Audit 47564

FY End

2022-11-30

Total Expended

$1.75M

Findings

2

Programs

1

Organization: Jennings American Legion Hospital, Inc. (LA)

Year: 2022 Accepted: 2023-08-30

Auditor: Lester Miller & Wells Cpa's

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
50934	2022-001	Material Weakness	-	ABL
627376	2022-001	Material Weakness	-	ABL

ALN	Program	Spent	Major	Findings
93.498	Provider Relief Fund	$1.75M	Yes	1

Contacts

Name	Title	Type
L9F8YN5V5K35	Dana Williams	Auditee
3376167000	Robert Miller	Auditor
No contacts on file

Notes to SEFA

Title: NOTE 4. SUBRECIPIENTS Accounting Policies: Basis of PresentationThe accompanying schedule of expenditures of federal awards from U.S. Department of Health and Human Services (HHS) (the schedule) is prepared in accordance with accounting principles generally accepted in the United States of America. The information in this schedule 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 Hospitals operations, it is not intended to and does not present the financial position, results of operations, changes in equity, or cash flows of the Hospital.Basis of AccountingExpenditures 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.Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Listing Number 93.498For the HHS awards related to the Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution program, HHS has indicated the amounts on the schedule be reported corresponding to reporting requirements of the HRSA Reporting Portal. Payments from HHS for PRF are assigned to Payment Received Periods (each, a Period) based upon the date each payment from the PRF was received. Each Period has a specified Period of Availability and timing of reporting requirements. Entities report into the HRSA Reporting Portal after each Periods deadline to use the funds (i.e., after the end of the Period of Availability).The schedule includes $1,510,529 received from HHS between January 1, 2021 and December 31, 2021. The schedule also includes $12,640 interest earned on grant funds during the same period. In accordance with guidance from HHS, these amounts are presented as Period 4. Such amounts were recognized as other revenue in the Hospitals financial statements as shown in the schedule in the year ended November 30, 20222.EstimatesThe preparation of the schedule in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount in other revenue during the reporting period. Actual results could differ from those estimates.Subsequent EventsThe schedule and related disclosures include evaluation of events through August 30, 2023, which is the date the schedule was available to be issued. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Hospital had no subrecipients in 2021 or 2022.

Title: NOTE 5. DONATED PERSONAL PROTECTIVE EQUIPMENT (unaudited) Accounting Policies: Basis of PresentationThe accompanying schedule of expenditures of federal awards from U.S. Department of Health and Human Services (HHS) (the schedule) is prepared in accordance with accounting principles generally accepted in the United States of America. The information in this schedule 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 Hospitals operations, it is not intended to and does not present the financial position, results of operations, changes in equity, or cash flows of the Hospital.Basis of AccountingExpenditures 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.Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Listing Number 93.498For the HHS awards related to the Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution program, HHS has indicated the amounts on the schedule be reported corresponding to reporting requirements of the HRSA Reporting Portal. Payments from HHS for PRF are assigned to Payment Received Periods (each, a Period) based upon the date each payment from the PRF was received. Each Period has a specified Period of Availability and timing of reporting requirements. Entities report into the HRSA Reporting Portal after each Periods deadline to use the funds (i.e., after the end of the Period of Availability).The schedule includes $1,510,529 received from HHS between January 1, 2021 and December 31, 2021. The schedule also includes $12,640 interest earned on grant funds during the same period. In accordance with guidance from HHS, these amounts are presented as Period 4. Such amounts were recognized as other revenue in the Hospitals financial statements as shown in the schedule in the year ended November 30, 20222.EstimatesThe preparation of the schedule in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount in other revenue during the reporting period. Actual results could differ from those estimates.Subsequent EventsThe schedule and related disclosures include evaluation of events through August 30, 2023, which is the date the schedule was available to be issued. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Hospital did not receive donated personal protective equipment (PPE) from federal and state sources during the year ended November 30, 2022.

Finding Details

Finding 2022-001

Finding 2022-001 ? Calculation and Reporting of Lost Revenues Identification of the federal program: Federal Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Assistance Listing No.: 93.498 COVID-19 Provider Relief Funds and American Rescue Plan (ARP) Rural Distribution Award Period of Performance: January 1, 2020 ? December 31, 2021Criteria or Specific Requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: ?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 or the ?Internal Control Integrated Framework.? Issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: The Hospital?s methodology for calculating lost revenues was not consistent between reporting Period 1 and Period 2. The revenue calculation for the baseline year was not recalculated to consider changes. Further, contractual adjustments were included for clinic operations, but gross charges for the clinics were removed. Cause: The Hospital did not have controls in place to identify and correct errors before reporting was completed. Further, the Hospital incorrectly interpreted the reporting instructions as it relates to the calculation of lost revenue. Effect or potential effect: The amounts reported to HRSA were not in accordance with established HHS reporting guidance. Questioned Costs: None. Context: For Period 1 reporting, the Hospital?s methodology for reporting lost revenues was Option 1, which used actual patient care revenues for the entire facility. This calculation was determined to be reasonable and consistently applied to patient care revenues for calendar year 2019, calendar year 2020 and the first two quarters of 2021. This calculation resulted in lost revenues of approximately $4.02 million. Unreimbursed lost revenues from Period 1 were approximately $1.01 million. These unreimbursed lost revenues are sufficient to cover the lost revenues of approximately $330,000 claimed in Period 2. During Period 2 reporting, the lost revenue calculation methodology changed to remove rural health clinic activity. The intent was to avoid offsetting lost revenues with profits. The Hospital did not elect Option 3 or recalculate the base year to be consistent. The Hospital also failed to remove rural health clinic contractual adjustments, which inflated lost revenues. When lost revenues are recalculated for calendar year 2019, 2020 and 2021 following methodology similar to Period 2, lost revenues for Period 1 are approximately $3.50 million and $1.44 million for Period 2. These lost revenues are sufficient to reimburse lost revenues claimed during Period 1 and Period 2. Recommendation: We recommend management implement procedures to ensure that the most recent guidance is reviewed and understood, and that information used in preparing the reports is reviewed for errors prior to reporting. View of Responsible Officials: Management agrees that the lost revenue methodology changed from Period 1 to Period 2 in response to changing guidance. Due to the evolving nature of the pandemic environment, it has been common for federal agencies to update, change, or delete their specific guidance over time.

Finding 2022-001

Finding 2022-001 ? Calculation and Reporting of Lost Revenues Identification of the federal program: Federal Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Assistance Listing No.: 93.498 COVID-19 Provider Relief Funds and American Rescue Plan (ARP) Rural Distribution Award Period of Performance: January 1, 2020 ? December 31, 2021Criteria or Specific Requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: ?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 or the ?Internal Control Integrated Framework.? Issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: The Hospital?s methodology for calculating lost revenues was not consistent between reporting Period 1 and Period 2. The revenue calculation for the baseline year was not recalculated to consider changes. Further, contractual adjustments were included for clinic operations, but gross charges for the clinics were removed. Cause: The Hospital did not have controls in place to identify and correct errors before reporting was completed. Further, the Hospital incorrectly interpreted the reporting instructions as it relates to the calculation of lost revenue. Effect or potential effect: The amounts reported to HRSA were not in accordance with established HHS reporting guidance. Questioned Costs: None. Context: For Period 1 reporting, the Hospital?s methodology for reporting lost revenues was Option 1, which used actual patient care revenues for the entire facility. This calculation was determined to be reasonable and consistently applied to patient care revenues for calendar year 2019, calendar year 2020 and the first two quarters of 2021. This calculation resulted in lost revenues of approximately $4.02 million. Unreimbursed lost revenues from Period 1 were approximately $1.01 million. These unreimbursed lost revenues are sufficient to cover the lost revenues of approximately $330,000 claimed in Period 2. During Period 2 reporting, the lost revenue calculation methodology changed to remove rural health clinic activity. The intent was to avoid offsetting lost revenues with profits. The Hospital did not elect Option 3 or recalculate the base year to be consistent. The Hospital also failed to remove rural health clinic contractual adjustments, which inflated lost revenues. When lost revenues are recalculated for calendar year 2019, 2020 and 2021 following methodology similar to Period 2, lost revenues for Period 1 are approximately $3.50 million and $1.44 million for Period 2. These lost revenues are sufficient to reimburse lost revenues claimed during Period 1 and Period 2. Recommendation: We recommend management implement procedures to ensure that the most recent guidance is reviewed and understood, and that information used in preparing the reports is reviewed for errors prior to reporting. View of Responsible Officials: Management agrees that the lost revenue methodology changed from Period 1 to Period 2 in response to changing guidance. Due to the evolving nature of the pandemic environment, it has been common for federal agencies to update, change, or delete their specific guidance over time.