Audit 305071

Statement of Condition:  The reporting package and data collection form for the year ended December 31, 2022 was not filed by the deadline of September 30, 2023, to the Federal Audit Clearinghouse. Criteria:  In accordance with 2 CFR Section 200.512(a), the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of Management and Budget. Effect of Condition:  The reporting package and data collection form for the year ended December 31, 2022, was not accessible to the Federal Audit Clearinghouse in a timely manner. Cause of Condition:  Due to turnover in finance department personnel, combined with resource issues, the reporting package and data collection form filing was not submitted within the deadline. Further, the 2021 Uniform Guidance audit will still in process which required that to be completed before the 2022 Uniform Guidance audit could be filed and submitted to the Federal Audit Clearinghouse. Recommendation:  We recommend Cottages adopt policies and procedures, including tracking and monitoring of reporting requirements, to ensure that the audit, reporting package, and data collection form are electronically filed with the Federal Audit Clearinghouse within the applicable deadline. Views of Responsible Official:  We agree with the recommendation. See corrective action plan.

Statement Condition: The Period 3 and 4 Provider Relief Fund reports were submitted with total revenue/net resident charges for each quarter of 2019, 2020, 2021 and 2022 and in total that did not agree to the net resident service revenues per the quarterly internal and year end audited financial statements. Further, Cottages did not update prior year’s net resident service revenue information in the reporting system. Criteria:  Under the terms and conditions of the awards, accurate amounts that agree with the entity's financial records are required to be reported in the Provider Relief Fund report. Cause of Condition:  Cottages did not include all third-party payor revenue sources and/or there were year-end audit adjustments that were recorded after the submission of the Period 3 and 4 Provider Relief Fund reports. Further, the reporting system does not allow for prior periods to be updated for errors. Effect of Condition:  The auditee reported actual annual revenues that were understated by $941,108 in 2109, $63,483 in 2020, $989,746 in 2021, and $84,602 in 2022 which totals $2,078,939. Despite the understatement of revenues for the respective years, there was still sufficient corrected lost revenues over years 2019-2022 of $6,122,747 that far exceeded the amount of lost revenues claimed for Reporting Period 4 of $820,138. Therefore, Cottages incurred enough lost revenue for the funds received in 2021. Recommendation:  We recommend that management implement a control process which includes a documented secondary review of approval of the calculation of the lost revenue. Due to the untimely reporting of this finding, Cottages is past the timeframe for filing revisions to the Period 1, 2 and 3 reports. We also recommend Cottages maintain documentation that details they incurred enough lost revenues to continue to qualify for the full amount of the funding. Views of Responsible Official:  Management agrees with the recommendation. See corrective action plan.

Statement of Condition:  The reporting package and data collection form for the year ended December 31, 2022 was not filed by the deadline of September 30, 2023, to the Federal Audit Clearinghouse. Criteria:  In accordance with 2 CFR Section 200.512(a), the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of Management and Budget. Effect of Condition:  The reporting package and data collection form for the year ended December 31, 2022, was not accessible to the Federal Audit Clearinghouse in a timely manner. Cause of Condition:  Due to turnover in finance department personnel, combined with resource issues, the reporting package and data collection form filing was not submitted within the deadline. Further, the 2021 Uniform Guidance audit will still in process which required that to be completed before the 2022 Uniform Guidance audit could be filed and submitted to the Federal Audit Clearinghouse. Recommendation:  We recommend Cottages adopt policies and procedures, including tracking and monitoring of reporting requirements, to ensure that the audit, reporting package, and data collection form are electronically filed with the Federal Audit Clearinghouse within the applicable deadline. Views of Responsible Official:  We agree with the recommendation. See corrective action plan.

Statement Condition: The Period 3 and 4 Provider Relief Fund reports were submitted with total revenue/net resident charges for each quarter of 2019, 2020, 2021 and 2022 and in total that did not agree to the net resident service revenues per the quarterly internal and year end audited financial statements. Further, Cottages did not update prior year’s net resident service revenue information in the reporting system. Criteria:  Under the terms and conditions of the awards, accurate amounts that agree with the entity's financial records are required to be reported in the Provider Relief Fund report. Cause of Condition:  Cottages did not include all third-party payor revenue sources and/or there were year-end audit adjustments that were recorded after the submission of the Period 3 and 4 Provider Relief Fund reports. Further, the reporting system does not allow for prior periods to be updated for errors. Effect of Condition:  The auditee reported actual annual revenues that were understated by $941,108 in 2109, $63,483 in 2020, $989,746 in 2021, and $84,602 in 2022 which totals $2,078,939. Despite the understatement of revenues for the respective years, there was still sufficient corrected lost revenues over years 2019-2022 of $6,122,747 that far exceeded the amount of lost revenues claimed for Reporting Period 4 of $820,138. Therefore, Cottages incurred enough lost revenue for the funds received in 2021. Recommendation:  We recommend that management implement a control process which includes a documented secondary review of approval of the calculation of the lost revenue. Due to the untimely reporting of this finding, Cottages is past the timeframe for filing revisions to the Period 1, 2 and 3 reports. We also recommend Cottages maintain documentation that details they incurred enough lost revenues to continue to qualify for the full amount of the funding. Views of Responsible Official:  Management agrees with the recommendation. See corrective action plan.