Audit 309195

III. Section III – Federal Award Findings and Questioned Costs Finding 2021-001 – Internal Control over Reporting (Significant Deficiency) Federal agency: U.S. Department of Health and Human Services Federal program title: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution AL Number: 93.498 Award Period: Period 1 and 2 Reporting (Period of availability January 1, 2020 – December 31, 2021) Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the nonfederal entity’s financial management systems, including records documenting compliance with Federal Statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Further, the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each federal award or program, in accordance with the reporting requirements. Condition/Context: It was noted that the Other Provider Relief Fund (PRF) Expenses section was completed for the by-period program report, however the amounts did not agree to the final expenditure support. The final expenditure support exceeded the direct expenditures reported in the Other PRF Expenses and Unreimbursed Expenses Attributable to Coronavirus sections of the reports. In addition, the classification of the expenses by category and between periods per the final support did not match the period 1 and 2 reports. Questioned costs: None noted. Cause: Evolving guidance contributed to the condition. Management was diligent about segregating funding and expenditures for COVID-19 funding in total, but that approach made reporting for individual programs more difficult. Effect: The District did not accurately complete the program reporting as noted in the condition; however, the final support compiled for Other PRF Expenses exceeded the amounts reported in total for period 1 and 2 by $3.4 million. In addition, there was a total of $35 million of lost revenue in addition to the Other PRF Expenses. PRF was only applied to $6.5 million, which left unused lost revenue of $28.5 million at the end of period 2. Due to the condition noted above, the exact PRF that should have been applied to lost revenue in period 1 and 2 is not certain; however, there were no related questioned costs as there were unused lost revenues and supported Other PRF Expenses totaling $32 million. Repeat Finding: This is not a repeat finding. Recommendation: If the District continues to accept grant funding, we recommend that they create a process to ensure that expenditures are segregated by funding sources at the beginning of the grant period and the plan for individual program reporting requirement compliance is established and monitored. Views of Responsible Officials: The District believed they were following the reporting requirements at the time of submission based on the guidance available. After the submission they went through the process to segregate the PRF support more completely from other COVID-19 funding. While the classifications and PRF applied to Other PRF Expenses versus lost revenues within the program reports would have changed based on that process, in total amounts in excess of program expenditures for both periods were supported.

Finding 2021-002 – Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency) Federal agency: U.S. Department of Health and Human Services Federal program title: COVID-19 HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund AL Number: 93.461 Award Period: 2021 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Uniform Guidance (2 CFR 200) Section 200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]….at a minimum shall…list individual Federal programs by Federal agency…[and] provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) number or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, the Organization is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Context: The Organization did not have sufficient controls to ensure the SEFA included all expenditures that qualified as an expenditure of a federal award during the period. Questioned costs: None noted. Cause: Factors contributing to the condition included the high volume of activity related to the new COVID-19 programs and the lack of understanding that the related payments represented grant expenditures that were required to be reported on the SEFA. Effect: The total expenditures presented per the preliminary SEFA increased by $1,340,525 related to ALN #93.461, COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund. No changes to the other financial statements were needed and the final SEFA was corrected to reflect the change. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization develop and implement a review process throughout the year to ensure compliance with SEFA reporting requirements as outlined in Uniform Guidance. Views of Responsible Officials: Processes will be put in place to compile the SEFA, reconcile to support, and perform a related review prior to audit. In addition, grant agreements will be required to go through the contract approval process. This will allow all grants to be identified and tracked, ensuring completeness. This has been implemented as of March 2024.

III. Section III – Federal Award Findings and Questioned Costs Finding 2021-001 – Internal Control over Reporting (Significant Deficiency) Federal agency: U.S. Department of Health and Human Services Federal program title: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution AL Number: 93.498 Award Period: Period 1 and 2 Reporting (Period of availability January 1, 2020 – December 31, 2021) Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the nonfederal entity’s financial management systems, including records documenting compliance with Federal Statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Further, the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each federal award or program, in accordance with the reporting requirements. Condition/Context: It was noted that the Other Provider Relief Fund (PRF) Expenses section was completed for the by-period program report, however the amounts did not agree to the final expenditure support. The final expenditure support exceeded the direct expenditures reported in the Other PRF Expenses and Unreimbursed Expenses Attributable to Coronavirus sections of the reports. In addition, the classification of the expenses by category and between periods per the final support did not match the period 1 and 2 reports. Questioned costs: None noted. Cause: Evolving guidance contributed to the condition. Management was diligent about segregating funding and expenditures for COVID-19 funding in total, but that approach made reporting for individual programs more difficult. Effect: The District did not accurately complete the program reporting as noted in the condition; however, the final support compiled for Other PRF Expenses exceeded the amounts reported in total for period 1 and 2 by $3.4 million. In addition, there was a total of $35 million of lost revenue in addition to the Other PRF Expenses. PRF was only applied to $6.5 million, which left unused lost revenue of $28.5 million at the end of period 2. Due to the condition noted above, the exact PRF that should have been applied to lost revenue in period 1 and 2 is not certain; however, there were no related questioned costs as there were unused lost revenues and supported Other PRF Expenses totaling $32 million. Repeat Finding: This is not a repeat finding. Recommendation: If the District continues to accept grant funding, we recommend that they create a process to ensure that expenditures are segregated by funding sources at the beginning of the grant period and the plan for individual program reporting requirement compliance is established and monitored. Views of Responsible Officials: The District believed they were following the reporting requirements at the time of submission based on the guidance available. After the submission they went through the process to segregate the PRF support more completely from other COVID-19 funding. While the classifications and PRF applied to Other PRF Expenses versus lost revenues within the program reports would have changed based on that process, in total amounts in excess of program expenditures for both periods were supported.

Finding 2021-002 – Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency) Federal agency: U.S. Department of Health and Human Services Federal program title: COVID-19 HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund AL Number: 93.461 Award Period: 2021 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Uniform Guidance (2 CFR 200) Section 200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]….at a minimum shall…list individual Federal programs by Federal agency…[and] provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) number or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, the Organization is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Context: The Organization did not have sufficient controls to ensure the SEFA included all expenditures that qualified as an expenditure of a federal award during the period. Questioned costs: None noted. Cause: Factors contributing to the condition included the high volume of activity related to the new COVID-19 programs and the lack of understanding that the related payments represented grant expenditures that were required to be reported on the SEFA. Effect: The total expenditures presented per the preliminary SEFA increased by $1,340,525 related to ALN #93.461, COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund. No changes to the other financial statements were needed and the final SEFA was corrected to reflect the change. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization develop and implement a review process throughout the year to ensure compliance with SEFA reporting requirements as outlined in Uniform Guidance. Views of Responsible Officials: Processes will be put in place to compile the SEFA, reconcile to support, and perform a related review prior to audit. In addition, grant agreements will be required to go through the contract approval process. This will allow all grants to be identified and tracked, ensuring completeness. This has been implemented as of March 2024.