Audit 295813

Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN#420680467 Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance - Other Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards and accompanying notes to the schedule of expenditures of federal awards. Condition: The Medical Center does not have an internal control system designed to provide for the preparation of the schedule of expenditures of federal. As auditors, we were requested to draft the schedule of expenditures of federal awards. Cause: Auditor assistance with preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Medical Center meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Medical Center would not be able to draft a complete and accurate schedule of expenditures of federal awards without the assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend management continually be aware of the financial reporting requirements relating to the Medical Center’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN#420680467 Activities Allowed or Unallowed and Allowable Costs/Costs 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 federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award. Condition: The Medical Center claimed expenses that had been reimbursed by another source. The Medical Center is a critical access hospital which means that a portion of their expenditures are covered by Medicare. The Medical Center did not decrease their expenses for the portion that was reimbursed by Medicare. The Medical Center’s special report submitted to the Department of Health and Human Services for Period 4 TIN #420680487 reported these expenses that were reimbursed by other sources which made the report inaccurate as well. Cause: The Medical Center did not have an internal control process in place to ensure the expenses reported were eligible expenditures under the federal program, and the report submitted to the Department of Health and Human Services for Period 4 was complete and accurate. The Medical Center did not consider Medicare reimbursement when claiming expenses under the federal program. Effect: Without reducing expenses by Medicare reimbursement, ineligible expenditures were claimed under the program, and the report was not accurately completed. Questioned Costs: The Medical Center had questioned costs of $580,669; however, the Medical Center had lost revenue carryforward on their submitted report of $234,595 and as noted in finding 2023-005, there was additional calculated lost revenue of $559,737 that could be used to cover these questioned costs. If the $580,669 of costs identified here are applied to the total remaining lost revenue, there is $213,633 of excess lost revenue remaining. Therefore, the Medical Center does not expect to have to return any funds. Context/Sampling: Sampling was not used Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center review the requirements of the federal program prior to compiling the expenditures claimed under the federal program. We also recommend the Medical Center implement a control process which includes a secondary review and approval of expenditures claimed under the federal program and a secondary review and approval of required reports to be submitted to the federal agency by and individual familiar with the requirements of the federal program. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN#420680467 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 federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award. Condition: The Medical Center’s lost revenue calculation did not take into consideration budgeted 340B revenue, but included actual 340B revenue, and did not take into consideration Period 1 questioned costs that were replaced with excess lost revenue. In addition, the calculation was not reviewed and approved by a separate individual outside of the preparer. The Medical Center’s special report submitted to the Department of Health and Human Services for Period 4 TIN #420680487 was not reviewed and approved by a separate individual outside of the preparer. Cause: The Medical Center did not have an internal control process in place to ensure effective review and approval of the lost revenue calculation, and the report submitted to the Department of Health and Human Services for Period 4 was completed and documented. Effect: Without an effective secondary review and approval, the lost revenue calculation and amounts claimed under the program were not calculated properly, and the report was not accurately completed. Questioned Costs: None as the Medical Center’s lost revenue calculation would have increased by $559,737 due to the calculation errors. Context/Sampling: The lost revenue calculation for all applicable quarters was tested and reviewed. Key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center implement a control process which includes a secondary review and approval of required reports to be submitted to the federal agency. We also recommend the Medical Center implement a control process which includes a secondary review and approval of the lost revenue calculation to ensure all required revenue streams are included for both actual and budget within the lost revenue calculation. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN#420680467 Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance - Other Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards and accompanying notes to the schedule of expenditures of federal awards. Condition: The Medical Center does not have an internal control system designed to provide for the preparation of the schedule of expenditures of federal. As auditors, we were requested to draft the schedule of expenditures of federal awards. Cause: Auditor assistance with preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Medical Center meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Medical Center would not be able to draft a complete and accurate schedule of expenditures of federal awards without the assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend management continually be aware of the financial reporting requirements relating to the Medical Center’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN#420680467 Activities Allowed or Unallowed and Allowable Costs/Costs 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 federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award. Condition: The Medical Center claimed expenses that had been reimbursed by another source. The Medical Center is a critical access hospital which means that a portion of their expenditures are covered by Medicare. The Medical Center did not decrease their expenses for the portion that was reimbursed by Medicare. The Medical Center’s special report submitted to the Department of Health and Human Services for Period 4 TIN #420680487 reported these expenses that were reimbursed by other sources which made the report inaccurate as well. Cause: The Medical Center did not have an internal control process in place to ensure the expenses reported were eligible expenditures under the federal program, and the report submitted to the Department of Health and Human Services for Period 4 was complete and accurate. The Medical Center did not consider Medicare reimbursement when claiming expenses under the federal program. Effect: Without reducing expenses by Medicare reimbursement, ineligible expenditures were claimed under the program, and the report was not accurately completed. Questioned Costs: The Medical Center had questioned costs of $580,669; however, the Medical Center had lost revenue carryforward on their submitted report of $234,595 and as noted in finding 2023-005, there was additional calculated lost revenue of $559,737 that could be used to cover these questioned costs. If the $580,669 of costs identified here are applied to the total remaining lost revenue, there is $213,633 of excess lost revenue remaining. Therefore, the Medical Center does not expect to have to return any funds. Context/Sampling: Sampling was not used Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center review the requirements of the federal program prior to compiling the expenditures claimed under the federal program. We also recommend the Medical Center implement a control process which includes a secondary review and approval of expenditures claimed under the federal program and a secondary review and approval of required reports to be submitted to the federal agency by and individual familiar with the requirements of the federal program. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN#420680467 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 federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award. Condition: The Medical Center’s lost revenue calculation did not take into consideration budgeted 340B revenue, but included actual 340B revenue, and did not take into consideration Period 1 questioned costs that were replaced with excess lost revenue. In addition, the calculation was not reviewed and approved by a separate individual outside of the preparer. The Medical Center’s special report submitted to the Department of Health and Human Services for Period 4 TIN #420680487 was not reviewed and approved by a separate individual outside of the preparer. Cause: The Medical Center did not have an internal control process in place to ensure effective review and approval of the lost revenue calculation, and the report submitted to the Department of Health and Human Services for Period 4 was completed and documented. Effect: Without an effective secondary review and approval, the lost revenue calculation and amounts claimed under the program were not calculated properly, and the report was not accurately completed. Questioned Costs: None as the Medical Center’s lost revenue calculation would have increased by $559,737 due to the calculation errors. Context/Sampling: The lost revenue calculation for all applicable quarters was tested and reviewed. Key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center implement a control process which includes a secondary review and approval of required reports to be submitted to the federal agency. We also recommend the Medical Center implement a control process which includes a secondary review and approval of the lost revenue calculation to ensure all required revenue streams are included for both actual and budget within the lost revenue calculation. Views of Responsible Officials: Management agrees with the finding.