FAC Explorer

Audit 319252

FY End
2023-12-31
Total Expended
$139.69M
Findings
2
Programs
22
Organization: Banner Health (AZ)
Year: 2023 Accepted: 2024-09-10
Auditor: Ernst & Young LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
496371 2023-001 Significant Deficiency - L
1072813 2023-001 Significant Deficiency - L

Programs

ALN Program Spent Major Findings
93.498 Covid-19 - Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $59.19M Yes 1
97.036 Covid-19 - Disaster Grants - Public Assistance (presidentially Declared Disasters) $10.81M - 0
93.310 Trans-Nih Research Support $1.16M - 0
93.253 Poison Control Stabilization and Enhancement Grants $289,025 - 0
93.307 Minority Health and Health Disparities Research $135,047 - 0
21.027 Covid-19 - Coronavirus State and Local Fiscal Recovery Funds $132,000 - 0
93.155 Covid-19 - Rural Health Research Centers $119,195 - 0
93.838 Covid-19 - Lung Diseases Research $93,875 - 0
93.866 Aging Research $67,360 - 0
93.855 Allergy and Infectious Diseases Research $56,421 - 0
93.395 Cancer Treatment Research $50,500 - 0
93.137 Covid-19 - Community Programs to Improve Minority Health Grant Program $43,412 - 0
93.470 Alzheimer's Disease Program Initiative (adpi) $42,500 - 0
93.391 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $33,070 - 0
93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders $21,373 - 0
93.393 Cancer Cause and Prevention Research $17,887 - 0
93.048 Covid-19 - Special Programs for the Aging, Title Iv, and Title Ii, Discretionary Projects $10,537 - 0
93.301 Small Rural Hospital Improvement Grant Program $9,559 - 0
93.426 The National Cardiovascular Health Program $7,900 - 0
93.286 Discovery and Applied Research for Technological Innovations to Improve Human Health $5,258 - 0
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $1,269 - 0
93.575 Covid-19 - Child Care and Development Block Grant $680 - 0

Contacts

Name Title Type
SB35ENJFKK14 John Shaw Auditee
6028392223 Scott Enos Auditor
No contacts on file

Notes to SEFA

Title: 1. Organization Accounting Policies: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant activity of Banner and is presented on the accrual basis of accounting. The information in the SEFA 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 (the Uniform Guidance). Therefore, some amounts presented in the SEFA may differ from amounts presented in, or used in the preparation of, the consolidated financial statements of Banner. For purposes of the SEFA, federal awards include any assistance provided by a federal agency directly or indirectly in the form of grants, contracts, cooperative agreements, loan and loan guarantees, or other non-cash assistance. The SEFA does not include payments received under the traditional Medicare and Medicaid reimbursement programs, as these programs are outside the scope of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Banner Health and Subsidiaries utilizes the Department of Health and Human Services negotiated indirect cost rate or the rate in the grant agreement. Banner Health and Subsidiaries (Banner) is a nonprofit corporation exempt from income taxes under Internal Revenue Code Section 501(c)(3) and applicable state income tax codes. Banner own, control, or lease hospitals, clinics, nursing homes, clinical laboratories, ambulatory surgery centers, urgent care centers, free-standing imaging centers, home health agencies, a captive insurance company, a foundation, an insurance division offering insurance products to Medicare, Medicaid, and commercial subscriber populations, and other health care-related organizations in six western states. Banner also holds controlling interests in several health care-related business ventures and non-controlling interests in several other entities that are accounted for under the equity method of accounting.
Title: 2. Summary of Significant Accounting Policies Accounting Policies: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant activity of Banner and is presented on the accrual basis of accounting. The information in the SEFA 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 (the Uniform Guidance). Therefore, some amounts presented in the SEFA may differ from amounts presented in, or used in the preparation of, the consolidated financial statements of Banner. For purposes of the SEFA, federal awards include any assistance provided by a federal agency directly or indirectly in the form of grants, contracts, cooperative agreements, loan and loan guarantees, or other non-cash assistance. The SEFA does not include payments received under the traditional Medicare and Medicaid reimbursement programs, as these programs are outside the scope of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Banner Health and Subsidiaries utilizes the Department of Health and Human Services negotiated indirect cost rate or the rate in the grant agreement. Basis of Accounting: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant activity of Banner and is presented on the accrual basis of accounting. The information in the SEFA 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 (the Uniform Guidance). Therefore, some amounts presented in the SEFA may differ from amounts presented in, or used in the preparation of, the consolidated financial statements of Banner. For purposes of the SEFA, federal awards include any assistance provided by a federal agency directly or indirectly in the form of grants, contracts, cooperative agreements, loan and loan guarantees, or other non-cash assistance. The SEFA does not include payments received under the traditional Medicare and Medicaid reimbursement programs, as these programs are outside the scope of the Uniform Guidance.
Title: 3. Indirect Costs Accounting Policies: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant activity of Banner and is presented on the accrual basis of accounting. The information in the SEFA 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 (the Uniform Guidance). Therefore, some amounts presented in the SEFA may differ from amounts presented in, or used in the preparation of, the consolidated financial statements of Banner. For purposes of the SEFA, federal awards include any assistance provided by a federal agency directly or indirectly in the form of grants, contracts, cooperative agreements, loan and loan guarantees, or other non-cash assistance. The SEFA does not include payments received under the traditional Medicare and Medicaid reimbursement programs, as these programs are outside the scope of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Banner Health and Subsidiaries utilizes the Department of Health and Human Services negotiated indirect cost rate or the rate in the grant agreement. The Uniform Guidance provides for a 10% de minimis indirect cost rate election; however, Banner did not make this election and uses a negotiated indirect cost rate.
Title: 4. Donated Personal Protective Equipment (Unaudited) Accounting Policies: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant activity of Banner and is presented on the accrual basis of accounting. The information in the SEFA 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 (the Uniform Guidance). Therefore, some amounts presented in the SEFA may differ from amounts presented in, or used in the preparation of, the consolidated financial statements of Banner. For purposes of the SEFA, federal awards include any assistance provided by a federal agency directly or indirectly in the form of grants, contracts, cooperative agreements, loan and loan guarantees, or other non-cash assistance. The SEFA does not include payments received under the traditional Medicare and Medicaid reimbursement programs, as these programs are outside the scope of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Banner Health and Subsidiaries utilizes the Department of Health and Human Services negotiated indirect cost rate or the rate in the grant agreement. For the year ended December 31, 2023, Banner did not receive any donated personal protective equipment that requires disclosure.
Title: 5. Provider Relief Fund Accounting Policies: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant activity of Banner and is presented on the accrual basis of accounting. The information in the SEFA 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 (the Uniform Guidance). Therefore, some amounts presented in the SEFA may differ from amounts presented in, or used in the preparation of, the consolidated financial statements of Banner. For purposes of the SEFA, federal awards include any assistance provided by a federal agency directly or indirectly in the form of grants, contracts, cooperative agreements, loan and loan guarantees, or other non-cash assistance. The SEFA does not include payments received under the traditional Medicare and Medicaid reimbursement programs, as these programs are outside the scope of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Banner Health and Subsidiaries utilizes the Department of Health and Human Services negotiated indirect cost rate or the rate in the grant agreement. The amount presented in the SEFA for Assistance Listing Number 93.498, COVID-19 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF Funds), is for the year ended December 31, 2023. The amount presented reconciles to the Provider Relief Fund (PRF) information reported to the Health Resources and Services Administration (HRSA) as follows: See the Notes to the SEFA for table. Health and Human Services (HHS) has indicated the PRF Funds in the SEFA 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 SEFA includes $59,191,241 of PRF Funds received from HHS between January 1, 2022 through December 31, 2022. In accordance with guidance from HHS, these amounts are presented as Period 5. No payments were received related to Period 6. Such amounts were recognized as other revenue in Banner’s consolidated financial statements in the year ended December 31, 2022.
Title: 6. Disaster Grants - Public Assistance (Presidentially Declared Disasters) Accounting Policies: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant activity of Banner and is presented on the accrual basis of accounting. The information in the SEFA 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 (the Uniform Guidance). Therefore, some amounts presented in the SEFA may differ from amounts presented in, or used in the preparation of, the consolidated financial statements of Banner. For purposes of the SEFA, federal awards include any assistance provided by a federal agency directly or indirectly in the form of grants, contracts, cooperative agreements, loan and loan guarantees, or other non-cash assistance. The SEFA does not include payments received under the traditional Medicare and Medicaid reimbursement programs, as these programs are outside the scope of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Banner Health and Subsidiaries utilizes the Department of Health and Human Services negotiated indirect cost rate or the rate in the grant agreement. In fiscal year 2023, Banner received approval from the Federal Emergency Management Agency for three projects related to the reimbursement of eligible expenditures of $57,928,047 incurred in previous fiscal years. These previous years’ expenditures are included in the SEFA in the current year in accordance with guidance provided by the U.S. Department of Homeland Security.

Finding Details

Finding 2023-001
Internal control deficiency and noncompliance over reporting of lost revenues attributable to coronavirus reported in the provider relief fund report. Identification of the federal program: Assistance Listing Number 93.498: • COVID-19 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution • U.S. Department of Health and Human Services • Federal award identification number – Not Applicable • Federal award year – January 1, 2020 to December 31, 2023 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, Section 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The terms and conditions of the award requires the following: • The recipient certifies that the payment will only be used to prevent, prepare for, and respond to coronavirus, and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. • The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. • The recipient shall adhere to the reporting requirements on provider relief fund payments for payments received exceeding $10,000 in the aggregate during the payment received period. The recipient must register in the provider relief fund reporting portal and submit reports as specified by HHS. • The recipient certifies that all information it provides as part of any application for the payment, as well as all information and reports relating to the payment that it provides in the future at the request of HHS or the HHS inspector general, are true, accurate and complete, to the best of its knowledge. The Provider Relief Programs: Provider Relief Fund and ARP Rural Payments Frequently Asked Questions states the following: • Duplication of expenses and lost revenues is not permitted. • Expenses and lost revenues may not be duplicated: payments may not be applied to the same expenses and lost revenues that were reported on in prior reporting period. Condition: During our testing over reporting, we observed management did not have effective internal controls in place to ensure lost revenues reported in the provider relief fund report were not duplicated. This resulted in an overstatement of lost revenues reported in the provider relief fund report. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirements section above. Effect or potential effect: The lost revenues attributable to coronavirus were reported incorrectly in the provider relief fund report. Questioned costs: $404,529 – Assistance Listing Number 93.498, Award Identification Number – Not Applicable Questioned costs were computed by taking the total lost revenues available to be used in the current reporting period of $29,770,743 reported in the provider relief fund report compared to the actual total lost revenues available to be used in the current reporting period of $29,366,214. Context: During our testing over the calculation of lost revenues attributable to coronavirus, we observed management used $404,529 in lost revenues related to a subsidiary of Banner to substantiate the payments received; however, the Banner parent lost revenues were not reduced by $404,529 in lost revenues that were already used by the subsidiary of Banner. Management’s control regarding the review of the provider relief fund report did not identify this overstatement. Identification as a repeat finding, if applicable: No. Recommendation: Management should develop and implement effective internal controls to ensure the total lost revenues reported in the provider relief fund report are reflective of the entity’s consolidated lost revenues and are not duplicated. In addition, management should review the identified questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: There will be no additional provider relief fund reports submitted given this was the final report submitted to substantiate the payments received. However, if this program begins again, management will implement a control to ensure lost revenues are not duplicated. The entity will work with the grantor regarding the questioned costs identified.
Finding 2023-001
Internal control deficiency and noncompliance over reporting of lost revenues attributable to coronavirus reported in the provider relief fund report. Identification of the federal program: Assistance Listing Number 93.498: • COVID-19 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution • U.S. Department of Health and Human Services • Federal award identification number – Not Applicable • Federal award year – January 1, 2020 to December 31, 2023 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, Section 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The terms and conditions of the award requires the following: • The recipient certifies that the payment will only be used to prevent, prepare for, and respond to coronavirus, and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. • The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. • The recipient shall adhere to the reporting requirements on provider relief fund payments for payments received exceeding $10,000 in the aggregate during the payment received period. The recipient must register in the provider relief fund reporting portal and submit reports as specified by HHS. • The recipient certifies that all information it provides as part of any application for the payment, as well as all information and reports relating to the payment that it provides in the future at the request of HHS or the HHS inspector general, are true, accurate and complete, to the best of its knowledge. The Provider Relief Programs: Provider Relief Fund and ARP Rural Payments Frequently Asked Questions states the following: • Duplication of expenses and lost revenues is not permitted. • Expenses and lost revenues may not be duplicated: payments may not be applied to the same expenses and lost revenues that were reported on in prior reporting period. Condition: During our testing over reporting, we observed management did not have effective internal controls in place to ensure lost revenues reported in the provider relief fund report were not duplicated. This resulted in an overstatement of lost revenues reported in the provider relief fund report. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirements section above. Effect or potential effect: The lost revenues attributable to coronavirus were reported incorrectly in the provider relief fund report. Questioned costs: $404,529 – Assistance Listing Number 93.498, Award Identification Number – Not Applicable Questioned costs were computed by taking the total lost revenues available to be used in the current reporting period of $29,770,743 reported in the provider relief fund report compared to the actual total lost revenues available to be used in the current reporting period of $29,366,214. Context: During our testing over the calculation of lost revenues attributable to coronavirus, we observed management used $404,529 in lost revenues related to a subsidiary of Banner to substantiate the payments received; however, the Banner parent lost revenues were not reduced by $404,529 in lost revenues that were already used by the subsidiary of Banner. Management’s control regarding the review of the provider relief fund report did not identify this overstatement. Identification as a repeat finding, if applicable: No. Recommendation: Management should develop and implement effective internal controls to ensure the total lost revenues reported in the provider relief fund report are reflective of the entity’s consolidated lost revenues and are not duplicated. In addition, management should review the identified questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: There will be no additional provider relief fund reports submitted given this was the final report submitted to substantiate the payments received. However, if this program begins again, management will implement a control to ensure lost revenues are not duplicated. The entity will work with the grantor regarding the questioned costs identified.