FAC Explorer

Audit 338062

FY End
2023-06-30
Total Expended
$2.32M
Findings
4
Programs
3
Organization: Jacobson Memorial Hospital Care Center and Subsidiary (ND)
Year: 2023 Accepted: 2025-01-15
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
519295 2023-003 Material Weakness - L
519296 2023-004 Material Weakness - L
1095737 2023-003 Material Weakness - L
1095738 2023-004 Material Weakness - L

Programs

ALN Program Spent Major Findings
10.766 Community Facilities Loans and Grants $594,997 Yes 0
93.498 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $224,735 Yes 2
93.697 Testing and Mitigation for Rural Health Clinics $84,517 - 0

Contacts

Name Title Type
PEKXCMGQMT86 Stephanie Labrie Auditee
7015842792 Renee Gravalin Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting, with the exception for the COVID-19 Testing for the Uninsured program, which are recorded based on when the claim is deemed eligible as evidenced by the receipt of monies from the federal agency. When applicable, 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. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Hospital does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Jacobson Memorial Hospital Care Center and Subsidiary (Hospital) under programs of the federal government for the year ended June 30, 2023. The information 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 (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Hospital, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Hospital.
Title: Loan Programs Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting, with the exception for the COVID-19 Testing for the Uninsured program, which are recorded based on when the claim is deemed eligible as evidenced by the receipt of monies from the federal agency. When applicable, 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. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Hospital does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. Expenditures reported in this consolidated schedule consist of three separate loans. For the first two loans, the expenditures reported represents the beginning of the year outstanding loan balances plus advances made on the loans during the year, if applicable. The outstanding balances as of June 30, 2023 for these two loans were $481,971 and $893,764, respectively. The third loan is guaranteed by the United States Department of Agriculture (USDA) for up to 90% of the loan principal. Total expenditures reported represents 90% of the beginning of the year outstanding loan balances plus 9% of advances made on the loan during the year, if applicable. The outstanding balance as of June 30, 2023 for this loan was $574,544, of which 90% totals $517,090.
Title: Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Funds Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting, with the exception for the COVID-19 Testing for the Uninsured program, which are recorded based on when the claim is deemed eligible as evidenced by the receipt of monies from the federal agency. When applicable, 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. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Hospital does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. The Hospital received amounts from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) program (Federal Financial Assistance Listing #93.498) during the year ended June 30, 2022, totaling $224,735. The PRF expenditures are recognized on the Schedule when expenditures were included in the reporting to HHS for Period 4 (defined as payments received between January 1, 2022, and June 30, 2022). The amount recognized in the Schedule for Periods 4, were $224,735. The total amount of PRF expenditures included on the Schedule requires management to make estimates and assumptions that affect the reported amounts. Accordingly, such expenditures are considered a significant estimate. Estimates and assumptions may include reducing actual expenses by amounts that have been reimbursed or are obligated to be reimbursed by other sources and estimating marginal increases in expenses related to coronavirus. Actual amounts could differ from those estimates.

Finding Details

Finding 2023-003
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #450222079 Reporting Material Weakness in Internal Control Over Compliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Hospital claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Hospital selected Option i to calculate lost revenue. The methodology chosen utilized actual quarterly revenues from 2019, 2020, 2021, and 2022. The 2019 revenue amounts were compared to 2020, 2021, and 2022 to calculate the Hospital’s lost revenue. Condition – During our testing, the Hospital’s calculation of lost revenue claimed under the federal program as an allowable cost contained no formal review or approval by a separate individual outside of the preparer. In addition, there was no evidence retained that the Hospital’s special report submitted to the Department of Health and Human Services for Period 4 was reviewed and approved by a separate individual outside of the preparer. Cause – The Hospital did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented. Effect – The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs – None reported. Context – The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 4 Reporting were tested. No review outside of the preparer was noted on the lost revenue calculation, or the submission of the reporting to the Department of Health and Human Services outside of the preparer. Repeat Finding from Prior Years – No Recommendation – We recommend that the Hospital enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials – Management agrees with the finding.
Finding 2023-004
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #450222079 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – The Hospital was not able to provide sufficient support for the total net patient care revenues that were reported to the Department of Health and Human Services. As well as the Hospital’s total net patient care revenue did not agree to the amount in the report submitted to the Department of Health and Human Services. Cause – Due to high turnover in the CFO position and multiple accounting system conversions, the Hospital was unable to provide sufficient support over the total net patient care revenues that were reported to the Department of Health and Human Services. This caused the Hospital to report revenue amounts that did not accurately reflect the net patient care revenues reported on the audited financial statements. Effect – The lost revenue difference in what was accurately calculated compared to what was reported led to an incorrect filing and a claim of more support for lost revenue than was needed. Additionally, the revenue difference in what was reported on the audited financial statements compared to what was reported led to an incorrect filing of total net patient care revenues. Questioned Costs – None reported. Context – Lost revenue reported to the Department of Health and Human Services totaled $2,104,728. Due to the lack of sufficient support, actual lost revenue was not able to be calculated and the difference is not known. Additionally, revenues reported to the Department of Health and Human Services compared to the audited financial statements differed by $2,769,931. As lost revenue was not used as a qualifying expenditure in Period 4, there was no noted questioned costs due to this. Repeat Finding from Prior Years – No Recommendation – We recommend that management review their process and procedures to include monitoring over amounts reported relating to total revenues, lost revenue amounts and the related calculation. Views of Responsible Officials – Management agrees with the finding.
Finding 2023-003
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #450222079 Reporting Material Weakness in Internal Control Over Compliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Hospital claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Hospital selected Option i to calculate lost revenue. The methodology chosen utilized actual quarterly revenues from 2019, 2020, 2021, and 2022. The 2019 revenue amounts were compared to 2020, 2021, and 2022 to calculate the Hospital’s lost revenue. Condition – During our testing, the Hospital’s calculation of lost revenue claimed under the federal program as an allowable cost contained no formal review or approval by a separate individual outside of the preparer. In addition, there was no evidence retained that the Hospital’s special report submitted to the Department of Health and Human Services for Period 4 was reviewed and approved by a separate individual outside of the preparer. Cause – The Hospital did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented. Effect – The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs – None reported. Context – The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 4 Reporting were tested. No review outside of the preparer was noted on the lost revenue calculation, or the submission of the reporting to the Department of Health and Human Services outside of the preparer. Repeat Finding from Prior Years – No Recommendation – We recommend that the Hospital enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials – Management agrees with the finding.
Finding 2023-004
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #450222079 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – The Hospital was not able to provide sufficient support for the total net patient care revenues that were reported to the Department of Health and Human Services. As well as the Hospital’s total net patient care revenue did not agree to the amount in the report submitted to the Department of Health and Human Services. Cause – Due to high turnover in the CFO position and multiple accounting system conversions, the Hospital was unable to provide sufficient support over the total net patient care revenues that were reported to the Department of Health and Human Services. This caused the Hospital to report revenue amounts that did not accurately reflect the net patient care revenues reported on the audited financial statements. Effect – The lost revenue difference in what was accurately calculated compared to what was reported led to an incorrect filing and a claim of more support for lost revenue than was needed. Additionally, the revenue difference in what was reported on the audited financial statements compared to what was reported led to an incorrect filing of total net patient care revenues. Questioned Costs – None reported. Context – Lost revenue reported to the Department of Health and Human Services totaled $2,104,728. Due to the lack of sufficient support, actual lost revenue was not able to be calculated and the difference is not known. Additionally, revenues reported to the Department of Health and Human Services compared to the audited financial statements differed by $2,769,931. As lost revenue was not used as a qualifying expenditure in Period 4, there was no noted questioned costs due to this. Repeat Finding from Prior Years – No Recommendation – We recommend that management review their process and procedures to include monitoring over amounts reported relating to total revenues, lost revenue amounts and the related calculation. Views of Responsible Officials – Management agrees with the finding.