FAC Explorer

Audit 344374

FY End
2023-12-31
Total Expended
$11.97M
Findings
6
Programs
3
Organization: Confluence Health (WA)
Year: 2023 Accepted: 2025-02-28
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
525090 2023-003 Material Weakness Yes L
525091 2023-004 Material Weakness Yes L
525092 2023-005 Material Weakness - A
1101532 2023-003 Material Weakness Yes L
1101533 2023-004 Material Weakness Yes L
1101534 2023-005 Material Weakness - A

Programs

ALN Program Spent Major Findings
93.498 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $11.36M Yes 3
93.898 Cancer Prevention and Control Programs for State, Territorial and Tribal Organizations $579,788 - 0
14.241 Housing Opportunities for Persons with Aids $27,094 - 0

Contacts

Name Title Type
ML88S3LCLFE3 Eric Caldwell Auditee
5094333824 Dave Studebaker Auditor
No contacts on file

Notes to SEFA

Title: NOTE 1 - BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. 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: Confluence Health 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 Confluence Health and its subsidiaries (collectively, Confluence Health) under programs of the federal government for the year ended December 31, 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 Confluence Health, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Confluence Health. Effective July 1, 2023, the three affiliated entities merged into a single entity, Central Washington Health Services Association dba Confluence Health, referred to herein as the "Health System" or "Confluence Health."
Title: NOTE 2 - PRINCIPLES OF CONSOLIDATION Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. 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: Confluence Health has not elected to use the 10% de minimis cost rate. Significant intercompany balances and transactions have been eliminated in the schedule of expenditures of federal awards. The following entities and their associated TIN numbers included within the schedule are as follows: Central Washington Health Services Association dba Central Washington Hospital – TIN# 910171250 and Wenatchee Valley Hospital – TIN# 455563741.
Title: NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. 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: Confluence Health has not elected to use the 10% de minimis cost rate. Expenditures reported on the schedule are reported on the accrual basis of accounting. 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.
Title: NOTE 4 - INDIRECT COST RATE Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. 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: Confluence Health has not elected to use the 10% de minimis cost rate. Confluence Health has not elected to use the 10% de minimis cost rate.
Title: NOTE 5 - PROVIDER RELIEF FUND AND AMERICAN RESCUE PLAN (ARP) RURAL DISTRIBUTION Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. 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: Confluence Health has not elected to use the 10% de minimis cost rate. Confluence Health 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) in the amount of $50,001,156 as of December 31, 2023. PRF expenditures are not recognized on the schedule until the expenditures were included in the reporting to HHS as required under the PRF program. The following summarizes the PRF program funds and the timing of when the amounts were recognized in the financial statements. Amounts Amounts Amounts Recognized in Recognized in Recognized in Accordance with Accordance with Accordance with Federal GAAP for the GAAP for the GAAP for the Financial Year Ended Year Ended Year Ended Assistance December 31, December 31, December 31, Federal Department/Program Title/Grant Name Listing 2020 2021 2022 Department of Health and Human Services Health Resources and Services Administration COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Period 1 (not included in 2023 Schedule) 93.498 $ 1 8,316,152 $ 9,021,557 $ - Period 2 (not included in 2023 Schedule) 93.498 4,500,000 2,000,000 - Period 3 (not included in 2023 Schedule) 93.498 - - - Period 4 (not included in 2023 Schedule) 93.498 - 4,800,675 - Period 5 (included in 2023 Schedule) 93.498 - - 11,362,772 Total COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution $ 2 2,816,152 $ 1 5,822,232 $ 1 1,362,772 Confluence Health did not receive, or recognize in accordance with U.S. GAAP, Provider Relief Fund or American Rescue Plan (ARP) Rural Distribution during the year ended December 31, 2023.

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 5 TIN# 910171250 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Confluence Health must establish and maintain effective internal control over federal awards that provides reasonable assurance that Confluence Health is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: Confluence Health selected option ii to calculate lost revenue which consists of a comparison of actual results during the period of availability to a budget approved before March 27, 2020, for the entire period of availability. The budget used in the calculation of lost revenue for quarters in 2021, 2022 and 2023 was not approved prior to March 27, 2020. Cause: Confluence Health did have an approved budget prior to March 27, 2020, for calendar year 2020, but the approved budget did not cover the entire period of availability. Effect: The reporting to HHS for Period 5 was considered incorrect. Confluence Health did not have a budget approved prior to March 27, 2020 for the entire period of availability. There was no effect on the amount of lost revenue applied against the funding received, however there were errors in the key line items reported. Questioned Costs: None reported. Context: Key line items were tested on the Period 5 Department of Health and Human Services special report. Repeat Finding from Prior Years: Yes. Recommendation: We recommend that management review award requirements and reporting to ensure proper application of the terms and conditions of the program. 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 5 TIN# 910171250 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Confluence Health must establish and maintain effective internal control over federal awards that provides reasonable assurance that Confluence Health is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: For certain quarters, the amounts reported for net patient revenue were based on gross charges. Additionally, amounts did not agree to the supporting documentation provided. Cause: Confluence Health did not have an internal control process in place to ensure the accuracy of the reporting key line items. Effect: There was no effect on the amount of lost revenue applied against the funding received in the current period, however there were errors in the key line items reported. Lost revenue calculated using net patient revenue would have resulted in $80,271,491 in lost revenues, which exceeds the amount claimed in prior periods of $11,480,727. Questioned Costs: None reported. Context: Key line items were tested on the Period 5 Department of Health and Human Services special report. Repeat Finding from Prior Years: Yes. Recommendation: We recommend that management review the calculation methodology for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-005
epartment 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 5 TIN# 910171250 Activities Allowed or Unallowed, Allowable Cost/Cost Principles Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 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: Confluence Health claimed and reported expenditures that contained errors based upon the underlying documentation. Cause: Confluence Health did not have adequate internal controls policy in place to ensure expenditures claimed were accurate and based upon underlying records. Effect: There is a potential that significant costs may be claimed and reported may not be supported during a subsequent examination. Questioned Costs: $89,582. Context: A nonstatistical sample of 60, supplies, services, and payroll transactions out of a population of approximately 5,215 totaling $5,006,903 were selected for testing. The sample contained errors in two transactions in which the amounts claimed on the Period 5 report were not supported by payroll records. The amounts claimed not supported by payroll records totaled $89,582 out of a total sample value of $2,615,445. Repeat Finding from Prior Years: No. Recommendation: We recommend that management modify internal control policies to ensure amounts claimed for this program agree to underlying documentation. 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 5 TIN# 910171250 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Confluence Health must establish and maintain effective internal control over federal awards that provides reasonable assurance that Confluence Health is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: Confluence Health selected option ii to calculate lost revenue which consists of a comparison of actual results during the period of availability to a budget approved before March 27, 2020, for the entire period of availability. The budget used in the calculation of lost revenue for quarters in 2021, 2022 and 2023 was not approved prior to March 27, 2020. Cause: Confluence Health did have an approved budget prior to March 27, 2020, for calendar year 2020, but the approved budget did not cover the entire period of availability. Effect: The reporting to HHS for Period 5 was considered incorrect. Confluence Health did not have a budget approved prior to March 27, 2020 for the entire period of availability. There was no effect on the amount of lost revenue applied against the funding received, however there were errors in the key line items reported. Questioned Costs: None reported. Context: Key line items were tested on the Period 5 Department of Health and Human Services special report. Repeat Finding from Prior Years: Yes. Recommendation: We recommend that management review award requirements and reporting to ensure proper application of the terms and conditions of the program. 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 5 TIN# 910171250 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Confluence Health must establish and maintain effective internal control over federal awards that provides reasonable assurance that Confluence Health is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: For certain quarters, the amounts reported for net patient revenue were based on gross charges. Additionally, amounts did not agree to the supporting documentation provided. Cause: Confluence Health did not have an internal control process in place to ensure the accuracy of the reporting key line items. Effect: There was no effect on the amount of lost revenue applied against the funding received in the current period, however there were errors in the key line items reported. Lost revenue calculated using net patient revenue would have resulted in $80,271,491 in lost revenues, which exceeds the amount claimed in prior periods of $11,480,727. Questioned Costs: None reported. Context: Key line items were tested on the Period 5 Department of Health and Human Services special report. Repeat Finding from Prior Years: Yes. Recommendation: We recommend that management review the calculation methodology for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-005
epartment 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 5 TIN# 910171250 Activities Allowed or Unallowed, Allowable Cost/Cost Principles Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 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: Confluence Health claimed and reported expenditures that contained errors based upon the underlying documentation. Cause: Confluence Health did not have adequate internal controls policy in place to ensure expenditures claimed were accurate and based upon underlying records. Effect: There is a potential that significant costs may be claimed and reported may not be supported during a subsequent examination. Questioned Costs: $89,582. Context: A nonstatistical sample of 60, supplies, services, and payroll transactions out of a population of approximately 5,215 totaling $5,006,903 were selected for testing. The sample contained errors in two transactions in which the amounts claimed on the Period 5 report were not supported by payroll records. The amounts claimed not supported by payroll records totaled $89,582 out of a total sample value of $2,615,445. Repeat Finding from Prior Years: No. Recommendation: We recommend that management modify internal control policies to ensure amounts claimed for this program agree to underlying documentation. Views of Responsible Officials: Management agrees with the finding.