Audit 365058

Identification of the Federal Program: Federal Agency and Program Name: U.S. Department of Health and Human Services Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Award Year(s): 2024 Assistance Listing #: 93.817 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR section 200.328(c) requires that recipients of Federal funding “must submit financial reports as required by the Federal award.” Condition: For one of the two Federal Financial Reports (FFRs) submitted in FY 2024, incorrect project/grant period dates and federal share of expenditures amount was reported in the FFR. Cause: Corewell did not have sufficient internal controls to follow the FFR instructions and report the correct amounts. Effect or Potential Effect: The information reported and provided to the Federal awarding agency could be incomplete or inaccurate. Questioned Costs: None Context: Corewell submitted 2 FFR reports in FY 2024. The FFR instructions required reporting the cumulative Federal share of expenditures amount ($2,253,211) from the date of inception of the award (9/30/2022) through the end date of the reporting period specified. However, Corewell reported only the current period expenditures ($933,054) for the current grant year and consequently, this error also resulted in incorrect amount reported for Unliquidated balance of Federal funds. The total federal expenditures for HPP for FY 2024 were $1,292,999. Identification as a Repeat Finding: This is not a repeat finding.Recommendation: We recommend management strengthen its internal controls and procedures over review of the data in the FFR prior to submission of the report(s). Views of Responsible Officials: Management will develop a written protocol and tracking matrix to record and track all federally funded projects that report through the Payment Management System (PMS) to ensure the correct period of performance report is created and a second level of review performed on a timely basis in accordance with sponsor requirements prior to submission.

Identification of the federal program: Federal Agency and Program Name: U.S. Department of Health and Human Services, Health Resources and Services Administration (HRSA) Healthy Start Initiative Award Year(s): 2024 Assistance Listing #: 93.926 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282) (Transparency Act) that are codified in 2 CFR Part 170, “unless the auditee is exempt as provided in paragraph d. of this award term, the auditee must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency no later than the end of the month following the month in which the obligation was made.” Recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) per submission instructions posted at http://www.fsrs.gov.Condition: During our audit, we noted three instances where the required Federal Funding Accountability and Transparency Act (FFATA) reports were not submitted in the FSRS in FY 2024. In addition, we noted for all four FFATA reports that were submitted in FSRS in FY 2024, there was no evidence of review and approval of the reports prior to submission. Cause: Corewell did not have sufficient internal controls to ensure that the required FFATA reports were submitted and that all reports are reviewed prior to submission. Effect or potential effect: Corewell did not submit the necessary FFATA report under the Healthy Start Initiative (HSI) project for each first-tier subaward modifications over $30,000 in FSRS and consequently was not in compliance with the requirements under the Transparency Act. Additionally, lack of review could potentially result in incorrect information included in the reports. Questioned costs: $0 Context: Under the HSI program, there were four subrecipients that had a total of seven subawards (four new agreements and three amendments) in FY 2024. The three subaward modifications for which FFATA reports were not submitted totaled $278,805. Total subrecipient’s costs are $736,165 in FY 2024. The total federal expenditures for the HSI program for FY 2024 were $1,108,849. Identification as a repeat finding, if applicable: Not a repeat finding.Recommendation: We recommend management strengthen its internal controls and procedures over the review of subrecipient awards and amendments to ensure the required FFATA reports are submitted to be in compliance with the Federal Transparency Act. In addition, we also recommend management to implement documenting the review of FFATA reports prior to their submission. Views of responsible officials: Management will develop a written procedure for FFATA reporting that includes specific instructions for reporting amended subawards throughout the award period. Additionally, the procedure will include review and approval of the report prior to submission. This process will be disseminated to the Office of Sponsored Programs team and reviewed on a regular basis for ongoing education and compliance purposes.

Identification of the Federal Program: Federal Agency and Program Name: U.S. Department of Homeland Security Disaster Grants – Public Assistance (Presidentially Declared Disasters) Pass Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass Through Award Number: 4494-DR-MI Pass through Award Period: 7/1/2022-4/30/2023 Assistance Listing #: 97.036 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per FEMA’s Public Assistance Program and Policy Guide V4, “The Subrecipient must provide documentation to support the actual costs within 90 days of work completion” Per FEMA FAQ: COVID-19 Pandemic: Public Assistance Disposition Requirements for Equipment and Supplies, Version 2, Question 14. Will FEMA allow stockpiling of equipment and supplies after May 11, 2023? “FEMA will apply the 90% federal cost share to funding for all eligible costs for work performed and items used from July 2, 2022, through May 11, 2023. FEMA will only reimburse for supplies purchased based on a justifiable need to be used or distributed by May 11, 2023. If supplies were purchased during the incident/eligibility period but ultimately not needed for pandemic response, those supplies would become part of the applicant’s stock and would be subject to disposition requirements.” Condition: During our audit we identified $1,077,759 in costs, included in the project 10 application, where the Personal Protective Equipment (PPE) and other COVID related supplies were not used within the period of performance outlined within the project worksheet. Cause: Corewell did not complete the inventory and usage analysis prior to submission of the project application to FEMA. Effect or Potential Effect: As a result of including PPE and other COVID related supplies that were not used prior to the specified period of performance, Corewell overstated the FEMA expenditures in the project 10 application. In addition, not completing the inventory and usage analysis prior to submission of the application could also potentially lead to requesting funding for such costs. Questioned Costs: $1,077,759 Context: There were three FEMA obligations during FY 2024. We identified the overstatement of expenditures in one of the projects (project 10) with an obligation amount of $6,732,507. The period of performance as specified within the project 10 application is July 2, 2022 to April 30, 2023 and $1,077,759 of costs were not used by April 30, 2023. The overstatement represents approximately 16% of the amounts reported in the project 10 application and 14% of the total FEMA obligations in FY 2024. The total federal expenditures for FEMA for FY 2024 were $7,795,530. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend management strengthen its internal controls and procedures and timely perform the inventory and usage of costs analysis prior to submission to FEMA. Views of Responsible Officials: Management will develop a process to perform, document, and sign off on a thorough claim review to validate that all final adjustments have been submitted prior to submitting the Request for Reimbursement to the State.

Identification of the Federal Program: Federal Agency and Program Name: U.S. Department of Health and Human Services Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Award Year(s): 2024 Assistance Listing #: 93.817 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR section 200.328(c) requires that recipients of Federal funding “must submit financial reports as required by the Federal award.” Condition: For one of the two Federal Financial Reports (FFRs) submitted in FY 2024, incorrect project/grant period dates and federal share of expenditures amount was reported in the FFR. Cause: Corewell did not have sufficient internal controls to follow the FFR instructions and report the correct amounts. Effect or Potential Effect: The information reported and provided to the Federal awarding agency could be incomplete or inaccurate. Questioned Costs: None Context: Corewell submitted 2 FFR reports in FY 2024. The FFR instructions required reporting the cumulative Federal share of expenditures amount ($2,253,211) from the date of inception of the award (9/30/2022) through the end date of the reporting period specified. However, Corewell reported only the current period expenditures ($933,054) for the current grant year and consequently, this error also resulted in incorrect amount reported for Unliquidated balance of Federal funds. The total federal expenditures for HPP for FY 2024 were $1,292,999. Identification as a Repeat Finding: This is not a repeat finding.Recommendation: We recommend management strengthen its internal controls and procedures over review of the data in the FFR prior to submission of the report(s). Views of Responsible Officials: Management will develop a written protocol and tracking matrix to record and track all federally funded projects that report through the Payment Management System (PMS) to ensure the correct period of performance report is created and a second level of review performed on a timely basis in accordance with sponsor requirements prior to submission.

Identification of the federal program: Federal Agency and Program Name: U.S. Department of Health and Human Services, Health Resources and Services Administration (HRSA) Healthy Start Initiative Award Year(s): 2024 Assistance Listing #: 93.926 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282) (Transparency Act) that are codified in 2 CFR Part 170, “unless the auditee is exempt as provided in paragraph d. of this award term, the auditee must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency no later than the end of the month following the month in which the obligation was made.” Recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) per submission instructions posted at http://www.fsrs.gov.Condition: During our audit, we noted three instances where the required Federal Funding Accountability and Transparency Act (FFATA) reports were not submitted in the FSRS in FY 2024. In addition, we noted for all four FFATA reports that were submitted in FSRS in FY 2024, there was no evidence of review and approval of the reports prior to submission. Cause: Corewell did not have sufficient internal controls to ensure that the required FFATA reports were submitted and that all reports are reviewed prior to submission. Effect or potential effect: Corewell did not submit the necessary FFATA report under the Healthy Start Initiative (HSI) project for each first-tier subaward modifications over $30,000 in FSRS and consequently was not in compliance with the requirements under the Transparency Act. Additionally, lack of review could potentially result in incorrect information included in the reports. Questioned costs: $0 Context: Under the HSI program, there were four subrecipients that had a total of seven subawards (four new agreements and three amendments) in FY 2024. The three subaward modifications for which FFATA reports were not submitted totaled $278,805. Total subrecipient’s costs are $736,165 in FY 2024. The total federal expenditures for the HSI program for FY 2024 were $1,108,849. Identification as a repeat finding, if applicable: Not a repeat finding.Recommendation: We recommend management strengthen its internal controls and procedures over the review of subrecipient awards and amendments to ensure the required FFATA reports are submitted to be in compliance with the Federal Transparency Act. In addition, we also recommend management to implement documenting the review of FFATA reports prior to their submission. Views of responsible officials: Management will develop a written procedure for FFATA reporting that includes specific instructions for reporting amended subawards throughout the award period. Additionally, the procedure will include review and approval of the report prior to submission. This process will be disseminated to the Office of Sponsored Programs team and reviewed on a regular basis for ongoing education and compliance purposes.

Identification of the Federal Program: Federal Agency and Program Name: U.S. Department of Homeland Security Disaster Grants – Public Assistance (Presidentially Declared Disasters) Pass Through Grantor: Michigan State Police Emergency Management and Homeland Security Division Pass Through Award Number: 4494-DR-MI Pass through Award Period: 7/1/2022-4/30/2023 Assistance Listing #: 97.036 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per FEMA’s Public Assistance Program and Policy Guide V4, “The Subrecipient must provide documentation to support the actual costs within 90 days of work completion” Per FEMA FAQ: COVID-19 Pandemic: Public Assistance Disposition Requirements for Equipment and Supplies, Version 2, Question 14. Will FEMA allow stockpiling of equipment and supplies after May 11, 2023? “FEMA will apply the 90% federal cost share to funding for all eligible costs for work performed and items used from July 2, 2022, through May 11, 2023. FEMA will only reimburse for supplies purchased based on a justifiable need to be used or distributed by May 11, 2023. If supplies were purchased during the incident/eligibility period but ultimately not needed for pandemic response, those supplies would become part of the applicant’s stock and would be subject to disposition requirements.” Condition: During our audit we identified $1,077,759 in costs, included in the project 10 application, where the Personal Protective Equipment (PPE) and other COVID related supplies were not used within the period of performance outlined within the project worksheet. Cause: Corewell did not complete the inventory and usage analysis prior to submission of the project application to FEMA. Effect or Potential Effect: As a result of including PPE and other COVID related supplies that were not used prior to the specified period of performance, Corewell overstated the FEMA expenditures in the project 10 application. In addition, not completing the inventory and usage analysis prior to submission of the application could also potentially lead to requesting funding for such costs. Questioned Costs: $1,077,759 Context: There were three FEMA obligations during FY 2024. We identified the overstatement of expenditures in one of the projects (project 10) with an obligation amount of $6,732,507. The period of performance as specified within the project 10 application is July 2, 2022 to April 30, 2023 and $1,077,759 of costs were not used by April 30, 2023. The overstatement represents approximately 16% of the amounts reported in the project 10 application and 14% of the total FEMA obligations in FY 2024. The total federal expenditures for FEMA for FY 2024 were $7,795,530. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend management strengthen its internal controls and procedures and timely perform the inventory and usage of costs analysis prior to submission to FEMA. Views of Responsible Officials: Management will develop a process to perform, document, and sign off on a thorough claim review to validate that all final adjustments have been submitted prior to submitting the Request for Reimbursement to the State.