Audit 44404

Finding 2022-001 - Material Weakness in Internal Control - Reporting Assistance Listing No.: 93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: Not applicable Award Number / Year: 2020 Criteria: All recipients of PRF payments (excluding Skilled Nursing Facility (SNF) and Nursing Home Infection Control Distribution payments) not fully expended on health care-related expenses attributable to COVID-19 may be applied to patient care lost revenues, if applicable. Recipients may choose to apply PRF payments toward lost revenues in accordance with the specified directions issued by HHS (collectively, the Guidance) using one of the three following options: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted and actual patient care revenues; Option iii: calculated by any reasonable method of estimating revenues. Condition/Context: The Company did not complete the PRF reporting in accordance with the U.S. Department of Health and Human Services guidance. The Company excluded from patient care revenue the amount attributable to independent living and assisted living related services provided to residents. Additionally, the report did not contain a documented review and approval of the reports prior to submission. Clerical errors were identified during testing totaling $25,179 and expenses were counted twice in error totaling $38,423. Effect: The amounts reported to Health Resources & Services Administration (HRSA) were not in accordance with established U.S. Department of Health and Human Services reporting guidance. Questioned Costs: $63,602 Cause: Management failed to review the submissions prior to finalizing and did not correct errors in the submissions. Recommendation: We recommend that management review and update, as needed, their procedure for completion of the reporting to ensure that a review and approval of such reporting is completed and documented prior to submission. Additionally, we recommend that management change their selected reporting option from Option i to Option iii in the next required submission, if revenue attributable to independent living and assisted living related services will continue to be excluded from patient care revenues. Recommendation: We recommend that management review and update, as needed, their procedure for completion of the reporting to ensure that a review and approval of such reporting is completed and documented prior to submission. Additionally, we recommend that management change their selected reporting option from Option i to Option iii in the next required submission, if revenue attributable to independent living and assisted living related services will continue to be excluded from patient care revenues. Views of Responsible Officials: The Company agrees with the finding. It is believed that verifiable lost revenues were more than sufficient to fully cover the funds received even eliminating these expenditures. Nonetheless, if any additional similar funding is ever sought or received, the Company will implement policies and procedures to ensure there is appropriate review of the submissions and lost revenue calculations. The Company agrees with the finding and will implement procedures to ensure an individual who is responsible for reporting will remain current on compliance requirements and review final reports and the related inputs prior to submission. Specifically, the Company will verify independent living unit revenues are included in the lost revenues? calculation.

Finding 2022-002 - Significant Deficiency in Internal Control - Activities Allowed and Unallowed; Allowable Costs/Cost Principles Assistance Listing Number: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Not applicable Award Number/Year: N/A / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by HHS. Activities allowed have been defined as health care related expenses used to prevent, prepare for, and respond to coronavirus or lost revenues that are attributable to coronavirus. Condition/Context: A sample of 40 items were selected for testing. During our testing, we noted one item selected for testing did not contain support of authorization. This was not a statistically valid sample. Effect: There were costs charged to the program that did not contain evidence of review and authorization. Questioned Costs: None Cause: Certain invoices are approved via email. Email support of approval was not maintained due to IT email retention policies. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program and ensure support is maintained. Management should ensure these policies and procedures are being implemented as designed. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program and ensure support is maintained. Management should ensure these policies and procedures are being implemented as designed. Views of Responsible Officials: The Company agrees with the finding and will implement procedures to ensure all invoices approved via email will be stored in our document management and workflow software.

Finding 2022-001 - Material Weakness in Internal Control - Reporting Assistance Listing No.: 93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: Not applicable Award Number / Year: 2020 Criteria: All recipients of PRF payments (excluding Skilled Nursing Facility (SNF) and Nursing Home Infection Control Distribution payments) not fully expended on health care-related expenses attributable to COVID-19 may be applied to patient care lost revenues, if applicable. Recipients may choose to apply PRF payments toward lost revenues in accordance with the specified directions issued by HHS (collectively, the Guidance) using one of the three following options: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted and actual patient care revenues; Option iii: calculated by any reasonable method of estimating revenues. Condition/Context: The Company did not complete the PRF reporting in accordance with the U.S. Department of Health and Human Services guidance. The Company excluded from patient care revenue the amount attributable to independent living and assisted living related services provided to residents. Additionally, the report did not contain a documented review and approval of the reports prior to submission. Clerical errors were identified during testing totaling $25,179 and expenses were counted twice in error totaling $38,423. Effect: The amounts reported to Health Resources & Services Administration (HRSA) were not in accordance with established U.S. Department of Health and Human Services reporting guidance. Questioned Costs: $63,602 Cause: Management failed to review the submissions prior to finalizing and did not correct errors in the submissions. Recommendation: We recommend that management review and update, as needed, their procedure for completion of the reporting to ensure that a review and approval of such reporting is completed and documented prior to submission. Additionally, we recommend that management change their selected reporting option from Option i to Option iii in the next required submission, if revenue attributable to independent living and assisted living related services will continue to be excluded from patient care revenues. Recommendation: We recommend that management review and update, as needed, their procedure for completion of the reporting to ensure that a review and approval of such reporting is completed and documented prior to submission. Additionally, we recommend that management change their selected reporting option from Option i to Option iii in the next required submission, if revenue attributable to independent living and assisted living related services will continue to be excluded from patient care revenues. Views of Responsible Officials: The Company agrees with the finding. It is believed that verifiable lost revenues were more than sufficient to fully cover the funds received even eliminating these expenditures. Nonetheless, if any additional similar funding is ever sought or received, the Company will implement policies and procedures to ensure there is appropriate review of the submissions and lost revenue calculations. The Company agrees with the finding and will implement procedures to ensure an individual who is responsible for reporting will remain current on compliance requirements and review final reports and the related inputs prior to submission. Specifically, the Company will verify independent living unit revenues are included in the lost revenues? calculation.

Finding 2022-002 - Significant Deficiency in Internal Control - Activities Allowed and Unallowed; Allowable Costs/Cost Principles Assistance Listing Number: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Not applicable Award Number/Year: N/A / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by HHS. Activities allowed have been defined as health care related expenses used to prevent, prepare for, and respond to coronavirus or lost revenues that are attributable to coronavirus. Condition/Context: A sample of 40 items were selected for testing. During our testing, we noted one item selected for testing did not contain support of authorization. This was not a statistically valid sample. Effect: There were costs charged to the program that did not contain evidence of review and authorization. Questioned Costs: None Cause: Certain invoices are approved via email. Email support of approval was not maintained due to IT email retention policies. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program and ensure support is maintained. Management should ensure these policies and procedures are being implemented as designed. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge, and expertise of the award to review and approve expenditures prior to being allocated to the program and ensure support is maintained. Management should ensure these policies and procedures are being implemented as designed. Views of Responsible Officials: The Company agrees with the finding and will implement procedures to ensure all invoices approved via email will be stored in our document management and workflow software.