporting U.S. Department of Health and Human Services: Passed through State of New Jersey, Department of Health: COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (SARS-COV-2 Hospital Testing) Federal Grant Number and Years: PHLP21CHT017 (7/1/2021 ? 6/30/2022) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: None Criteria: Activities Allowed or Unallowed and Allowable Costs/Cost Principles / Types of Services Allowed or Disallowed - Except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards (2 CFR Section 200.404). Cash Management - Except where otherwise authorized by statute, when non-federal entities are funded under the reimbursement method, costs must be adequately documented as paid prior to the date of the reimbursement request (2 CFR section 200.305(b)(3)) Reporting - In accordance with the grant agreement and the reporting requirements for State of New Jersey Department of Health (NJDOH), direct grants and pass-through funds are fulfilled utilizing a Report of Expenditures (ROE). ROEs are prepared and submitted quarterly in order to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for reimbursement and tracking purposes. The ROEs are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee?s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Additionally, in accordance with Federal requirements, a non-Federal entity shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition and Context: On a quarterly basis, University Hospital (the Hospital) prepares and reports to New Jersey Department of Health the program expenditures for Federal funding amounts on the ROE, which are then used to prepare the annual SEFA at the end of the fiscal year. The Hospital?s expenditures per the ROE were greater than the expenditures that were supported by the general ledger and accounting records, therefore, the Hospital submitted the ROE and claim towards the grant for reimbursement above the amount allowed by $405,971, due to a double counting of previously reimbursed costs. Further, the Hospital?s indirect costs charged were greater than the allowable amount by $3,514. The original amount reported on the SEFA by the Hospital and charged to the State was $3,142,428. The Hospital has adjusted the SEFA to account for allowable costs, which is $2,732,943. The Hospital?s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the Hospital has adequate supporting accounting records for allowable costs claimed and reported on the ROE and SEFA. Cause: Management's review of the ROE did not identify the double counting of previously reimbursed costs, therefore, the review was not performed at the appropriate level of precision in accordance with its design. Effect: The Hospital overcharged the grant by $409,485. Questioned Costs: $409,485 Recommendation: We recommend that the Hospital strengthen its procedures to ensure that the quarterly ROEs include the correct amount of allowable expenditures based upon the general ledger and accounting records and reflected on the SEFA and that the review of the ROE is properly performed prior to submission for reimbursement.

Finding 2022-001

2022-001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles / Types of Services Allowed or Disallowed, Cash Management, and Reporting U.S. Department of Health and Human Services: Passed through State of New Jersey, Department of Health: COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (SARS-COV-2 Hospital Testing) Federal Grant Number and Years: PHLP21CHT017 (7/1/2021 ? 6/30/2022) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: None Criteria: Activities Allowed or Unallowed and Allowable Costs/Cost Principles / Types of Services Allowed or Disallowed - Except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards (2 CFR Section 200.404). Cash Management - Except where otherwise authorized by statute, when non-federal entities are funded under the reimbursement method, costs must be adequately documented as paid prior to the date of the reimbursement request (2 CFR section 200.305(b)(3)) Reporting - In accordance with the grant agreement and the reporting requirements for State of New Jersey Department of Health (NJDOH), direct grants and pass-through funds are fulfilled utilizing a Report of Expenditures (ROE). ROEs are prepared and submitted quarterly in order to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for reimbursement and tracking purposes. The ROEs are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee?s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Additionally, in accordance with Federal requirements, a non-Federal entity shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition and Context: On a quarterly basis, University Hospital (the Hospital) prepares and reports to New Jersey Department of Health the program expenditures for Federal funding amounts on the ROE, which are then used to prepare the annual SEFA at the end of the fiscal year. The Hospital?s expenditures per the ROE were greater than the expenditures that were supported by the general ledger and accounting records, therefore, the Hospital submitted the ROE and claim towards the grant for reimbursement above the amount allowed by $405,971, due to a double counting of previously reimbursed costs. Further, the Hospital?s indirect costs charged were greater than the allowable amount by $3,514. The original amount reported on the SEFA by the Hospital and charged to the State was $3,142,428. The Hospital has adjusted the SEFA to account for allowable costs, which is $2,732,943. The Hospital?s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the Hospital has adequate supporting accounting records for allowable costs claimed and reported on the ROE and SEFA. Cause: Management's review of the ROE did not identify the double counting of previously reimbursed costs, therefore, the review was not performed at the appropriate level of precision in accordance with its design. Effect: The Hospital overcharged the grant by $409,485. Questioned Costs: $409,485 Recommendation: We recommend that the Hospital strengthen its procedures to ensure that the quarterly ROEs include the correct amount of allowable expenditures based upon the general ledger and accounting records and reflected on the SEFA and that the review of the ROE is properly performed prior to submission for reimbursement.