Audit 323118

Finding 2023-001 - Significant deficiency regarding Allowable Costs/Cost Principles and lack of documentation supporting management’s review control Identification of the Federal Program: Grantor: Department of Agriculture Pass through entity: NYS Department of Health Program Name: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing No.: 10.557 Criteria or Specific Requirement: Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Title 2, Subtitle A, Chapter II, Part 200, Subpart E 200.414 - 415 – Cost Principles, Indirect Costs– the Non-Federal entity should apply to appropriate cost principles cited in Subpart E and calculate indirect costs using the rate approved by the cognizant agency. Condition: Management was unable to provide evidence of a control being consistently performed and at the appropriate level of precision to address the risk that Hospital only seeks reimbursement for allowable costs under the contract. Additionally, the Hospital did not use the approved indirect cost rate per the contract when calculating the indirect costs for the fiscal year ended December 31, 2023. The Hospital also did not use the approved rate for calculating fringe benefits expense for the three months encompassing October through December 2023. Cause: The Hospital’s control framework did not identify these errors as part of the monthly review. Effect or Potential Effect: The lack of effective controls in place to ensure the indirect and fringe rates were being applied appropriately on a monthly basis caused inaccurate reporting of indirect and fringe expenses as part of the Hospital’s monthly voucher process. However, compensating controls were in place to ensure the ensure the expenses did not exceed the approved budgeted amounts. Questioned Costs: Questioned costs are immaterial to the major program, and below $25,000. Context: For the contracts that are in effect for the period under audit, the Hospital submits a monthly voucher request to the local agency for reimbursement of eligible expenditures. Each of these submissions is to be reviewed by a person knowledgeable of the program. In testing the review control, management did not retain evidence of the review occurring at the appropriate level of precision prior to the monthly voucher submission. In a sample of four voucher submissions, three included indirect expenses that were not calculated at the approved rate and two included fringe benefit expenses that were not calculated at the approved rate. Identification as a repeat finding: This finding is not a repeat finding from the prior year. Recommendation: Management should retain more robust documentation as evidence of their review of the monthly voucher submissions under the program. Management should enhance their process for reviewing the indirect and fringe expense portions of the voucher submission in order the ensure indirect and fringe rates are applied at the approved rates from the granting agency. Views of Responsible Officials: Management concurs with the audit finding and has implemented a standardized review and approval process that will be performed prior to monthly vouchers being submitted for reimbursement, including verification of allowability of expenditures and appropriate indirect cost and fringe benefit expense rates. Evidence of the monthly review and approval will be retained.

Finding 2023-001 - Significant deficiency regarding Allowable Costs/Cost Principles and lack of documentation supporting management’s review control Identification of the Federal Program: Grantor: Department of Agriculture Pass through entity: NYS Department of Health Program Name: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing No.: 10.557 Criteria or Specific Requirement: Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Title 2, Subtitle A, Chapter II, Part 200, Subpart E 200.414 - 415 – Cost Principles, Indirect Costs– the Non-Federal entity should apply to appropriate cost principles cited in Subpart E and calculate indirect costs using the rate approved by the cognizant agency. Condition: Management was unable to provide evidence of a control being consistently performed and at the appropriate level of precision to address the risk that Hospital only seeks reimbursement for allowable costs under the contract. Additionally, the Hospital did not use the approved indirect cost rate per the contract when calculating the indirect costs for the fiscal year ended December 31, 2023. The Hospital also did not use the approved rate for calculating fringe benefits expense for the three months encompassing October through December 2023. Cause: The Hospital’s control framework did not identify these errors as part of the monthly review. Effect or Potential Effect: The lack of effective controls in place to ensure the indirect and fringe rates were being applied appropriately on a monthly basis caused inaccurate reporting of indirect and fringe expenses as part of the Hospital’s monthly voucher process. However, compensating controls were in place to ensure the ensure the expenses did not exceed the approved budgeted amounts. Questioned Costs: Questioned costs are immaterial to the major program, and below $25,000. Context: For the contracts that are in effect for the period under audit, the Hospital submits a monthly voucher request to the local agency for reimbursement of eligible expenditures. Each of these submissions is to be reviewed by a person knowledgeable of the program. In testing the review control, management did not retain evidence of the review occurring at the appropriate level of precision prior to the monthly voucher submission. In a sample of four voucher submissions, three included indirect expenses that were not calculated at the approved rate and two included fringe benefit expenses that were not calculated at the approved rate. Identification as a repeat finding: This finding is not a repeat finding from the prior year. Recommendation: Management should retain more robust documentation as evidence of their review of the monthly voucher submissions under the program. Management should enhance their process for reviewing the indirect and fringe expense portions of the voucher submission in order the ensure indirect and fringe rates are applied at the approved rates from the granting agency. Views of Responsible Officials: Management concurs with the audit finding and has implemented a standardized review and approval process that will be performed prior to monthly vouchers being submitted for reimbursement, including verification of allowability of expenditures and appropriate indirect cost and fringe benefit expense rates. Evidence of the monthly review and approval will be retained.

Finding 2023-001 - Significant deficiency regarding Allowable Costs/Cost Principles and lack of documentation supporting management’s review control Identification of the Federal Program: Grantor: Department of Agriculture Pass through entity: NYS Department of Health Program Name: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing No.: 10.557 Criteria or Specific Requirement: Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Title 2, Subtitle A, Chapter II, Part 200, Subpart E 200.414 - 415 – Cost Principles, Indirect Costs– the Non-Federal entity should apply to appropriate cost principles cited in Subpart E and calculate indirect costs using the rate approved by the cognizant agency. Condition: Management was unable to provide evidence of a control being consistently performed and at the appropriate level of precision to address the risk that Hospital only seeks reimbursement for allowable costs under the contract. Additionally, the Hospital did not use the approved indirect cost rate per the contract when calculating the indirect costs for the fiscal year ended December 31, 2023. The Hospital also did not use the approved rate for calculating fringe benefits expense for the three months encompassing October through December 2023. Cause: The Hospital’s control framework did not identify these errors as part of the monthly review. Effect or Potential Effect: The lack of effective controls in place to ensure the indirect and fringe rates were being applied appropriately on a monthly basis caused inaccurate reporting of indirect and fringe expenses as part of the Hospital’s monthly voucher process. However, compensating controls were in place to ensure the ensure the expenses did not exceed the approved budgeted amounts. Questioned Costs: Questioned costs are immaterial to the major program, and below $25,000. Context: For the contracts that are in effect for the period under audit, the Hospital submits a monthly voucher request to the local agency for reimbursement of eligible expenditures. Each of these submissions is to be reviewed by a person knowledgeable of the program. In testing the review control, management did not retain evidence of the review occurring at the appropriate level of precision prior to the monthly voucher submission. In a sample of four voucher submissions, three included indirect expenses that were not calculated at the approved rate and two included fringe benefit expenses that were not calculated at the approved rate. Identification as a repeat finding: This finding is not a repeat finding from the prior year. Recommendation: Management should retain more robust documentation as evidence of their review of the monthly voucher submissions under the program. Management should enhance their process for reviewing the indirect and fringe expense portions of the voucher submission in order the ensure indirect and fringe rates are applied at the approved rates from the granting agency. Views of Responsible Officials: Management concurs with the audit finding and has implemented a standardized review and approval process that will be performed prior to monthly vouchers being submitted for reimbursement, including verification of allowability of expenditures and appropriate indirect cost and fringe benefit expense rates. Evidence of the monthly review and approval will be retained.

Finding 2023-001 - Significant deficiency regarding Allowable Costs/Cost Principles and lack of documentation supporting management’s review control Identification of the Federal Program: Grantor: Department of Agriculture Pass through entity: NYS Department of Health Program Name: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing No.: 10.557 Criteria or Specific Requirement: Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Title 2, Subtitle A, Chapter II, Part 200, Subpart E 200.414 - 415 – Cost Principles, Indirect Costs– the Non-Federal entity should apply to appropriate cost principles cited in Subpart E and calculate indirect costs using the rate approved by the cognizant agency. Condition: Management was unable to provide evidence of a control being consistently performed and at the appropriate level of precision to address the risk that Hospital only seeks reimbursement for allowable costs under the contract. Additionally, the Hospital did not use the approved indirect cost rate per the contract when calculating the indirect costs for the fiscal year ended December 31, 2023. The Hospital also did not use the approved rate for calculating fringe benefits expense for the three months encompassing October through December 2023. Cause: The Hospital’s control framework did not identify these errors as part of the monthly review. Effect or Potential Effect: The lack of effective controls in place to ensure the indirect and fringe rates were being applied appropriately on a monthly basis caused inaccurate reporting of indirect and fringe expenses as part of the Hospital’s monthly voucher process. However, compensating controls were in place to ensure the ensure the expenses did not exceed the approved budgeted amounts. Questioned Costs: Questioned costs are immaterial to the major program, and below $25,000. Context: For the contracts that are in effect for the period under audit, the Hospital submits a monthly voucher request to the local agency for reimbursement of eligible expenditures. Each of these submissions is to be reviewed by a person knowledgeable of the program. In testing the review control, management did not retain evidence of the review occurring at the appropriate level of precision prior to the monthly voucher submission. In a sample of four voucher submissions, three included indirect expenses that were not calculated at the approved rate and two included fringe benefit expenses that were not calculated at the approved rate. Identification as a repeat finding: This finding is not a repeat finding from the prior year. Recommendation: Management should retain more robust documentation as evidence of their review of the monthly voucher submissions under the program. Management should enhance their process for reviewing the indirect and fringe expense portions of the voucher submission in order the ensure indirect and fringe rates are applied at the approved rates from the granting agency. Views of Responsible Officials: Management concurs with the audit finding and has implemented a standardized review and approval process that will be performed prior to monthly vouchers being submitted for reimbursement, including verification of allowability of expenditures and appropriate indirect cost and fringe benefit expense rates. Evidence of the monthly review and approval will be retained.