Audit 6331

FY End
2023-03-31
Total Expended
$16.97M
Findings
6
Programs
4
Year: 2023 Accepted: 2023-12-12
Auditor: Forvis LLP

Organization Exclusion Status:

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Findings

ID Ref Severity Repeat Requirement
4019 2023-002 Significant Deficiency - L
4020 2023-003 Material Weakness Yes ABL
4021 2023-004 - - AB
580461 2023-002 Significant Deficiency - L
580462 2023-003 Material Weakness Yes ABL
580463 2023-004 - - AB

Programs

ALN Program Spent Major Findings
10.780 Community Facilities Loans and Grants (community Programs) $14.36M Yes 0
93.498 Provider Relief Fund $2.34M Yes 3
93.301 Small Rural Hospital Improvement Grant Program $257,732 - 0
93.461 Covid-19 Testing for the Uninsured $11,697 - 0

Contacts

Name Title Type
Z3PQDGF25G29 Melodie Crowell Auditee
8704603569 Cynthia Burns Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures 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. The Hospital has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The Hospital has elected not to use the 10% de minimis indirect cost rate allowed under Uniform Guidance. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Drew Memorial Hospital, Inc. d/b/a Drew Memorial Health System (the Hospital) under programs of the federal government for the year ended March 31, 2023. 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 Hospital, it is not intended to, and does not, present the financial position, changes in net assets or cash flows of the Hospital.
Title: Federal Loan Program Accounting Policies: Expenditures 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. The Hospital has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The Hospital has elected not to use the 10% de minimis indirect cost rate allowed under Uniform Guidance. The federal loan program listed subsequently represents a commitment from the U.S. Department of Agriculture to Drew County, Arkansas (the County), to refinance a short-term bond (the Bond) issued by the County on behalf of the Hospital in an amount of up to $15 million. Proceeds from the issuance of the Bond provide funding for a facilities expansion project that is administered directly by the Hospital. The Bond may be redeemed at any time. The balances and transactions relating to this program are included in the Hospital’s basic financial statements. Loans made during the year are included in the federal expenditures presented in the Schedule. The balance of loans outstanding at March 31, 2023 consists of: Assistance Living Number 10.780 Community Facilities Loans and Grants (Community Programs) $14,177,535.

Finding Details

Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Living No. 93.498 U.S. Department of Heath and Human Services Criteria or Specific Requirement – Reporting (45 CFR 75.342) The Hospital is required to prepare and submit period three and four provider relief fund reports to the U.S. Department of Health and Human Services. These reports are to be prepared using accurate financial information and submitted by the deadline established. Condition – The Hospital submitted the provider relief fund report without proper review. Questioned Costs – None Effect – The provider relief fund report submitted by the Hospital contained multiple errors. Cause – Internal controls and grant-related expense review processes were not in place. Identification as a Repeat Finding – Not applicable Recommendation – We recommend implementing controls to ensure amounts reported are accurate, complete and reviewed. View of Responsible Officials and Planned Corrective Actions – Management concurs with the finding and recommendation and will implement controls to ensure all reporting is reviewed for accuracy.
Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Living No. 93.498 U.S. Department of Heath and Human Services Criteria or Specific Requirement – Reporting (45 CFR 75.342) and Activities Allowed/Unallowed and Cost Principles (Pub. L. No. 116- 136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623). The Hospital is required to prepare and submit period three and four provider relief fund reports to the U.S. Department of Health and Human Services (HHS). These reports are to be prepared using accurate financial information and submitted by the deadline established. The funds cannot be used for expenses reimbursed or obligated to be reimbursed by other sources. Condition – The Hospital reported COVID-19-related expenditures within the HHS Provider Relief Fund (PRF) portal that were reimbursed through other funding sources and reported expenditures that did not have supporting documentation that expenditures were related to the prevention, preperation or response to COVID-19. The Hospital incorrectly reported lost revenues for two of the six quarters reported within the HHS PRF portal. Questioned Costs – $433,982 Context – The Hospital reported $298,205 of COVID-19-related expenditures within the HHS PRF portal that were reimbursed through other funding sources. In addition, management did not retain supporting documentation for $135,776 of expenditures to document their relation to the prevention, preparation or response to COVID-19. Furthermore, the Hospital incorrectly reported lost revenues for two of the six quarters resulting in an overstatement of $2,717. Effect – The Hospital reported expenses that did not have support necessary to demonstrate the expenses were reasonably related to the prevention, preparation or response to COVID-19. Additionally, costs that were reimbursed by another source or were not allowed were included in the HHS PRF portal. Cause – Internal controls and grant-related expense review processes were not in place to ensure support was retained for expenditures report and that expendiutres were not obligated to be reimbursed by other sources. Identification as a Repeat Finding – 2022-003 Recommendation – Policies and procedures over federal grant reporting and grant management should be modified to ensure expenditures are allowable and are not used for multiple sources and reports should be prepared with supporting documentation retained. View of Responsible Officials and Planned Corrective Actions – Management agrees with the finding that expenses should be reimbursed by only one source. Management believes that while certain expenses were reported that were reimbursed by other funding sources they have additional allowable expenditures that could have been reported. Going forward, for subsequent reporting periods related to the Provider Relief Fund and American Rescue Plan Rural Distribution management will allocate expenditures as required, and will ensure expenses are reimbursed in accordance with current guidance.
Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Listing No. 93.498 U.S. Department of Heath and Human Services Criteria or Specific Requirement – Activities Allowed/Unallowed and Cost Principles (Pub. L. No. 116- 136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623). The Hospital is required to ensure funding is only used to prevent, prepare for , and respond to conronavirus and COVID-19. Condition – The Hospital reported COVID-19-related expenditures within the HHS Provider Relief Fund (PRF) portal that did not have supporting documentation showing expenditures were related to the prevention, preperation or response to COVID-19. Questioned Costs – $1,144 Context – The Hospital did not retain supporting documentation for certain expenses showing their relation to the prevention, preperation or response to COVID-19. We tested a random sample of 40 expenditures reported under the PRF program from a total of 290 expenditures. Four expenditures in the amount of $1,910 out of the sample of 40 expenditures did not have supporting documentation. Effect – The Hospital reported expenses that did not have support necessary to demonstrate the expenses were reasonably related to the prevention, preparation or response to COVID-19. Cause – Internal controls and grant-related expense review processes were not in place to ensure support was retained for expenditures report and that expendiutres were not obligated to be reimbursed by other sources. Identification as a Repeat Finding – Not applicable Recommendation – Policies and procedures over federal grant reporting and grant management should be modified to ensure expenditures are allowable with supporting documentation retained. View of Responsible Officials and Planned Corrective Actions – Managment considers the expenditures reported to be in compliance with program regulations. Management agrees with the finding that additional supporting documentation should be retained. Going forward, for subsequent reporting periods related to the Provider Relief Fund and American Rescue Plan Rural Distribution management will implement controls to ensure all underlying support related to expenses is documented and retained.
Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Living No. 93.498 U.S. Department of Heath and Human Services Criteria or Specific Requirement – Reporting (45 CFR 75.342) The Hospital is required to prepare and submit period three and four provider relief fund reports to the U.S. Department of Health and Human Services. These reports are to be prepared using accurate financial information and submitted by the deadline established. Condition – The Hospital submitted the provider relief fund report without proper review. Questioned Costs – None Effect – The provider relief fund report submitted by the Hospital contained multiple errors. Cause – Internal controls and grant-related expense review processes were not in place. Identification as a Repeat Finding – Not applicable Recommendation – We recommend implementing controls to ensure amounts reported are accurate, complete and reviewed. View of Responsible Officials and Planned Corrective Actions – Management concurs with the finding and recommendation and will implement controls to ensure all reporting is reviewed for accuracy.
Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Living No. 93.498 U.S. Department of Heath and Human Services Criteria or Specific Requirement – Reporting (45 CFR 75.342) and Activities Allowed/Unallowed and Cost Principles (Pub. L. No. 116- 136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623). The Hospital is required to prepare and submit period three and four provider relief fund reports to the U.S. Department of Health and Human Services (HHS). These reports are to be prepared using accurate financial information and submitted by the deadline established. The funds cannot be used for expenses reimbursed or obligated to be reimbursed by other sources. Condition – The Hospital reported COVID-19-related expenditures within the HHS Provider Relief Fund (PRF) portal that were reimbursed through other funding sources and reported expenditures that did not have supporting documentation that expenditures were related to the prevention, preperation or response to COVID-19. The Hospital incorrectly reported lost revenues for two of the six quarters reported within the HHS PRF portal. Questioned Costs – $433,982 Context – The Hospital reported $298,205 of COVID-19-related expenditures within the HHS PRF portal that were reimbursed through other funding sources. In addition, management did not retain supporting documentation for $135,776 of expenditures to document their relation to the prevention, preparation or response to COVID-19. Furthermore, the Hospital incorrectly reported lost revenues for two of the six quarters resulting in an overstatement of $2,717. Effect – The Hospital reported expenses that did not have support necessary to demonstrate the expenses were reasonably related to the prevention, preparation or response to COVID-19. Additionally, costs that were reimbursed by another source or were not allowed were included in the HHS PRF portal. Cause – Internal controls and grant-related expense review processes were not in place to ensure support was retained for expenditures report and that expendiutres were not obligated to be reimbursed by other sources. Identification as a Repeat Finding – 2022-003 Recommendation – Policies and procedures over federal grant reporting and grant management should be modified to ensure expenditures are allowable and are not used for multiple sources and reports should be prepared with supporting documentation retained. View of Responsible Officials and Planned Corrective Actions – Management agrees with the finding that expenses should be reimbursed by only one source. Management believes that while certain expenses were reported that were reimbursed by other funding sources they have additional allowable expenditures that could have been reported. Going forward, for subsequent reporting periods related to the Provider Relief Fund and American Rescue Plan Rural Distribution management will allocate expenditures as required, and will ensure expenses are reimbursed in accordance with current guidance.
Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Listing No. 93.498 U.S. Department of Heath and Human Services Criteria or Specific Requirement – Activities Allowed/Unallowed and Cost Principles (Pub. L. No. 116- 136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623). The Hospital is required to ensure funding is only used to prevent, prepare for , and respond to conronavirus and COVID-19. Condition – The Hospital reported COVID-19-related expenditures within the HHS Provider Relief Fund (PRF) portal that did not have supporting documentation showing expenditures were related to the prevention, preperation or response to COVID-19. Questioned Costs – $1,144 Context – The Hospital did not retain supporting documentation for certain expenses showing their relation to the prevention, preperation or response to COVID-19. We tested a random sample of 40 expenditures reported under the PRF program from a total of 290 expenditures. Four expenditures in the amount of $1,910 out of the sample of 40 expenditures did not have supporting documentation. Effect – The Hospital reported expenses that did not have support necessary to demonstrate the expenses were reasonably related to the prevention, preparation or response to COVID-19. Cause – Internal controls and grant-related expense review processes were not in place to ensure support was retained for expenditures report and that expendiutres were not obligated to be reimbursed by other sources. Identification as a Repeat Finding – Not applicable Recommendation – Policies and procedures over federal grant reporting and grant management should be modified to ensure expenditures are allowable with supporting documentation retained. View of Responsible Officials and Planned Corrective Actions – Managment considers the expenditures reported to be in compliance with program regulations. Management agrees with the finding that additional supporting documentation should be retained. Going forward, for subsequent reporting periods related to the Provider Relief Fund and American Rescue Plan Rural Distribution management will implement controls to ensure all underlying support related to expenses is documented and retained.