FAC Explorer

Audit 25483

FY End
2022-12-31
Total Expended
$7.14M
Findings
4
Programs
5
Organization: Memorial Hospital D/b/a Memorial Healthcare (MI)
Year: 2022 Accepted: 2023-09-28
Auditor: Baker Tilly US LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
22111 2022-001 Significant Deficiency - L
22112 2022-002 Significant Deficiency - AB
598553 2022-001 Significant Deficiency - L
598554 2022-002 Significant Deficiency - AB

Programs

ALN Program Spent Major Findings
93.498 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $4.64M Yes 1
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.45M Yes 0
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $939,157 Yes 1
93.461 Covid-19 Claims Reimbursed for the Uninsured Program and the Covid-19 Coverage Assistance Fund $90,132 - 0
21.019 Coronavirus Relief Fund $22,435 - 0

Contacts

Name Title Type
QJPTDKZKSFZ6 Rose Brown Auditee
9896403279 Debra Bowes Auditor
No contacts on file

Notes to SEFA

Title: Summary of Significant Accounting Policies Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Memorial Healthcare and subsidiaries (the Organization) under programs of the federal government for the year ended December 31, 2022. The information in this schedule 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 may differ from amounts presented in, or used in the preparation of the consolidated finanicla statements. 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 position or cash flows of the Organization. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Expenditures reported on the Schedule are reported on the accrual basis of accounting, with the exception of expenditures associated with the U.S. Department of Health and Human Services (HHS) Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) program and the expenditures associated with Disaster Grants Public Assistance (Presidentially Declared Disasters) program. 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. ?PRF expenditures are reported based upon the timing of reporting periods in accordance with guidance provided by the Health Resources and Services Administration (HRSA). The Schedule includes expenditures of the PRF for the periods of availability that ended in the fiscal year ended December 31, 2022. The terms and conditions of the award allow for reimbursement of lost revenues. The Organizations methodology for calculating lost revenues was an alternative reasonable methodology under Option 3, determined as the difference between budgeted patient care revenues compared to actual patient care revenues for each year. The budgets for years ending after December 31, 2020, 2021 and 2022 were not approved prior to the March 27,2020 cut-off date as established by the PRF. ?Expenditures related to disaster grants are reported when the Organization has expended the necessary funds and the Federal Emergency Management Agency (FEMA) and its pass-through agency, the Michigan State Police, Emergency Management and Homeland Security Division (MSP-EMHS), have approved the expenditures for reimbursement. Expenditures on the Schedule that occurred prior to the reporting period and were approved by FEMA/MSP-EMHS during the reporting period were $939,157.Pass-through entity identifying numbers are presented where available.
Title: Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Memorial Healthcare and subsidiaries (the Organization) under programs of the federal government for the year ended December 31, 2022. The information in this schedule 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 may differ from amounts presented in, or used in the preparation of the consolidated finanicla statements. 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 position or cash flows of the Organization. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. For the HHS awards related to the PRF, HHS has indicated the amounts on the Schedule be reported corresponding to reporting requirements of the HRSA PRF Reporting Portal. Payments from HHS for PRF are assigned to "Payment Received Periods" (each, a Period) based upon the date each payment from the PRF was received. Each Period has a specified Period of Availability and timing of reporting requirements. Entities report into the HRSA PRF Reporting Portal after each Period's deadline to use the funds (i.e., after the end of the Period of Availability). The Schedule includes $4,640,030 received from HHS between January 1, 2021 through December 31, 2021. In accordance with the guidance from HHS, these amounts are presented as Period 3 and 4 as follows: Period ReceivedDate RangeReceivedDeadline to Use FundsPeriod 31/1/2021 6/30/2021$ 44,418June 30, 2022Period 47/1/2021 12/31/20214,595,612December 31, 2022Totals$ 4,640,030Such amounts were recognized as a component of grant and contribution income in the Systems consolidated statement of operations and changes in net assets for the year ended December 31, 2021. Due to the PRF reporting requirements, these amounts are not the total PRF received and/or recognized as grant and contribution income in the year presented in the Schedule.

Finding Details

Finding 2022-001
Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of Provider Relief Fund and American Rescue Plan Rural Distribution (PRF) payments must also comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services. The Health Resources and Services Administration (HRSA) has established certain guidelines for the calculation and reporting of lost revenues. In accordance with this guidance, lost revenues are calculated for each quarter during a period of availability, as a standalone calculation, with 2019 quarters serving as a baseline. For each calendar year of reporting, the applicable quarters where lost revenues are demonstrated are totaled to determine the annual lost revenues amount. Condition/Context: The Organization did not complete the PRF reporting in accordance with the U.S. Department and Health and Human Services guidance. Amounts reported in the Periods 3 and 4 Health Resources and Services Administration (HRSA) submissions did not agree to the underlying calculation of lost revenue. As a result of this, lost revenue amounts reported to HRSA for the periods of availability that ended in the year ended December 31, 2022 were understated by $983,963. Effect: The amounts reported to HRSA were not in accordance with established U.S. Department of Health and Human Services reporting guidance. Cause: The Organization?s calculation of lost revenue was correctly prepared on a quarterly basis, with lost revenue amounts calculated as a standalone calculation in accordance with HRSA guidance. In preparing its Period 3 and Period 4 reports, an oversight by management led to incorrect reporting whereby lost revenue did not reflect quarterly standalone amounts (lost revenue as calculated for certain quarters was offset by amounts calculated as the excess of actual over budgeted amounts for quarters that that did not demonstrate having lost revenues. The Organization?s internal control did not detect and correct this prior to report submission. Recommendation: We recommend that management implement procedures to ensure that lost revenues be reported in accordance with HRSA reporting guidance, which under Option 3 reporting would require input of zero for a quarter where there is no lost revenue.
Finding 2022-002
Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Disaster Grants - Public Assistance payments must be used for allowable expenses described in the grant agreement and specified in guidance issued by the U.S. Department of Homeland Security, Federal Emergency Management Agency (FEMA). Activities allowed and eligible costs have been outlines in the FEMA Public Assistance Program and Policy Guide, FP-104-009-2, April 2-18 (PAPPG) and FEMA COVID-19 Fact Sheets and Guidance. The purpose of the Public Assistance Grant Program as it relates to the COVID-19 pandemic is to provide funds for emergency protective measures ? actions taken to eliminate or lessen immediate threats to lives, public health, or safety related to the pandemic. Condition/Context: The Organization included expenses that did not meet criteria of an allowable expense as defined by the FEMA guidance. The Organization included $3,726 of testing supplies that were not related to COVID-19. This was not a statistically valid sample. Effect: The Organization claimed expenses that were not in accordance with established FEMA guidance and are therefore deemed unallowable. Cause: An error in the coding of certain testing supplies was not detected by the Organization?s internal control process. Recommendation: We recommend that management implement procedures to ensure that the most recent guidance is reviewed and understood and that information used in accumulating allowable expenses is reviewed, with errors addressed.
Finding 2022-001
Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of Provider Relief Fund and American Rescue Plan Rural Distribution (PRF) payments must also comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services. The Health Resources and Services Administration (HRSA) has established certain guidelines for the calculation and reporting of lost revenues. In accordance with this guidance, lost revenues are calculated for each quarter during a period of availability, as a standalone calculation, with 2019 quarters serving as a baseline. For each calendar year of reporting, the applicable quarters where lost revenues are demonstrated are totaled to determine the annual lost revenues amount. Condition/Context: The Organization did not complete the PRF reporting in accordance with the U.S. Department and Health and Human Services guidance. Amounts reported in the Periods 3 and 4 Health Resources and Services Administration (HRSA) submissions did not agree to the underlying calculation of lost revenue. As a result of this, lost revenue amounts reported to HRSA for the periods of availability that ended in the year ended December 31, 2022 were understated by $983,963. Effect: The amounts reported to HRSA were not in accordance with established U.S. Department of Health and Human Services reporting guidance. Cause: The Organization?s calculation of lost revenue was correctly prepared on a quarterly basis, with lost revenue amounts calculated as a standalone calculation in accordance with HRSA guidance. In preparing its Period 3 and Period 4 reports, an oversight by management led to incorrect reporting whereby lost revenue did not reflect quarterly standalone amounts (lost revenue as calculated for certain quarters was offset by amounts calculated as the excess of actual over budgeted amounts for quarters that that did not demonstrate having lost revenues. The Organization?s internal control did not detect and correct this prior to report submission. Recommendation: We recommend that management implement procedures to ensure that lost revenues be reported in accordance with HRSA reporting guidance, which under Option 3 reporting would require input of zero for a quarter where there is no lost revenue.
Finding 2022-002
Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Disaster Grants - Public Assistance payments must be used for allowable expenses described in the grant agreement and specified in guidance issued by the U.S. Department of Homeland Security, Federal Emergency Management Agency (FEMA). Activities allowed and eligible costs have been outlines in the FEMA Public Assistance Program and Policy Guide, FP-104-009-2, April 2-18 (PAPPG) and FEMA COVID-19 Fact Sheets and Guidance. The purpose of the Public Assistance Grant Program as it relates to the COVID-19 pandemic is to provide funds for emergency protective measures ? actions taken to eliminate or lessen immediate threats to lives, public health, or safety related to the pandemic. Condition/Context: The Organization included expenses that did not meet criteria of an allowable expense as defined by the FEMA guidance. The Organization included $3,726 of testing supplies that were not related to COVID-19. This was not a statistically valid sample. Effect: The Organization claimed expenses that were not in accordance with established FEMA guidance and are therefore deemed unallowable. Cause: An error in the coding of certain testing supplies was not detected by the Organization?s internal control process. Recommendation: We recommend that management implement procedures to ensure that the most recent guidance is reviewed and understood and that information used in accumulating allowable expenses is reviewed, with errors addressed.