Audit 27328

Finding 2022-003: Notifications of Disbursements to Students Sent Prior to 30 Days before Crediting a Student?s Account Federal Awarding Agency: Department of Education (ED) Award Name: Federal Direct Student Loans Award Number: Various Award Years: 7/1/2021-6/30/2022 Assistance Listing Title: Federal Direct Student Loans Assistance Listing Number: 84.268 Pass-through entities: Not applicable Criteria 34 CFR 668.165(a)(3)(i) notes the timing of a Direct Loan or TEACH Grant notification varies depending on whether a school obtains affirmative confirmation from a student that he or she wants a loan or accepts the grant. Under affirmative confirmation, a school obtains written confirmation of the types and amounts of Title IV loans a student wants for the period of enrollment before the school credits the student?s account with those loan funds. This notification must be sent: ? if the school obtains affirmative confirmation, no earlier than 30 days before and no later than 30 days after crediting the student?s account; or ? if the school does NOT obtain affirmative confirmation, no earlier than 30 days before and no later than 7 days after crediting the student?s account. Condition 34 Direct Loans were tested for disbursements, in which the University received affirmative confirmation for all Direct Loans. In 11 of the 34 cases, the notification of disbursement was sent greater than 30 days prior to the distribution date. Cause The Student Information System (SIS) is configured to send notifications of disbursement based on activity by students in requesting and accepting loans. If the student accepts a loan prior to the deadline, the system will send the notification based on the origination date rather than the disbursement date. Effect The disbursement notifications were sent to students earlier than 30 days prior to the disbursement. Questioned Costs None noted. Recommendation We recommend management adjust the configuration of the system to send notifications no more than 30 days prior to crediting a student?s account, regardless of when the student accepts the loan. Management?s Corrective Action Plan Management?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.

Finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Criteria Law (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below: Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals). Option 2) Difference Between 2020 and 2021 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020. Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach). Additionally, the Provider Relief Fund Lost Revenues Guide specifies that revenues not attributable to patient care are required to be excluded from the lost revenues calculation. Condition In March 2022, management submitted their Reporting Period 2 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 and 2021 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission. Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020, and the budget for the period July 1, 2021 through December 31, 2021 (the first six months of fiscal year 2022) was approved on June 2, 2021. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar quarters (January 1, 2021 through December 31, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their Period 2 reporting into the HRSA portal. Note this finding was also identified during the fiscal year 2021 audit, however, there was not sufficient time for the University to remediate prior to the Period 2 submission deadline. Additionally, the budgeted revenues submitted in the HRSA portal for Period 2 included revenues not attributable to patient care (as defined in the Provider Relief Fund Lost Revenues Guide). The actual revenues submitted in the HRSA portal for Period 2 appropriately excluded revenues not attributable to patient care. This resulted in lost revenues reported to the HRSA portal for Period 2 being overstated. Cause Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Keck Medical Center of USC was aware that revenues not attributable to patient care should not be included in the lost revenues calculation (as evidenced by management correctly excluding these amounts from the actual revenues reported in the HRSA portal for Period 2) but was not aware these amounts were included in the budget amounts reported in the HRSA portal for Period 2. Effect Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Additionally, the lost revenues reported to HRSA for Period 2 were overstated by the amount of revenues not attributable to patient care that were inappropriately included in budgeted revenues. However, as Keck Medical Center of USC has sufficient lost revenues excluding these amounts, there is no impact to its entitlement to the funding. Questioned Costs None noted. Recommendation We recommend management communicate the error in the Reporting Period 2 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.

Finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Criteria Law (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below: Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals). Option 2) Difference Between 2020 and 2021 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020. Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach). Additionally, the Provider Relief Fund Lost Revenues Guide specifies that revenues not attributable to patient care are required to be excluded from the lost revenues calculation. Condition In March 2022, management submitted their Reporting Period 2 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 and 2021 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission. Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020, and the budget for the period July 1, 2021 through December 31, 2021 (the first six months of fiscal year 2022) was approved on June 2, 2021. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar quarters (January 1, 2021 through December 31, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their Period 2 reporting into the HRSA portal. Note this finding was also identified during the fiscal year 2021 audit, however, there was not sufficient time for the University to remediate prior to the Period 2 submission deadline. Additionally, the budgeted revenues submitted in the HRSA portal for Period 2 included revenues not attributable to patient care (as defined in the Provider Relief Fund Lost Revenues Guide). The actual revenues submitted in the HRSA portal for Period 2 appropriately excluded revenues not attributable to patient care. This resulted in lost revenues reported to the HRSA portal for Period 2 being overstated. Cause Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Keck Medical Center of USC was aware that revenues not attributable to patient care should not be included in the lost revenues calculation (as evidenced by management correctly excluding these amounts from the actual revenues reported in the HRSA portal for Period 2) but was not aware these amounts were included in the budget amounts reported in the HRSA portal for Period 2. Effect Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Additionally, the lost revenues reported to HRSA for Period 2 were overstated by the amount of revenues not attributable to patient care that were inappropriately included in budgeted revenues. However, as Keck Medical Center of USC has sufficient lost revenues excluding these amounts, there is no impact to its entitlement to the funding. Questioned Costs None noted. Recommendation We recommend management communicate the error in the Reporting Period 2 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.

Finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Criteria Law (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below: Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals). Option 2) Difference Between 2020 and 2021 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020. Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach). Additionally, the Provider Relief Fund Lost Revenues Guide specifies that revenues not attributable to patient care are required to be excluded from the lost revenues calculation. Condition In March 2022, management submitted their Reporting Period 2 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 and 2021 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission. Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020, and the budget for the period July 1, 2021 through December 31, 2021 (the first six months of fiscal year 2022) was approved on June 2, 2021. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar quarters (January 1, 2021 through December 31, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their Period 2 reporting into the HRSA portal. Note this finding was also identified during the fiscal year 2021 audit, however, there was not sufficient time for the University to remediate prior to the Period 2 submission deadline. Additionally, the budgeted revenues submitted in the HRSA portal for Period 2 included revenues not attributable to patient care (as defined in the Provider Relief Fund Lost Revenues Guide). The actual revenues submitted in the HRSA portal for Period 2 appropriately excluded revenues not attributable to patient care. This resulted in lost revenues reported to the HRSA portal for Period 2 being overstated. Cause Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Keck Medical Center of USC was aware that revenues not attributable to patient care should not be included in the lost revenues calculation (as evidenced by management correctly excluding these amounts from the actual revenues reported in the HRSA portal for Period 2) but was not aware these amounts were included in the budget amounts reported in the HRSA portal for Period 2. Effect Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Additionally, the lost revenues reported to HRSA for Period 2 were overstated by the amount of revenues not attributable to patient care that were inappropriately included in budgeted revenues. However, as Keck Medical Center of USC has sufficient lost revenues excluding these amounts, there is no impact to its entitlement to the funding. Questioned Costs None noted. Recommendation We recommend management communicate the error in the Reporting Period 2 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.

Finding 2022-003: Notifications of Disbursements to Students Sent Prior to 30 Days before Crediting a Student?s Account Federal Awarding Agency: Department of Education (ED) Award Name: Federal Direct Student Loans Award Number: Various Award Years: 7/1/2021-6/30/2022 Assistance Listing Title: Federal Direct Student Loans Assistance Listing Number: 84.268 Pass-through entities: Not applicable Criteria 34 CFR 668.165(a)(3)(i) notes the timing of a Direct Loan or TEACH Grant notification varies depending on whether a school obtains affirmative confirmation from a student that he or she wants a loan or accepts the grant. Under affirmative confirmation, a school obtains written confirmation of the types and amounts of Title IV loans a student wants for the period of enrollment before the school credits the student?s account with those loan funds. This notification must be sent: ? if the school obtains affirmative confirmation, no earlier than 30 days before and no later than 30 days after crediting the student?s account; or ? if the school does NOT obtain affirmative confirmation, no earlier than 30 days before and no later than 7 days after crediting the student?s account. Condition 34 Direct Loans were tested for disbursements, in which the University received affirmative confirmation for all Direct Loans. In 11 of the 34 cases, the notification of disbursement was sent greater than 30 days prior to the distribution date. Cause The Student Information System (SIS) is configured to send notifications of disbursement based on activity by students in requesting and accepting loans. If the student accepts a loan prior to the deadline, the system will send the notification based on the origination date rather than the disbursement date. Effect The disbursement notifications were sent to students earlier than 30 days prior to the disbursement. Questioned Costs None noted. Recommendation We recommend management adjust the configuration of the system to send notifications no more than 30 days prior to crediting a student?s account, regardless of when the student accepts the loan. Management?s Corrective Action Plan Management?s response is reported on ?Management?s Views and Corrective Action Plan? at the end of this report.

Finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Criteria Law (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below: Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals). Option 2) Difference Between 2020 and 2021 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020. Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach). Additionally, the Provider Relief Fund Lost Revenues Guide specifies that revenues not attributable to patient care are required to be excluded from the lost revenues calculation. Condition In March 2022, management submitted their Reporting Period 2 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 and 2021 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission. Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020, and the budget for the period July 1, 2021 through December 31, 2021 (the first six months of fiscal year 2022) was approved on June 2, 2021. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar quarters (January 1, 2021 through December 31, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their Period 2 reporting into the HRSA portal. Note this finding was also identified during the fiscal year 2021 audit, however, there was not sufficient time for the University to remediate prior to the Period 2 submission deadline. Additionally, the budgeted revenues submitted in the HRSA portal for Period 2 included revenues not attributable to patient care (as defined in the Provider Relief Fund Lost Revenues Guide). The actual revenues submitted in the HRSA portal for Period 2 appropriately excluded revenues not attributable to patient care. This resulted in lost revenues reported to the HRSA portal for Period 2 being overstated. Cause Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Keck Medical Center of USC was aware that revenues not attributable to patient care should not be included in the lost revenues calculation (as evidenced by management correctly excluding these amounts from the actual revenues reported in the HRSA portal for Period 2) but was not aware these amounts were included in the budget amounts reported in the HRSA portal for Period 2. Effect Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Additionally, the lost revenues reported to HRSA for Period 2 were overstated by the amount of revenues not attributable to patient care that were inappropriately included in budgeted revenues. However, as Keck Medical Center of USC has sufficient lost revenues excluding these amounts, there is no impact to its entitlement to the funding. Questioned Costs None noted. Recommendation We recommend management communicate the error in the Reporting Period 2 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.

Finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Criteria Law (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below: Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals). Option 2) Difference Between 2020 and 2021 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020. Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach). Additionally, the Provider Relief Fund Lost Revenues Guide specifies that revenues not attributable to patient care are required to be excluded from the lost revenues calculation. Condition In March 2022, management submitted their Reporting Period 2 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 and 2021 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission. Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020, and the budget for the period July 1, 2021 through December 31, 2021 (the first six months of fiscal year 2022) was approved on June 2, 2021. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar quarters (January 1, 2021 through December 31, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their Period 2 reporting into the HRSA portal. Note this finding was also identified during the fiscal year 2021 audit, however, there was not sufficient time for the University to remediate prior to the Period 2 submission deadline. Additionally, the budgeted revenues submitted in the HRSA portal for Period 2 included revenues not attributable to patient care (as defined in the Provider Relief Fund Lost Revenues Guide). The actual revenues submitted in the HRSA portal for Period 2 appropriately excluded revenues not attributable to patient care. This resulted in lost revenues reported to the HRSA portal for Period 2 being overstated. Cause Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Keck Medical Center of USC was aware that revenues not attributable to patient care should not be included in the lost revenues calculation (as evidenced by management correctly excluding these amounts from the actual revenues reported in the HRSA portal for Period 2) but was not aware these amounts were included in the budget amounts reported in the HRSA portal for Period 2. Effect Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Additionally, the lost revenues reported to HRSA for Period 2 were overstated by the amount of revenues not attributable to patient care that were inappropriately included in budgeted revenues. However, as Keck Medical Center of USC has sufficient lost revenues excluding these amounts, there is no impact to its entitlement to the funding. Questioned Costs None noted. Recommendation We recommend management communicate the error in the Reporting Period 2 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.

Finding 2022-002: Reporting with the Health Resources & Services Administration (HRSA) Provider Relief Fund Portal Federal Awarding Agency: Department of Health and Human Services (HHS) Award Name: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Number: Various Award Years: 1/1/2020-12/31/2021 Assistance Listing Title: COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing Number: 93.498 Pass-through entities: Not applicable Criteria Law (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) notes that Provider Relief Funds should be used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. HRSA provided three options for assessing lost revenue at organizations per the HRSA Provider Relief Fund Lost Revenue Guide released in August 2021. The three different options to calculate the lost revenues are described below: Option 1) Difference Between 2019 Actual and Total revenue/Net charges for patient care revenues (Actuals for each quarter during the period of availability versus 2019 Actuals). Option 2) Difference Between 2020 and 2021 Budgeted and Actual Total revenue/Net charges for patient care revenues (Actuals for each quarter of availability versus Budgets for each quarter of availability). For organizations that selected option 2, an organization is required to have an Executive Level Attestation and Approval of their budget prior to March 27, 2020. Option 3) Any reasonable method of estimating revenues (otherwise known as a hybrid approach). Additionally, the Provider Relief Fund Lost Revenues Guide specifies that revenues not attributable to patient care are required to be excluded from the lost revenues calculation. Condition In March 2022, management submitted their Reporting Period 2 into the HRSA portal. Management selected option 2, Lost Revenue Reporting Method: 2020 and 2021 Budgeted Revenues, for the recognition of lost revenues in their HRSA portal submission. Through the testing of this special reporting, we identified that the budget for University of Southern California and its subsidiary entities, Keck Medical Center of USC, which houses Keck Hospital of USC and USC Norris Cancer Hospital, and USC Verdugo Hills Hospital (collectively ?Keck Medical Center of USC?) for the period July 1, 2019 through June 30, 2020 (fiscal year 2020) was approved by the Board of Trustees (the ?Board?) of the University on March 2, 2019. However, Keck Medical Center of USC?s budget for the period July 1, 2020 through June 30, 2021 (fiscal year 2021) was approved by the Board after March 27, 2020 on July 24, 2020, and the budget for the period July 1, 2021 through December 31, 2021 (the first six months of fiscal year 2022) was approved on June 2, 2021. Thus, the 2020 calendar year third and fourth quarters (July 1, 2020 through December 31, 2020) and the 2021 calendar quarters (January 1, 2021 through December 31, 2021) were not approved by the Board prior to March 27, 2020. As a result, Keck Medical Center of USC incorrectly selected option 2 within their Period 2 reporting into the HRSA portal. Note this finding was also identified during the fiscal year 2021 audit, however, there was not sufficient time for the University to remediate prior to the Period 2 submission deadline. Additionally, the budgeted revenues submitted in the HRSA portal for Period 2 included revenues not attributable to patient care (as defined in the Provider Relief Fund Lost Revenues Guide). The actual revenues submitted in the HRSA portal for Period 2 appropriately excluded revenues not attributable to patient care. This resulted in lost revenues reported to the HRSA portal for Period 2 being overstated. Cause Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Keck Medical Center of USC was aware that revenues not attributable to patient care should not be included in the lost revenues calculation (as evidenced by management correctly excluding these amounts from the actual revenues reported in the HRSA portal for Period 2) but was not aware these amounts were included in the budget amounts reported in the HRSA portal for Period 2. Effect Keck Medical Center of USC misinterpreted the HRSA guidance and was not cognizant of the fact that all budgets within the period of availability for Reporting Period 2 which is January 1, 2020 through December 31, 2021 (including those periods falling within fiscal year 2020, fiscal year 2021, and fiscal year 2022) must be approved prior to March 27, 2020 in order to select option 2. Additionally, the lost revenues reported to HRSA for Period 2 were overstated by the amount of revenues not attributable to patient care that were inappropriately included in budgeted revenues. However, as Keck Medical Center of USC has sufficient lost revenues excluding these amounts, there is no impact to its entitlement to the funding. Questioned Costs None noted. Recommendation We recommend management communicate the error in the Reporting Period 2 submission to HRSA as soon as possible to determine the best course of action to correct the error. Additionally, we recommend management design and implement an internal control around review of the HRSA guidance and the subsequent submissions in order to ensure proper review of all elements of the relevant guidance prior to submission to the portal.