Audit 8819

FY End

2023-03-31

Total Expended

$17.73M

Findings

2

Programs

3

Organization: Holland Hospital (MI)

Year: 2023 Accepted: 2023-12-29

Auditor: Plante & Moran PLLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
6866	2023-001	Material Weakness	-	B
583308	2023-001	Material Weakness	-	B

ALN	Program	Spent	Major	Findings
93.498	Covid-19 - Provider Relief Fund and American Rescue Plan Rural Distribution	$14.77M	Yes	0
21.027	Covid-19 - Coronavirus State and Local Fiscal Recovery Funds	$2.00M	Yes	1
97.036	Covid-19 - Disaster Grants - Public Assistance (presidentially Declared Disasters)	$964,587	Yes	0

Contacts

Name	Title	Type
NMRQLLDT3FJ5	Alex Roehling	Auditee
6163943456	Adam Stevenson	Auditor
No contacts on file

Notes to SEFA

Title: Disaster Grants Public Assistance Program Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Holland Hospital (the “Hospital”) under programs of the federal government for the year ended March 31, 2023. The information in the 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 (the “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. Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement except for expenditures related to Assistance Listing Number (ALN) 93.498, Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution. PRF does not apply the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, but rather applies the U.S. Department of Health and Human Services’ (HHS) guidance and frequently asked questions, as outlined in the Compliance Supplement. For the PRF program, HHS has indicated the amounts on the Schedule be reported corresponding to reporting requirements of the HHS PRF Portal. Payments from HHS for PRF are assigned a payment received period (a "period") based upon the date each PRF payment was received. Each period has a specified period of availability and timing of reporting requirements. Entities report into the HHS PRF Portal after each period's deadline to use the funds (i.e., after the end of the period of availability). The pass-through entity identifying numbers are presented where available. The Hospital has elected not to use the 10 percent de minimis indirect cost rate to recover indirect costs, as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The Hospital has elected not to use the 10 percent de minimis indirect cost rate to recover indirect costs, as allowed under the Uniform Guidance. Included in the Schedule for the year ended March 31, 2023 is $964,587 of expenditures incurred, under ALN 97.036, COVID-19: Disaster Grants - Public Assistance (Presidentially Declared Disasters), in previous fiscal years. The project worksheet for these expenditures was approved in the current fiscal year and these expenditures have been reported in the current fiscal year in accordance with the reporting requirements outlined in the 2022 Compliance Supplement.

Finding Details

Finding 2023-001

ALN, Federal Agency, and Program Name - 21.027, U.S. Department of Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - N/A - 2023 Pass-through Entity - Michigan Health and Hospital Association Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per Uniform Grant Guidance 2 CFR 200.303 paragraph (a) Holland Hospital must "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". Additionally, per the grant agreement signed with the Michigan Hospital Association, "Retention bonuses for employees/employee groups at risk of leaving (not to exceed 20% of total funds awarded to each health care provider), are deemed to be eligible costs under the grant terms. Condition - The Hospital's controls in place for submitting expenses did not identify that several invoices and related expense amounts were duplicated in the addendum to the period 1 submission. As a result, period 1 addendum submission included expenses that were deemed unallowable as they had already been utilized to support funding received. Reimbursement for, the original period 1 submission contained retention bonus costs that exceeded 20% of total funds awarded. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A, refer to context below for additional information. Context - The Hospital submitted $227,879 in contract labor costs for reimbursements in the period 1 submission and on the period 1 addendum. Additionally, retention bonuses submitted for reimbursement exceeded the 20% bonus cap outlined in the grant agreed by $273,825. The Hospital was able to replace these costs with other allowable costs, thereby creating no questioned costs. Cause and Effect - The lack of appropriate level of review resulted in ineligible costs being submitted for reimbursement. Recommendation - We recommend that the Hospital implement controls, including levels of review, to ensure that expenses submitted are allowable in accordance with the grant agreement and uniform guidance requirements. Views of Responsible Officials and Corrective Action Plan - The Hospital agrees that it submitted duplicate invoices for reimbursements in the addendum to period 1 submission to MHA and that our preventative controls did not catch this, however we want to clearly state that our detective controls found the error post submission. At that time we immediately contacted and corrected the error with MHA. We will continue to monitor our preventative controls and review processes to avoid this in the future.

Finding 2023-001

ALN, Federal Agency, and Program Name - 21.027, U.S. Department of Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - N/A - 2023 Pass-through Entity - Michigan Health and Hospital Association Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per Uniform Grant Guidance 2 CFR 200.303 paragraph (a) Holland Hospital must "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". Additionally, per the grant agreement signed with the Michigan Hospital Association, "Retention bonuses for employees/employee groups at risk of leaving (not to exceed 20% of total funds awarded to each health care provider), are deemed to be eligible costs under the grant terms. Condition - The Hospital's controls in place for submitting expenses did not identify that several invoices and related expense amounts were duplicated in the addendum to the period 1 submission. As a result, period 1 addendum submission included expenses that were deemed unallowable as they had already been utilized to support funding received. Reimbursement for, the original period 1 submission contained retention bonus costs that exceeded 20% of total funds awarded. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A, refer to context below for additional information. Context - The Hospital submitted $227,879 in contract labor costs for reimbursements in the period 1 submission and on the period 1 addendum. Additionally, retention bonuses submitted for reimbursement exceeded the 20% bonus cap outlined in the grant agreed by $273,825. The Hospital was able to replace these costs with other allowable costs, thereby creating no questioned costs. Cause and Effect - The lack of appropriate level of review resulted in ineligible costs being submitted for reimbursement. Recommendation - We recommend that the Hospital implement controls, including levels of review, to ensure that expenses submitted are allowable in accordance with the grant agreement and uniform guidance requirements. Views of Responsible Officials and Corrective Action Plan - The Hospital agrees that it submitted duplicate invoices for reimbursements in the addendum to period 1 submission to MHA and that our preventative controls did not catch this, however we want to clearly state that our detective controls found the error post submission. At that time we immediately contacted and corrected the error with MHA. We will continue to monitor our preventative controls and review processes to avoid this in the future.