FAC Explorer

Audit 321051

FY End
2023-12-31
Total Expended
$19.95M
Findings
2
Programs
3
Organization: Cottage Health (CA)
Year: 2023 Accepted: 2024-09-25
Auditor: Ernst & Young LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
498297 2023-001 Material Weakness - ABHLN
1074739 2023-001 Material Weakness - ABHLN

Programs

ALN Program Spent Major Findings
93.498 Covid-19 - Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $18.38M Yes 0
97.036 Covid-19 - Disaster Grants - Public Assistance (presidentially Declared Disasters) $1.41M Yes 1
93.052 National Family Caregiver Support, Title Iii, Part E $35,975 - 0

Contacts

Name Title Type
S4EQHU6ACNK3 Lawrence Thomas Auditee
8056981376 Scott Enos Auditor
No contacts on file

Notes to SEFA

Title: 1. Summary of Significant Accounting Policies Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal grant activity of Cottage Health 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, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 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. There were no donated goods and personal protective equipment received from federal sources that required recognition or disclosure in the notes to the SEFA. De Minimis Rate Used: N Rate Explanation: Cottage Health utilizes the rate in the grant agreement. Basis of Accounting: The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal grant activity of Cottage Health 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, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 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. There were no donated goods and personal protective equipment received from federal sources that required recognition or disclosure in the notes to the SEFA.
Title: 2. Indirect Costs Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal grant activity of Cottage Health 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, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 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. There were no donated goods and personal protective equipment received from federal sources that required recognition or disclosure in the notes to the SEFA. De Minimis Rate Used: N Rate Explanation: Cottage Health utilizes the rate in the grant agreement. The Uniform Guidance provides for a 10% de minimis indirect cost rate election; however, Cottage Health did not make this election and did not use the de minimis indirect cost rate.
Title: 3. Provider Relief Fund Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal grant activity of Cottage Health 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, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 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. There were no donated goods and personal protective equipment received from federal sources that required recognition or disclosure in the notes to the SEFA. De Minimis Rate Used: N Rate Explanation: Cottage Health utilizes 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 amounts presented below were derived from 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 $18,383,626 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 (payments received between January 1, 2022 through June 30, 2022) and Period 6 (payments received between July 1, 2022 through December 31, 2022). This amount was recognized as other operating revenue in Cottage Health’s consolidated financial statements in the year ended December 31, 2022.
Title: 4. Disaster Grants - Public Assistance (Presidentially Declared Disasters) Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal grant activity of Cottage Health 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, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 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. There were no donated goods and personal protective equipment received from federal sources that required recognition or disclosure in the notes to the SEFA. De Minimis Rate Used: N Rate Explanation: Cottage Health utilizes the rate in the grant agreement. In fiscal year 2023, Cottage Health received approval from the Federal Emergency Management Agency for three projects related to the reimbursement of eligible expenditures of $1,408,022 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
Finding 2023-001 – Internal control deficiency over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting, and Special Tests and Provisions. Identification of the federal program: Assistance Listing Number 97.036: • COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) • U.S. Department of Homeland Security • Federal Award Identification Number: o Project Worksheet Number – PA-09-CA-4482-PW-00383(1591)  Federal Award Year – January 20, 2020 to September 22, 2020 o Project Worksheet Number – PA-09-CA-4482-PW-00420(1959)  Federal Award Year – January 20, 2020 to June 30, 2020 o Project Worksheet Number – PA-09-CA-4482-PW-01811(1946)  Federal Award Year – January 20, 2020 to July 1, 2022 • Pass-Through Entity – California Governor’s Office of Emergency Services Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 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). Condition: We observed management did not design effective internal controls to ensure documentation was retained to evidence the operating effectiveness of the internal controls. Cause: Management did not design effective internal controls over the compliance requirements as stated in the criteria or specific requirements section above. Effect or potential effect: Management did not design effective internal controls to retain documentation to evidence the operating effectiveness of the internal controls over the projects and related expenses submitted to FEMA for reimbursement. Questioned costs: None. Context: We did not test internal controls given management did not design effective internal controls to retain documentation to evidence the operating effectiveness of the internal controls over the projects and related expenses submitted to FEMA for reimbursement. Identification as a repeat finding, if applicable: No. Recommendation: Management should development and implement effective internal controls to ensure documentation is retained to evidence the operating effectiveness of the internal controls over the projects and related expenses submitted to FEMA for reimbursement. Views of responsible officials: Management will develop and implement additional internal controls to ensure documentation is retained to evidence the operating effectiveness of the internal controls. These internal controls will ensure expenses included in FEMA grant applications are reported completely and accurately. The additional internal controls will include a reconciliation of application expense detail to final paid invoices along with a notation that each expense is allowed to be included in the FEMA submission. The reconciliation will be reviewed and approved by the Cottage Health Director of Finance prior to final FEMA submission and evidence of the review will be retained.
Finding 2023-001
Finding 2023-001 – Internal control deficiency over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting, and Special Tests and Provisions. Identification of the federal program: Assistance Listing Number 97.036: • COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) • U.S. Department of Homeland Security • Federal Award Identification Number: o Project Worksheet Number – PA-09-CA-4482-PW-00383(1591)  Federal Award Year – January 20, 2020 to September 22, 2020 o Project Worksheet Number – PA-09-CA-4482-PW-00420(1959)  Federal Award Year – January 20, 2020 to June 30, 2020 o Project Worksheet Number – PA-09-CA-4482-PW-01811(1946)  Federal Award Year – January 20, 2020 to July 1, 2022 • Pass-Through Entity – California Governor’s Office of Emergency Services Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 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). Condition: We observed management did not design effective internal controls to ensure documentation was retained to evidence the operating effectiveness of the internal controls. Cause: Management did not design effective internal controls over the compliance requirements as stated in the criteria or specific requirements section above. Effect or potential effect: Management did not design effective internal controls to retain documentation to evidence the operating effectiveness of the internal controls over the projects and related expenses submitted to FEMA for reimbursement. Questioned costs: None. Context: We did not test internal controls given management did not design effective internal controls to retain documentation to evidence the operating effectiveness of the internal controls over the projects and related expenses submitted to FEMA for reimbursement. Identification as a repeat finding, if applicable: No. Recommendation: Management should development and implement effective internal controls to ensure documentation is retained to evidence the operating effectiveness of the internal controls over the projects and related expenses submitted to FEMA for reimbursement. Views of responsible officials: Management will develop and implement additional internal controls to ensure documentation is retained to evidence the operating effectiveness of the internal controls. These internal controls will ensure expenses included in FEMA grant applications are reported completely and accurately. The additional internal controls will include a reconciliation of application expense detail to final paid invoices along with a notation that each expense is allowed to be included in the FEMA submission. The reconciliation will be reviewed and approved by the Cottage Health Director of Finance prior to final FEMA submission and evidence of the review will be retained.