Audit 336314

FY End
2021-12-31
Total Expended
$36.91M
Findings
2
Programs
7
Organization: Confluence Health (WA)
Year: 2021 Accepted: 2025-01-07
Auditor: Moss Adams

Organization Exclusion Status:

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Contacts

Name Title Type
ML88S3LCLFE3 Eric Caldwell Auditee
5094333824 Mary Wright Auditor
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Notes to SEFA

Title: Note 1 – Basis of Presentation Accounting Policies: Note 2 – Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting with special consideration for the Provider Relief Fund expenditures (see Note 4). Such expenditures are recognized following the cost principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass through entity numbers are presented where available. The Health System used the 10 percent de minimis indirect cost rate. De Minimis Rate Used: Y Rate Explanation: The Health System used the 10 percent de minimis indirect cost rate. The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Confluence Health System (the “Health System”) under programs of the federal government for the year ended December 31, 2021. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Health System, it is not intended to and does not present the financial position, change in net assets, or cash flows of the Health System.
Title: Note 3 – Subrecipients Accounting Policies: Note 2 – Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting with special consideration for the Provider Relief Fund expenditures (see Note 4). Such expenditures are recognized following the cost principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass through entity numbers are presented where available. The Health System used the 10 percent de minimis indirect cost rate. De Minimis Rate Used: Y Rate Explanation: The Health System used the 10 percent de minimis indirect cost rate. The Health System did not provide any federal awards to subrecipients during the year ended December 31, 2021.
Title: Note 4 – Provider Relief Fund Accounting Policies: Note 2 – Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting with special consideration for the Provider Relief Fund expenditures (see Note 4). Such expenditures are recognized following the cost principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass through entity numbers are presented where available. The Health System used the 10 percent de minimis indirect cost rate. De Minimis Rate Used: Y Rate Explanation: The Health System used the 10 percent de minimis indirect cost rate. The Health System received funds under the Provider Relief Fund, administered by the U.S. Department of Health & Human Services (HHS), under the Coronavirus Aid Relief, and Economic Security Action (CARES Act) of $5,900,675 and $33,837,709 during 2021 and 2020 respectively. The Health System recognized the payments as other operating revenue. In accordance with guidance from HHS, the Health System included expenditures for Provider Relief Fund Assistance Listing No. 93.498 of $33,837,709 for reporting periods 1 and 2, respectively, in the Schedule for the year ended December 31, 2021, to align with HHS reporting guidelines. The tax ID number of the entities that received Provider Relief Fund assistance were 454789950 and 455563741.
Title: Note 5 - Restatement Accounting Policies: Note 2 – Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting with special consideration for the Provider Relief Fund expenditures (see Note 4). Such expenditures are recognized following the cost principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass through entity numbers are presented where available. The Health System used the 10 percent de minimis indirect cost rate. De Minimis Rate Used: Y Rate Explanation: The Health System used the 10 percent de minimis indirect cost rate. The Schedule was restated to add the HRSA COVID-19 Uninsured Program, ALN # 93.461 after identifying the program was improperly excluded from the originally issued Schedule.

Finding Details

Finding 2021-001 Preparation of the Schedule Expenditures of Federal Awards – Material Weakness in Internal Control Over Compliance Program: U.S. Department of Health and Human Services HRSA COVID-19 Uninsured Program ALN 93.461 Award year: 2021 Criteria: 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, Confluence Health (the Health System) is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Cause: The Health System did not have sufficient controls to ensure the SEFA included all expenditures that qualified as an expenditure of a federal award during the period. Effect: The SEFA was revised to include $2,036,330 of expenditures related to ALN #93.461, HRSA COVID-19 Uninsured Program, which resulted in an additional major program and the reissuance of the 2021 reporting package. Additionally, it was determined that the Health System had not properly reported approximately $1.0 million in expenditures related to this same program in its prior year SEFA. Questioned Costs: Not applicable. Context: Factors contributing to the condition included the high volume of activity related to new COVID-19 programs and the lack of understanding that the related payments represented grant expenditures from a Federal source that were required to be reported on the SEFA. Repeat Finding: Not applicable. Recommendation: We recommend the Health System develop and implement a review process through the year to ensure compliance with SEFA reporting requirements as outlined in the 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. This will allow all grants from a Federal source to be identified and tracked, ensuring completeness.
Finding 2021-001 Preparation of the Schedule Expenditures of Federal Awards – Material Weakness in Internal Control Over Compliance Program: U.S. Department of Health and Human Services HRSA COVID-19 Uninsured Program ALN 93.461 Award year: 2021 Criteria: 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, Confluence Health (the Health System) is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Cause: The Health System did not have sufficient controls to ensure the SEFA included all expenditures that qualified as an expenditure of a federal award during the period. Effect: The SEFA was revised to include $2,036,330 of expenditures related to ALN #93.461, HRSA COVID-19 Uninsured Program, which resulted in an additional major program and the reissuance of the 2021 reporting package. Additionally, it was determined that the Health System had not properly reported approximately $1.0 million in expenditures related to this same program in its prior year SEFA. Questioned Costs: Not applicable. Context: Factors contributing to the condition included the high volume of activity related to new COVID-19 programs and the lack of understanding that the related payments represented grant expenditures from a Federal source that were required to be reported on the SEFA. Repeat Finding: Not applicable. Recommendation: We recommend the Health System develop and implement a review process through the year to ensure compliance with SEFA reporting requirements as outlined in the 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. This will allow all grants from a Federal source to be identified and tracked, ensuring completeness.