Audit 413143

Findings and Questioned Costs Relating to Federal Awards 2025-004: Compliance Requirements: Allowable Costs/Cost Principles Federal Granting Agency: U.S. Department of Homeland Security Award Name: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Award Number: FEMA-4506-DR-PA Geisinger Project: 698009 Assistance Listing Number: 97.036 Award Year: Fiscal year 2025 Pass-through Entity: Commonwealth of Pennsylvania Emergency Management Agency Criteria: The terms and conditions for recipients of Disaster Grants - Public Assistance (Presidentially Declared Disasters) require that federal funds be used only for eligible emergency protective measures and other eligible work. Emergency work is defined as work that must be performed immediately to save lives, protect public health and safety, or avert or lessen the threat of a major disaster. Federal Emergency Management Agency (FEMA) guidance provides that claimed costs must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR § 200.403(g)); • Reduced by all applicable credits and other sources of funding, including those that would result in a duplication of benefits (Stafford Act § 312; 42 U.S.C. § 5155; 2 CFR § 200.406); • Authorized and not prohibited under applicable laws and regulations; • Consistent with the entity’s established policies and procedures; and • Necessary and reasonable for the performance of the federal award (2 CFR § 200.403). In addition, 2 CFR § 200.303 requires non-federal entities receiving federal awards to establish and maintain effective internal controls that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Condition: Geisinger made claims to the Federal Emergency Management Agency (FEMA) under the Disaster Grants - Public Assistance (Presidentially Declared Disasters) program for qualifying costs incurred to prepare for and respond to the COVID-19 pandemic. Geisinger’s applications and supporting documentation demonstrated that the claimed costs were incremental to its normal operating costs and were directly attributable to pandemic response activities. Geisinger prepared and submitted its claims in accordance with FEMA guidance available at that time. FEMA subsequently approved, obligated, and paid several projects. Accordingly, Risant reported approximately $615,555 on its Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2025, based on amounts obligated by FEMA prior to FEMA’s duplication of benefits review. Following the approval and obligation of the projects, FEMA issued clarifying guidance related to patient care revenue duplication of benefits in December 2023 and subsequently performed a duplication of benefits analysis of Geisinger’s applications. On September 22, 2025, FEMA issued an Applicant Review Memo concluding that certain costs previously approved and obligated were at risk of duplication with patient care revenue. FEMA’s recommended reductions were based on its reassessment of previously approved claims utilizing the duplication of benefits methodology established in the clarifying guidance. Based on FEMA’s reassessment, Geisinger accepted FEMA’s determination and returned $72,763 related to one FEMA project obligated during 2025. Questioned Cost: $72,763 representing costs associated with the identified project that FEMA subsequently determined to be at risk of duplication of benefits and that Geisinger returned to FEMA during 2025. Repeat Finding in the Prior Year Not a repeat finding. Cause: FEMA issued clarifying guidance in December 2023 regarding the evaluation of potential duplication of benefits and subsequently performed a retrospective review of previously approved and obligated Geisinger projects. Effect: Costs previously approved and obligated by FEMA were subsequently determined to be at risk of duplication under FEMA’s revised duplication-of-benefits assessment methodology resulting in a reduction of previously awarded funding and federal expenditures reported on the SEFA. Recommendation: We recommend that management continue to monitor FEMA guidance related to COVID-19 Public Assistance funding and assess the impact of any subsequent FEMA determinations on amounts reported on the SEFA for existing and future awards. Views of Responsible Officials: Management agrees with the finding and the following corrective actions are being taken to minimize future risks. Management will continue to monitor FEMA guidance and determinations related to COVID-19 Public Assistance funding. Geisinger will evaluate the impact of subsequent FEMA reviews or determinations on amounts reported on the SEFA and adjust, as appropriate.