FAC Explorer

Audit 48983

FY End
2022-12-31
Total Expended
$4.65M
Findings
4
Programs
2
Organization: Loretto Health and Rehabilitation Center (NY)
Year: 2022 Accepted: 2023-09-27
Auditor: Fustcharles LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
43904 2022-003 - - L
43905 2022-004 Significant Deficiency Yes L
620346 2022-003 - - L
620347 2022-004 Significant Deficiency Yes L

Programs

ALN Program Spent Major Findings
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $3.64M Yes 0
93.498 Provider Relief Fund $1.01M Yes 2

Contacts

Name Title Type
NXL2BEYJZ249 John Murray Auditee
3154133206 Patrick Dooher Auditor
No contacts on file

Notes to SEFA

Title: Note A - Basis of Presentation Accounting Policies: Note B - Summary of Significant Accounting PoliciesExpenditures reported on the schedule are reported on the accrual basis of accounting. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (the schedule) includes the federal award activity of Loretto Health and Rehabilitation Center (the Company) under programs of the federal government for the year ended December 31, 2022. 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 operations of the Company, it is not intended to and does not present the financial position, results of operations, changes in net assets (deficit) or cash flows of the Company.
Title: Note C - Subrecipients Accounting Policies: Note B - Summary of Significant Accounting PoliciesExpenditures reported on the schedule are reported on the accrual basis of accounting. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Company provided no federal awards to subrecipients for the year ended December 31, 2022.
Title: Note D - Indirect Cost Rate Accounting Policies: Note B - Summary of Significant Accounting PoliciesExpenditures reported on the schedule are reported on the accrual basis of accounting. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Company has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Note E - Provider Relief Fund (PRF) Accounting Policies: Note B - Summary of Significant Accounting PoliciesExpenditures reported on the schedule are reported on the accrual basis of accounting. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Company received amounts from the U.S. Department of Health and Human Services (DHHS) through the Provider Relief Fund and American Rescue Plan (ARP) Rural Distributions program (Federal Financial Assistance Listing No. 93.498) during the year ended December 31, 2021 totaling $1,013,035. The Company incurred eligible expenses (including lost revenue) and, therefore, recognized revenue amounting to $1,013,035 for the year ended December 31, 2021 in grant income from CARES Act on the financial statements. In accordance with the 2022 compliance supplement, the programs expenditures recognized on the schedule are based on the reporting to DHHS for Periods 3 and 4, defined as payments received from January 1, 2021 to December 31, 2021 of $1,013,035, as required under the program.
Title: Note F - Disaster Grants - Public Assistance Accounting Policies: Note B - Summary of Significant Accounting PoliciesExpenditures reported on the schedule are reported on the accrual basis of accounting. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Company, as a subrecipient, received amounts from its parent corporation, Loretto Management Corporation, under the Disaster Grants - Public Assistance (Presidentially Declared Disasters) program (Federal Financial Assistance Listing No. 97.036) during the year ended December 31, 2022. The Company incurred eligible COVID-19 expenses and, therefore, recognized revenue in 2021 and 2022 based upon receiving approval and received this reimbursement in 2022. In accordance with the 2022 compliance supplement, the programs expenditures recognized on the schedule are based on the reporting of expenses incurred from May 2020 to March 2021 which were obligated by DHS during 2022 and 2021, as required under the compliance supplement.

Finding Details

Finding 2022-003
Finding No. 2022-03 - Lost Revenue Reporting - Compliance Finding Criteria: Under the terms and conditions of the awards, accurate amounts that agree with the entity's financial records are required to be reported in the Provider Relief Fund report. Condition: The Period 4 Provider Relief Fund (PRF) report was submitted on March 31, 2023, based on preliminary internal financial statement net patient service revenues for the various quarters in 2022. The 4th quarter did not include final year-end balances after year-end post-closing and audit entries were posted to the trial balance. As a result, the PRF submission reported actual revenues for 2022 that were not accurate and did not agree to the audited financial statements. Context: This finding is consistent with prior years and due to timing of PRF reporting in advance of year end audited financial statements. Effect: The actual net patient service revenue in the audited financial statements for 2022 was lower by $3,253,834, which resulted in an understatement of lost revenue in the PRF report to be claimed in future periods by the same amount. The reporting did not impact the PRF funding received and retained by the auditee due to the error. Cause: Adjustments were made during the audit in conjunction with management that impacted the actual 2022 net patient service revenues after the reporting of the PRF report to HRSA for Period 4. Questioned Costs: None reported. Recommendation: We recommend the auditee update the revenue data for 2022 actual revenue in future HRSA PRF reporting periods. Views of Responsible Official: Management agrees with this finding. See corrective action plan.
Finding 2022-004
Finding No. 2022-04 - Reporting - Significant Deficiency in Internal Control over Compliance Criteria: 2 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: There was no evidence retained that the Phase 4 report submitted on the HRSA portal in March 2023 to the Department of Health and Human Services was reviewed and approved by a separate individual outside of the preparer. Context: This finding did not impact the reporting which was made timely. Effect: Without documentation of a secondary review and approval, demonstrating internal controls over compliance is difficult. Cause: There were staffing shortages during 2022. Due to the shortages, the auditee did not have an internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the report submitted to the Department of Health and Human Services for Period 4. Questioned Costs: None reported. Recommendation: We recommend that management implement a control process which includes a documented secondary review and approval. Views of Responsible Official: Management agrees with this finding. See corrective action plan.
Finding 2022-003
Finding No. 2022-03 - Lost Revenue Reporting - Compliance Finding Criteria: Under the terms and conditions of the awards, accurate amounts that agree with the entity's financial records are required to be reported in the Provider Relief Fund report. Condition: The Period 4 Provider Relief Fund (PRF) report was submitted on March 31, 2023, based on preliminary internal financial statement net patient service revenues for the various quarters in 2022. The 4th quarter did not include final year-end balances after year-end post-closing and audit entries were posted to the trial balance. As a result, the PRF submission reported actual revenues for 2022 that were not accurate and did not agree to the audited financial statements. Context: This finding is consistent with prior years and due to timing of PRF reporting in advance of year end audited financial statements. Effect: The actual net patient service revenue in the audited financial statements for 2022 was lower by $3,253,834, which resulted in an understatement of lost revenue in the PRF report to be claimed in future periods by the same amount. The reporting did not impact the PRF funding received and retained by the auditee due to the error. Cause: Adjustments were made during the audit in conjunction with management that impacted the actual 2022 net patient service revenues after the reporting of the PRF report to HRSA for Period 4. Questioned Costs: None reported. Recommendation: We recommend the auditee update the revenue data for 2022 actual revenue in future HRSA PRF reporting periods. Views of Responsible Official: Management agrees with this finding. See corrective action plan.
Finding 2022-004
Finding No. 2022-04 - Reporting - Significant Deficiency in Internal Control over Compliance Criteria: 2 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: There was no evidence retained that the Phase 4 report submitted on the HRSA portal in March 2023 to the Department of Health and Human Services was reviewed and approved by a separate individual outside of the preparer. Context: This finding did not impact the reporting which was made timely. Effect: Without documentation of a secondary review and approval, demonstrating internal controls over compliance is difficult. Cause: There were staffing shortages during 2022. Due to the shortages, the auditee did not have an internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the report submitted to the Department of Health and Human Services for Period 4. Questioned Costs: None reported. Recommendation: We recommend that management implement a control process which includes a documented secondary review and approval. Views of Responsible Official: Management agrees with this finding. See corrective action plan.