Finding Number: 2023-006 Program: Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through Entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year. Federal Award Year: 2023 Compliance Requirement: Allowability Criteria PHAs may use HCVP and MV funds only for HAPs to participating owners, and for associated administrative fees (24 CFR sections 982.151 and 982.152). Accumulated administrative fees prior to fiscal year 2004, may be used for any housing-related purpose. Unspent administrative fees accumulated post fiscal year 2003 (i.e., fees from fiscal year 2004 and later funding, see III.L.1.e.(4)(a), “Financial Reporting – Financial Reports”) may be used only to support the HCVP. These funds still are considered to be administrative fee reserves and are subject to all of the requirements applicable to administrative fee reserves including, but not limited to, those in 24 CFR section 982.155. The fees accumulated from fiscal year 2004 and later funding must be used for activities related to the provision of tenant-based rental assistance authorized under Section 8 of the United States Housing Act of 1937, including related development activities. PHAs must maintain and report balances for both funding sources (see notice PIH 2015-17 (HA) dated October 6, 2015) (Division I, Title II, Section (5) of Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, 118 Stat. 3296, and subsequent appropriations acts; see Section 5 of Notice PIH 2005-01; 24 CFR section 982.155). Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Conditions Found Based on the cost allocation plan that is prepared by the City annually, we recalculated the indirect costs that should have been charged to the HCV program. Based on an approved rate of 18.85%, we identified that there was an additional $86,163 of indirect expenses that were incorrectly charged to the program. We further note that there is no control over the review of the expenses that are applied to the indirect cost rate. Cause Per discussion with management, costs associated with the project string ‘FSS to HCV’ of $79,369 were inappropriately applied to the HCV grant/indirect cost calculation. Additionally, $6,794 was also inappropriately applied to the indirect cost calculation due to a City accountant incorrectly applying reclass and transfer amounts to the HCV program. Effect Not applying the proper expenses to the indirect cost rate has caused the City to charge unallowable costs to the HCV program and not to be in compliance with HUD regulations. Questioned Costs $86,163 – The difference between the indirect costs that should have been charged to the HCV program and what was applied. Repeat finding A similar finding was not reported in the prior year. Statistical sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the City implement a review process to ensure the indirect cost allocation rate is being applied to the proper expenses and, thus, properly being charged to the grant. View of Responsible Officials The Health and Human Services Department prepares an indirect cost allocation plan that has historically been used to allocate indirect cost charges to the HACLB. As part of the process to allocate indirect costs, a journal entry was processed for the transfer by fiscal year-end. The calculation method used the City’s legacy and current financial systems’ generated labor reports, capturing the labor cost amounts by legacy system index codes as the basis for the allocation calculation. One of the index codes had pointed to aFamily Self-Sufficiency program’s general ledger account that was later determined to be questionable by the auditor for inclusion under the HCV program. The Family Self-Sufficiency program does have an association with Housing Choice Vouchers, but was considered by KPMG as not having a direct relationship, and therefore should be excluded from the calculation basis. This amount that was in disagreement represented a majority of the calculated difference between that which was originally posted and the calculated HCV expenditures costs basis calculated by KPMG. The much smaller difference in the total costs basis resulted from later re-classed labor costs out of the HCV general ledger accounts, not reflected in the labor costs reports, and thus not accounted for. To ensure appropriate indirect cost charges going forward, costs will be taken from general ledger account balances near fiscal year-end, instead of only considering labor reports. HACLB does have a multi-step review and approval process for the processing and posting of journal entries and their support documentation, but an improved method of capturing final costs can be implemented in the analysis process. Furthermore, for upcoming fiscal years, the City has changed its indirect costs allocation methodology, in that the City will be directly charging HACLB’s funds its share of overhead costs thereby eliminating the Health and Human Services Department indirect cost allocation plan and related indirect cost charges. The $86,163 that was inappropriately charged to the Housing Fund was repaid by the Health Operating Fund, as of September 30, 2024. Response to Views of Responsible Officials The City provided the labor cost reports that were used to calculate the indirect costs that were charged to the program. KPMG compared the calculation the City completed, based on these labor reports, to what was actually charged to the program for payroll and fringe benefits. There was a difference of $86,163 between the actual costs charged and what the City initially calculated from the labor reports. When discussing the difference with the City, it was communicated in writing on August 20, 2024 that an additional $86,163 was inappropriately charged, and should have been excluded from the HCV program due to an oversight in the accounting department.
Finding Number: 2023-008 Program: COVID-19 Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through Entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year. Federal Award Year: 2023 Compliance Requirement: Special Tests- Housing Quality Standards Enforcement Criteria For units under housing assistance payment (HAP) contracts that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Conditions Found During our testing, we noted that for 10 of 40 samples selected, the required repairs were not completed within the 30-day time period, and the City did not properly abate voucher payments by the abatement effective date. As noted above, this date is to be no later than the first of the month following the specified correction period. Additionally, for 31 of 40 sample selections, we noted that deficiencies were not remediated within 30 days, and therefore, the control failed to ensure that repairs were completed timely. The City’s control of sending a letter to the tenant to inform them of the deficiency ensures they are aware of the time frame, but does not ensure action is taken. The City's control over ensuring that voucher payments are properly stopped for abated units, requires the Inspection Supervisor to sign the bi-monthly check run to ensure the HAP register's completeness and accuracy. For six of the seven samples selected, the check run/HAP register did not include the signature of the Inspection Supervisor. Cause Due to the required number of deficiencies and limited resources, the City was not able to abate payments, or prorate the payments based on the effective abatement date. The City was also unable to enforce the housing quality standards. Effect The City is not in compliance with the housing quality standards enforcement requirements as set by HUD. Questioned Costs Not applicable Repeat finding A similar finding was not reported in the prior year. Statistical sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the City implement additional control procedures to ensure that deficiencies are remediated within 30 days. Additionally, control procedures should be in place for those that are not remediated within 30 days to ensure HAP payments are abated or prorated, as appropriate. View of Responsible Officials Due primarily to limited staffing resources, HACLB was unable to verify whether required repairs were completed by the owners, and was unable to take the proper subsequent steps of abating payments to them. To ensure that required repairs are completed within the 30-day time period, HACLB will implement a process to ensure reinspection dates occur before the expiration of the 30-day remediation period. HACLB will also establish clear criteria and standards for the Inspections Housing Assistance Coordinator who is responsible for timely abatement entries, ensuring compliance with operational and regulatory requirements. The Inspections Housing Assistance Coordinator will receive additional training on abatement procedures to enhance their skills and understanding. Furthermore, the Housing Assistance Coordinator will conduct weekly reviews of deficiencies that exceed the 30-day remediation period to ensure timely action for abatement or proration. Response to Views of Responsible Officials The City communicated verbally and in writing, through process narrative understanding documents, that the Inspection Supervisor reviews the register to ensure that payments are stopped for abated units, or restarted for units coming off the abatement list. The Inspection Supervisor is required to sign or initial each check run/HAP register to ensure its completeness and accuracy. It is further noted that when one coordinator is unavailable, another coordinator will perform their review and approval of the register. Written process narratives were provided to KPMG on June 5, 2024.
Finding Number: 2023-008 Program: COVID-19 Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through Entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year. Federal Award Year: 2023 Compliance Requirement: Special Tests- Housing Quality Standards Enforcement Criteria For units under housing assistance payment (HAP) contracts that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Conditions Found During our testing, we noted that for 10 of 40 samples selected, the required repairs were not completed within the 30-day time period, and the City did not properly abate voucher payments by the abatement effective date. As noted above, this date is to be no later than the first of the month following the specified correction period. Additionally, for 31 of 40 sample selections, we noted that deficiencies were not remediated within 30 days, and therefore, the control failed to ensure that repairs were completed timely. The City’s control of sending a letter to the tenant to inform them of the deficiency ensures they are aware of the time frame, but does not ensure action is taken. The City's control over ensuring that voucher payments are properly stopped for abated units, requires the Inspection Supervisor to sign the bi-monthly check run to ensure the HAP register's completeness and accuracy. For six of the seven samples selected, the check run/HAP register did not include the signature of the Inspection Supervisor. Cause Due to the required number of deficiencies and limited resources, the City was not able to abate payments, or prorate the payments based on the effective abatement date. The City was also unable to enforce the housing quality standards. Effect The City is not in compliance with the housing quality standards enforcement requirements as set by HUD. Questioned Costs Not applicable Repeat finding A similar finding was not reported in the prior year. Statistical sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the City implement additional control procedures to ensure that deficiencies are remediated within 30 days. Additionally, control procedures should be in place for those that are not remediated within 30 days to ensure HAP payments are abated or prorated, as appropriate. View of Responsible Officials Due primarily to limited staffing resources, HACLB was unable to verify whether required repairs were completed by the owners, and was unable to take the proper subsequent steps of abating payments to them. To ensure that required repairs are completed within the 30-day time period, HACLB will implement a process to ensure reinspection dates occur before the expiration of the 30-day remediation period. HACLB will also establish clear criteria and standards for the Inspections Housing Assistance Coordinator who is responsible for timely abatement entries, ensuring compliance with operational and regulatory requirements. The Inspections Housing Assistance Coordinator will receive additional training on abatement procedures to enhance their skills and understanding. Furthermore, the Housing Assistance Coordinator will conduct weekly reviews of deficiencies that exceed the 30-day remediation period to ensure timely action for abatement or proration. Response to Views of Responsible Officials The City communicated verbally and in writing, through process narrative understanding documents, that the Inspection Supervisor reviews the register to ensure that payments are stopped for abated units, or restarted for units coming off the abatement list. The Inspection Supervisor is required to sign or initial each check run/HAP register to ensure its completeness and accuracy. It is further noted that when one coordinator is unavailable, another coordinator will perform their review and approval of the register. Written process narratives were provided to KPMG on June 5, 2024.
Finding Number: 2023-009 Program: COVID-19 Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through Entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year. Federal Award Year: 2023 Compliance Requirement: Special Tests- Housing Assistance Payment, Reporting, and Allowability Criteria The Public Housing Authority (PHA) must pay a monthly housing assistance payment (HAP) on behalf of the family that corresponds with the amount on line 12u of the HUD-50058. This HAP amount must be reflected on the HAP contract and HAP register (24 CFR section 982.158 and 24 CFR Part 982, Subpart K). Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Conditions Found For 1 of 40 samples selected, the City did not complete the required eligibility re-examination as required on 4/1/2023, but instead completed it on 1/4/2024. At the time of the re-examination, the City found that the individual no longer qualified for further HAP payments a their monthly adjusted income exceeded 30% of the rental payment. As a result of the delay in completing the re-examination, the individual continued to receive HAP payments that they were no longer eligible to receive. While the HUD-5508 and the amended HAP contract showed a $0 housing assistance payment amount, the HAP register showed that the individual continued to receive HAP assistance payments in the amount of $462 through the City’s fiscal year end of 9/30/2023. Additionally, the City’s control over the HAP register, used in testing the housing assistance payment and allowability compliance requirements, requires six of the Housing Authority Coordinators to review each check run/HAP register. Each Coordinator is responsible for reviewing and approving a different area of the register to ensure its completeness and accuracy. For six of the seven samples selected, the check run/HAP register did not include all signatures of the required Housing Authority Coordinator. With regard to the HUD-50058 reporting testwork, the City does not have a control in place to ensure that the HUD-50058 is complete and accurate. As such, there was not a control related to this process to test. Cause Due to the Housing Authority being understaffed and the required number of re-examinations be performed, many of the re-examinations were completed late. This caused the City to not be in compliance with HUD regulations and as such the HUD-50058, HAP register, and HAP contracts to not be in agreement. Effect The City is not in compliance with HUD’s requirements that the HUD-50058, HAP register, and HAP contract/amended contract agree. Additionally, the City has been providing ineligible participants with HAP payments resulting in unallowable costs. Questioned Costs $462- Difference between the contract/amendment and the HAP register. Repeat finding A similar finding was not reported in the prior year. Statistical sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the City implement additional controls and procedures to ensure proper record keeping and that the HUD-50058, HAP register, and HAP contract all agree. View of Responsible Officials Due to staffing shortages during the fiscal year and the high volume of participants in the City’s HCV program, a few reexaminations were completed late. Moreover, a significant amount of staff time was used for training regarding the Housing Opportunity Through Modernization Act (HOTMA) regulations that were continually revised and ultimately delayed, which reduced the amount of time that staff could have utilized for certification processes. The changing regulations created ambiguity for existing and new staff. There was one selection out of forty, of which KPMG determined did not qualify for further HAP payments, since the family share equaled or exceeded the gross rent. For this particular sample selection, the April 1, 2023 annual reexamination was completed on January 4, 2024, when the HAP payment decreased from $462 to $0 per month. A Zero-HAP letter was sent to the participant on February 26, 2024, informing the participant that effective March 1, 2024 this individual would be responsible for the full rent and would no longer receive a Housing Assistance Payment (HAP). The letter also advised the individual that she would remain a participant for an additional six months and no change in income/circumstances, her participation in the voucher program would be terminated, per HUD policies. Because the annual reexamination was processed late, HACLB absorbed the HAP payment until the 30-day notice of change was provided to the participant. At the conclusion of the Zero-HAP term (six months), the Housing Specialist completed the End of Participation for the participant and has requested the transfer of the remaining overpaid HAP from the HAP fund to the Housing Authority Administrative Fund. This minimal amount correction was being processed in FY24. To address delays in reexamination processes, HACLB has contracted with an agency to assist in processing overdue reexaminations, and HACLB has submitted recruiting requisitions to its Human Resources department to hire additional housing specialists to improve upon its management of the high volume of HCV program participants, documentation and processes, and to meet various requirement deadlines. Regarding the testing of HUD-50058 forms, the HUD-50058 form is generated after information is inputted into HUD’s system. Error warnings are produced from the system if information is missing. Accuracy is based on the information inputted. HACLB will provide additional training to staff inputting the information, and reviews will continue to be done by the supervisor. However, it would be very difficult for the HUD-50058 form, HAP register and HAP contract to not be in agreement. When a reexamination is processed, any changes are made in HUD’s system, changes are locked in, a HUD-50058 is generated, an amended HAP contract is printed, which reflects the changes made on the 50058 form, and when the HAP payment is made the payment is made for the new amount per the HAP register. Thereby, each step dependent upon the prior step’s information, making it very difficult for the HUD-50058 form, HAP register and HAP contract to not be in agreement. To further improve upon the process, HACLB implemented new housing software in August 2024, which enhances reporting and tracking of payments, of HUD-50058 forms and of contract amendments. Housing Assistance Coordinators will use these reports to identify and address discrepancies. Lastly, regarding the City’s control with the HAP register’s required signatures, HACLB’s internal procedures does not require all six Housing Coordinators to approve the check run/HAP register, as KPMG assumed. There are only three assigned Housing Assistance Coordinators that have designated staff who are allowed to make adjustments and review the check-run adjustment register to confirm the work of their respective teams. If one of the approvers is absent, another approver may review and approve the adjustments that can be completed via email. Response to Views of Responsible Officials As noted in the conditions found, the City did not complete this reexamination until nine months after the effective date. Therefore, the process that occurred in January 2024, should have occurred by April 1, 2023. The individual would have been determined to have a $0 HAP payment at this time. Therefore, the City provided the participant with the $462 payment for the nine months that the reexamination was not completed. Through walkthrough procedures and process narrative understanding documents, the City communicated to KPMG in writing that all parties listed on the HAP register are required to sign off and approve the register. Only one of seven registers selected for testing included all six signatures. Written process narratives were provided to KPMG on June 5, 2024.
Finding Number: 2023-009 Program: COVID-19 Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through Entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year. Federal Award Year: 2023 Compliance Requirement: Special Tests- Housing Assistance Payment, Reporting, and Allowability Criteria The Public Housing Authority (PHA) must pay a monthly housing assistance payment (HAP) on behalf of the family that corresponds with the amount on line 12u of the HUD-50058. This HAP amount must be reflected on the HAP contract and HAP register (24 CFR section 982.158 and 24 CFR Part 982, Subpart K). Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Conditions Found For 1 of 40 samples selected, the City did not complete the required eligibility re-examination as required on 4/1/2023, but instead completed it on 1/4/2024. At the time of the re-examination, the City found that the individual no longer qualified for further HAP payments a their monthly adjusted income exceeded 30% of the rental payment. As a result of the delay in completing the re-examination, the individual continued to receive HAP payments that they were no longer eligible to receive. While the HUD-5508 and the amended HAP contract showed a $0 housing assistance payment amount, the HAP register showed that the individual continued to receive HAP assistance payments in the amount of $462 through the City’s fiscal year end of 9/30/2023. Additionally, the City’s control over the HAP register, used in testing the housing assistance payment and allowability compliance requirements, requires six of the Housing Authority Coordinators to review each check run/HAP register. Each Coordinator is responsible for reviewing and approving a different area of the register to ensure its completeness and accuracy. For six of the seven samples selected, the check run/HAP register did not include all signatures of the required Housing Authority Coordinator. With regard to the HUD-50058 reporting testwork, the City does not have a control in place to ensure that the HUD-50058 is complete and accurate. As such, there was not a control related to this process to test. Cause Due to the Housing Authority being understaffed and the required number of re-examinations be performed, many of the re-examinations were completed late. This caused the City to not be in compliance with HUD regulations and as such the HUD-50058, HAP register, and HAP contracts to not be in agreement. Effect The City is not in compliance with HUD’s requirements that the HUD-50058, HAP register, and HAP contract/amended contract agree. Additionally, the City has been providing ineligible participants with HAP payments resulting in unallowable costs. Questioned Costs $462- Difference between the contract/amendment and the HAP register. Repeat finding A similar finding was not reported in the prior year. Statistical sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the City implement additional controls and procedures to ensure proper record keeping and that the HUD-50058, HAP register, and HAP contract all agree. View of Responsible Officials Due to staffing shortages during the fiscal year and the high volume of participants in the City’s HCV program, a few reexaminations were completed late. Moreover, a significant amount of staff time was used for training regarding the Housing Opportunity Through Modernization Act (HOTMA) regulations that were continually revised and ultimately delayed, which reduced the amount of time that staff could have utilized for certification processes. The changing regulations created ambiguity for existing and new staff. There was one selection out of forty, of which KPMG determined did not qualify for further HAP payments, since the family share equaled or exceeded the gross rent. For this particular sample selection, the April 1, 2023 annual reexamination was completed on January 4, 2024, when the HAP payment decreased from $462 to $0 per month. A Zero-HAP letter was sent to the participant on February 26, 2024, informing the participant that effective March 1, 2024 this individual would be responsible for the full rent and would no longer receive a Housing Assistance Payment (HAP). The letter also advised the individual that she would remain a participant for an additional six months and no change in income/circumstances, her participation in the voucher program would be terminated, per HUD policies. Because the annual reexamination was processed late, HACLB absorbed the HAP payment until the 30-day notice of change was provided to the participant. At the conclusion of the Zero-HAP term (six months), the Housing Specialist completed the End of Participation for the participant and has requested the transfer of the remaining overpaid HAP from the HAP fund to the Housing Authority Administrative Fund. This minimal amount correction was being processed in FY24. To address delays in reexamination processes, HACLB has contracted with an agency to assist in processing overdue reexaminations, and HACLB has submitted recruiting requisitions to its Human Resources department to hire additional housing specialists to improve upon its management of the high volume of HCV program participants, documentation and processes, and to meet various requirement deadlines. Regarding the testing of HUD-50058 forms, the HUD-50058 form is generated after information is inputted into HUD’s system. Error warnings are produced from the system if information is missing. Accuracy is based on the information inputted. HACLB will provide additional training to staff inputting the information, and reviews will continue to be done by the supervisor. However, it would be very difficult for the HUD-50058 form, HAP register and HAP contract to not be in agreement. When a reexamination is processed, any changes are made in HUD’s system, changes are locked in, a HUD-50058 is generated, an amended HAP contract is printed, which reflects the changes made on the 50058 form, and when the HAP payment is made the payment is made for the new amount per the HAP register. Thereby, each step dependent upon the prior step’s information, making it very difficult for the HUD-50058 form, HAP register and HAP contract to not be in agreement. To further improve upon the process, HACLB implemented new housing software in August 2024, which enhances reporting and tracking of payments, of HUD-50058 forms and of contract amendments. Housing Assistance Coordinators will use these reports to identify and address discrepancies. Lastly, regarding the City’s control with the HAP register’s required signatures, HACLB’s internal procedures does not require all six Housing Coordinators to approve the check run/HAP register, as KPMG assumed. There are only three assigned Housing Assistance Coordinators that have designated staff who are allowed to make adjustments and review the check-run adjustment register to confirm the work of their respective teams. If one of the approvers is absent, another approver may review and approve the adjustments that can be completed via email. Response to Views of Responsible Officials As noted in the conditions found, the City did not complete this reexamination until nine months after the effective date. Therefore, the process that occurred in January 2024, should have occurred by April 1, 2023. The individual would have been determined to have a $0 HAP payment at this time. Therefore, the City provided the participant with the $462 payment for the nine months that the reexamination was not completed. Through walkthrough procedures and process narrative understanding documents, the City communicated to KPMG in writing that all parties listed on the HAP register are required to sign off and approve the register. Only one of seven registers selected for testing included all six signatures. Written process narratives were provided to KPMG on June 5, 2024.
Finding Number: 2023-010 Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds ALN #: 21.027 Pass-through Entity: N/A – Direct Award Federal Agency: U.S. Department of Treasury Federal Award Numbers: N/A Federal Award Year: 2021 Compliance Requirement: Allowability Criteria Recipients may use SLFRF payments for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 codified at 42 USC sections 802 and 803 respectively. Recipients may use payments from CSLFRF to: a. Respond to the public health and negative economic impacts of the pandemic, by supporting the health of communities, and helping households, small businesses, impacted industries, and the public sector recover from economic impacts of the pandemic. b. Replace lost public sector revenue to provide government services; recipients may use this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic. c. Provide premium pay for essential workers, offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors; and d. Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support, vital wastewater and storm water infrastructure, and to expand access to broadband internet. Additionally, per 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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. This would include internal controls related to the review and approval of allowable costs. Conditions Found The City utilized a portion of the funds received under the Coronavirus State and Local Fiscal Recovery Funds program to establish and fund a Guaranteed Income Program. The Guaranteed Income Program provided payments to individuals who experienced negative economic impacts as a result of the pandemic. To determine who would be eligible to receive assistance under the Guaranteed Income Program, the City developed specific eligibility criteria whereby applicants that had a household income below the poverty line would meet the criteria of having a negative economic impact. The total amount paid under this program for the year ended September 30, 2023 was $623,500. During our testwork over the allowability of payments made under the Guaranteed Income Program, we identified that for 5 of 25 payments selected for testwork, the applicant did not meet the criteria of having a household income of less than the poverty line as established by the City. While each of the five applications reported household income that was lower than the poverty line, the additional documentation provided by the applicant to substantiate what their actual income was showed household income that exceeded the poverty line. As a result, these applicants were not eligible for the program and the payments made to the five applicants. Cause The cause of the condition found was due to insufficient review controls over the processing and approval of participant applications. The City utilized a vendor to assist in the processing of applications for this program. The City had implemented a policy whereby the City reviewed 10% of the applications approved by the vendor. The errors identified during our testwork related to applications that the City did not review. Effect The effect of the condition found is that payments under the Guaranteed Income program were made to ineligible participants resulting in unallowable costs. Questioned Costs $2,500 – The amount paid to the five ineligible applicants identified Repeat finding A similar finding was not reported in the prior year. Statistical sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend that the existing internal controls related to the review and approval of applications for the Guaranteed Income Program be evaluated to ensure that all applications approved by the vendor were appropriately approved by the City. View of Responsible Officials The utilization of a vendor to evaluate, approve and process applications was critical to the speedy and successful deployment of the Guaranteed Income Program in response to the COVID-19 pandemic. The Economic Development Department does not have the staff capacity to evaluate the volume of applications received under this and similar programs implemented under the Coronavirus State and Local Fiscal Recovery Funds program. Accordingly, the Economic Development Department relied on its contracted partner to verify applicants for enrollment in the program and conducted a secondary review of 10% of all applications approved by the vendor prior to authorizing disbursement. As noted in the finding, the errors identified in the test work related to applications that the Economic Development Department did not review. Nonetheless, the Economic Development Department acknowledges that insufficient review controls contributed to payments made to ineligible applicants. In response to the findings, Economic Development Department has worked with the vendor to improve evaluation processes related to the income eligibility verification process, including: a. Enhanced Training: The vendor will provide comprehensive training to all reviewers involved in verifying income documentation. This training will emphasize the importance of accurately inputting pay period frequency and using gross income for calculations. b. Secondary checks: The vendor will establish additional quality assurance checks to validate the accuracy of income calculations before final eligibility determinations are made. This may include double-checking calculations by a second reviewer or implementing automated systems to flag potential errors. Additionally, the Economic Development Department has re-evaluated and revised its policy for additional review by staff; increasing the number of applications reviewed by the Economic Development Department from 10% to 30%. In the view of Management of Economic Development Department, increasing the review sample size to 30% sufficiently mitigates the risk of further error while preserving the benefits and efficiencies that utilizing a contract processor provides. Further, the Economic Development Department worked with the vendor to review all applications manually qualified by the vendor to identify any further ineligible applications not found in the sample. Regarding the questioned costs, the Economic Development Department implemented a second round of the Guaranteed Income Program that was funded by non-grant funds. Costs associated with the ineligible applications identified in the audit were reclassified from American Rescue Plan Act funding to the City’s General Fund, and replaced by costs from confirmed eligible applications in the second round of the program. Finally, the City has sought restitution from the vendor for administrative costs of the improperly vetted applications. The City will not seek repayment from the ineligible applicants. The applicants were not responsible for the error.
Finding Number: 2023-011 Program: Disaster Grants – Public Assistance (Presidentially Declared Disasters) ALN #: 97.036 Pass-through Entity: State of California – Office of Emergency Services Federal Agency: Federal Emergency Management Agency (FEMA) Grant Award Numbers: 3100202051, 3100202055, 3100202058, and 3100202059 Federal Award Years: January 27, 2023, March 12, 2023, July 17, 2023, July 21, 2023 Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Conditions Found The City did not have adequate internal controls related to the reporting of expenditures on the SEFA for Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Disaster Grants) program. The City incorrectly reported $2,165,166 in expenditures on the September 30, 2023 draft Schedule of Expenditures of Federal Awards (SEFA) related to grants that were not obligated by the Federal Emergency Management Agency (FEMA) as of September 30, 2023, resulting in the draft SEFA being overstated. While the City had incurred costs under these FEMA projects, nonfederal entities may not record expenditures on the SEFA until FEMA has approved the nonfederal entity’s project and has obligated those expenditures to the nonfederal entity. The City subsequently revised the SEFA so that the expenditures reported are accurate. Cause In discussing these conditions with the City, it stated the error was primarily due to the City not understanding the updated guidance issued by FEMA that notes FEMA expenditures are to be recorded on the SEFA at the later of the FEMA obligation date or the incurrence of an allowable expense. Effect Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the City from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs Not applicable Repeat finding A similar finding was not reported in the prior year. Statistical sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the City implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate. View of Responsible Officials The Financial Management Department acknowledges there was a deficiency in the manner that expenditures were reported for a declared disaster on the SEFA for the fiscal year ended September 30, 2023. The $2,165,166 overstatement represented expenditures that FEMA obligated within 60 days of September 30, 2023. Given the program is maintained in a Governmental Fund, the Department recorded a revenue accrual in the FY 2023 Annual Comprehensive Financial Report (ACFR) to align with the City’s existing policy to record grant revenue expected to be collected within one year in the same fiscal year expenditures are reported. The Department recognizes FEMA Disaster Grants should be an exception and will prevent this reporting error by updating the Revenue Recognition Policy and issuing a Financial Management Disaster Procedure Manual that will include a narrative on this specific matter. The Procedures Manual will be published on the City Intranet and utilized for all City Staff as a resource for all future disaster grants funded by FEMA’s Public Assistance Program (ALN 97.036). Revisions to the Procedure Manual will be made as needed to ensure the City is current with the latest compliance changes. In addition to attending regular meetings and obtaining direct correspondence and guidance from FEMA representatives, Financial Management will also perform its own research to obtain, read, and apply the latest Uniform Guidance Compliance Supplement prior to the annual SEFA preparation process to ensure the City is meeting compliance requirements. The proper FEMA expenditures amount for fiscal year ended September 30, 2023, was revised in subsequent SEFA drafts and is reflected in the final Single Audit report.
2023-005: Written Policies and Procedures Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic Expansion Grant Federal Award Identification Number and Year: 1H79SM086680-01, Program Grant Period 09/29/2022-09/29/2023 Pass-through Entity: N/A Type: Material weakness in internal control and noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319(d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Authority did not have written procedures for cash management and allowable cost. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: Although the Authority is aware that they were required to have written policies and procedures for the items noted above, they were using the grant agreement guidelines that provide grantees with guidance for ensuring the existing accounting and personnel policies and procedures include the necessary controls. These guidelines address the compliance areas required by the Uniform Guidance. Recommendation: We recommend the Authority adopt written policies and procedures over cash management and allowable costs required under the Uniform Guidance. View of Responsible Officials and Planned Corrective Action Plan: See attached corrective action plan.
Finding Number: 2023-001 Federal Agency: U.S. Department of Housing and Urban Development ALN: 14.157 Compliance Requirement: Special Test and Provisions – Use of Project Funds-Payroll Activities Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records: • Reasonable reflects the total activity for which the employee is compensated across all grant-related and non-grant-related activities (100% effort) and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – For ALN 14.157, we sampled and selected 25 out of 173 payroll expenditures and noted six (6) instances where timesheets were not available for review. Questioned Cost – $9,172 Context – This is a condition identified per review of The Project’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditure charged to the program in fiscal year 2023 is $203,516. The total amount sampled is $24,219. The known amount of the exceptions is $9,172. Effect – The Project is not in compliance with he stated provision. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – Timesheets appear to have been misfiled and were not available for review upon request. Recommendation – Management should ensure timesheets are properly filed and be available for review upon request. Views of Responsible Officials – Timesheets were misfiled by a new employee responsible for sorting and filing timesheets. Several employee folders were searched for misplaced timesheets, and some were found; However, the six missing timesheets were not found. This program is physically located in St. Thomas, and the original timesheets arrive at the administrative office about a week after the payroll is processed. A faxed copy of the original timesheets is used for review before processing payroll. Going forward, time sheet sorting and filing by new employees will be monitored more closely for proper sorting and filing
Preparation of Schedule of Expenditures of Federal Awards (SEFA) (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting, Cash Management and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds (AL #21.027) and Local Assistance and Tribal Consistency Fund (AL #21.032) Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to 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 terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the nonFederal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grant awards. The County reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis of accounting, in accordance with generally accepted accounting principles. CFR Section 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA to the amounts reported in the auditee’s financial statements. Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures recorded in the financial statements. Changes were made to major program expenditures, as well as expenditures of other programs, during the closing process and during the completion of the single audit to properly report expenditures on the SEFA. Closing procedures should be in place to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the grantor, claim the g ant revenues on a timely basis, reconcile the claim to the general ledger, and ensure the expenditures that will be claimed under federal awards are properly reported on the SEFA and audited financial statements prior to the start of the single audit. If expenditures reported on the SEFA are misstated, the County could fail to have a program appropriately identified as a major program and tested as a major program during the single audit. Failure to have a program audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: Closing procedures were not in place and management did not effectively communicate with County departments responsible for administering federal awards to identify all federal grant related activity. Effect: The SEFA required material adjustments to include all federal expenditures prior to the single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during the single audit. In addition, the lack of closing procedures resulted in audit delays which caused the 2022 and 2023 financial reporting process, including data collection form submission, to be untimely. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that management meet with department heads throughout the year and during the closing process to identify all expenditures under federal awards. Training should be provided to all staff to make sure they are aware of the importance of accurately reconciling and claiming grant expenditures on a timely basis and providing the information to management for inclusion on the SEFA. Views of Responsible Officials: The County will work to improve closing processes and communications with various departments to ensure the SEFA is complete and accurate.
Written Policies Required by the Uniform Guidance (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds (AL #21.027) and Local Assistance and Tribal Consistency Fund (AL #21.032) Criteria: Delta County does not have written policies and procedures to implement the requirements of 2 CFR section 200 for the administration of federal awards. The Uniform Guidance requires a nonfederal entity that has expended federal awards for a grant on or after December 26, 2014 to have written policies pertaining to: 1) advance payments and reimbursements; 2) determination of allowable costs; 3) compensation (personnel and benefits policies); 4) travel costs; and 5) procurement procedures. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. Condition: The County does not have processes in place to conform to all of the requirements in the Uniform Guidance. Cause: The County has not reviewed and updated its policies and procedures for continued changes in grants and the Uniform Guidance. Certain departmental grants operate outside of the general County processes and internal control system and policies and procedures for these departments have not been maintained. Effect: As a result of this condition, the County did not fully comply with the Uniform Guidance. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that the County adopt formal written policies covering these areas as soon as practical. Views of Responsible Officials: The County will work to update policies and procedures and to formalize responsibilities.
Preparation of Schedule of Expenditures of Federal Awards (SEFA) (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting, Cash Management and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds (AL #21.027) and Local Assistance and Tribal Consistency Fund (AL #21.032) Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to 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 terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the nonFederal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grant awards. The County reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis of accounting, in accordance with generally accepted accounting principles. CFR Section 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA to the amounts reported in the auditee’s financial statements. Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures recorded in the financial statements. Changes were made to major program expenditures, as well as expenditures of other programs, during the closing process and during the completion of the single audit to properly report expenditures on the SEFA. Closing procedures should be in place to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the grantor, claim the g ant revenues on a timely basis, reconcile the claim to the general ledger, and ensure the expenditures that will be claimed under federal awards are properly reported on the SEFA and audited financial statements prior to the start of the single audit. If expenditures reported on the SEFA are misstated, the County could fail to have a program appropriately identified as a major program and tested as a major program during the single audit. Failure to have a program audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: Closing procedures were not in place and management did not effectively communicate with County departments responsible for administering federal awards to identify all federal grant related activity. Effect: The SEFA required material adjustments to include all federal expenditures prior to the single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during the single audit. In addition, the lack of closing procedures resulted in audit delays which caused the 2022 and 2023 financial reporting process, including data collection form submission, to be untimely. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that management meet with department heads throughout the year and during the closing process to identify all expenditures under federal awards. Training should be provided to all staff to make sure they are aware of the importance of accurately reconciling and claiming grant expenditures on a timely basis and providing the information to management for inclusion on the SEFA. Views of Responsible Officials: The County will work to improve closing processes and communications with various departments to ensure the SEFA is complete and accurate.
Written Policies Required by the Uniform Guidance (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds (AL #21.027) and Local Assistance and Tribal Consistency Fund (AL #21.032) Criteria: Delta County does not have written policies and procedures to implement the requirements of 2 CFR section 200 for the administration of federal awards. The Uniform Guidance requires a nonfederal entity that has expended federal awards for a grant on or after December 26, 2014 to have written policies pertaining to: 1) advance payments and reimbursements; 2) determination of allowable costs; 3) compensation (personnel and benefits policies); 4) travel costs; and 5) procurement procedures. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. Condition: The County does not have processes in place to conform to all of the requirements in the Uniform Guidance. Cause: The County has not reviewed and updated its policies and procedures for continued changes in grants and the Uniform Guidance. Certain departmental grants operate outside of the general County processes and internal control system and policies and procedures for these departments have not been maintained. Effect: As a result of this condition, the County did not fully comply with the Uniform Guidance. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that the County adopt formal written policies covering these areas as soon as practical. Views of Responsible Officials: The County will work to update policies and procedures and to formalize responsibilities.
Finding 2023-009 - Procurement Information on Federal Programs: All programs Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity 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. 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). Additionally, according to 2 CFR §200.320, Procurement standards, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318, and §200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: a) Informal procurement methods, b) Formal procurement methods, c) Noncompetitive procurement. Condition: During the review of the procurement compliance requirement related to major program, it was determined that U.S. Water Alliance did not have a document procurement policy in place until August 2023. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement procedures could have resulted in noncompliance with the Criteria section above. Perspective: U.S. Water Alliance established a documented procurement policy that was put in place in August 2023. Within a random sample of 26 disbursements, 3 disbursements would have required compliance with the simplified acquisition method, but would have also met the exception due to the existence of an emergency causing public harm and the specialized nature of the work performed. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should adhere to its procurement policy put in place in August 2023 to ensure compliance with the Uniform Guidance going forward. Views of Responsible Officials and Planned Corrective Actions: While the Alliance did not have a standalone procurement policy in place until August 2023, it did have purchasing policies embedded in its Accounting and Finance Manual that covered purchases relative to our work at that time. No further corrective action is needed however policies are reviewed annually to ensure compliance under 2 CFR 200.516(a).
Finding 2023-009 - Procurement Information on Federal Programs: All programs Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity 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. 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). Additionally, according to 2 CFR §200.320, Procurement standards, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318, and §200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: a) Informal procurement methods, b) Formal procurement methods, c) Noncompetitive procurement. Condition: During the review of the procurement compliance requirement related to major program, it was determined that U.S. Water Alliance did not have a document procurement policy in place until August 2023. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement procedures could have resulted in noncompliance with the Criteria section above. Perspective: U.S. Water Alliance established a documented procurement policy that was put in place in August 2023. Within a random sample of 26 disbursements, 3 disbursements would have required compliance with the simplified acquisition method, but would have also met the exception due to the existence of an emergency causing public harm and the specialized nature of the work performed. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should adhere to its procurement policy put in place in August 2023 to ensure compliance with the Uniform Guidance going forward. Views of Responsible Officials and Planned Corrective Actions: While the Alliance did not have a standalone procurement policy in place until August 2023, it did have purchasing policies embedded in its Accounting and Finance Manual that covered purchases relative to our work at that time. No further corrective action is needed however policies are reviewed annually to ensure compliance under 2 CFR 200.516(a).
Finding 2023-009 - Procurement Information on Federal Programs: All programs Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity 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. 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). Additionally, according to 2 CFR §200.320, Procurement standards, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318, and §200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: a) Informal procurement methods, b) Formal procurement methods, c) Noncompetitive procurement. Condition: During the review of the procurement compliance requirement related to major program, it was determined that U.S. Water Alliance did not have a document procurement policy in place until August 2023. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement procedures could have resulted in noncompliance with the Criteria section above. Perspective: U.S. Water Alliance established a documented procurement policy that was put in place in August 2023. Within a random sample of 26 disbursements, 3 disbursements would have required compliance with the simplified acquisition method, but would have also met the exception due to the existence of an emergency causing public harm and the specialized nature of the work performed. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should adhere to its procurement policy put in place in August 2023 to ensure compliance with the Uniform Guidance going forward. Views of Responsible Officials and Planned Corrective Actions: While the Alliance did not have a standalone procurement policy in place until August 2023, it did have purchasing policies embedded in its Accounting and Finance Manual that covered purchases relative to our work at that time. No further corrective action is needed however policies are reviewed annually to ensure compliance under 2 CFR 200.516(a).
Finding 2023-009 - Procurement Information on Federal Programs: All programs Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity 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. 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). Additionally, according to 2 CFR §200.320, Procurement standards, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318, and §200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: a) Informal procurement methods, b) Formal procurement methods, c) Noncompetitive procurement. Condition: During the review of the procurement compliance requirement related to major program, it was determined that U.S. Water Alliance did not have a document procurement policy in place until August 2023. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement procedures could have resulted in noncompliance with the Criteria section above. Perspective: U.S. Water Alliance established a documented procurement policy that was put in place in August 2023. Within a random sample of 26 disbursements, 3 disbursements would have required compliance with the simplified acquisition method, but would have also met the exception due to the existence of an emergency causing public harm and the specialized nature of the work performed. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should adhere to its procurement policy put in place in August 2023 to ensure compliance with the Uniform Guidance going forward. Views of Responsible Officials and Planned Corrective Actions: While the Alliance did not have a standalone procurement policy in place until August 2023, it did have purchasing policies embedded in its Accounting and Finance Manual that covered purchases relative to our work at that time. No further corrective action is needed however policies are reviewed annually to ensure compliance under 2 CFR 200.516(a).
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
2023-003 — Allowable Cost/Allowable Activities – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Urban Indian Health Service ALN number: 93.193 Award years and number: 1/1/2018–12/31/2022, 75H70921C00004 & H722IHS0138-20-00 Pass-through entity: (if applicable) N/A Criteria: According to the Uniform Guidance (2 CFR § 200.303 - Internal Controls) and the Center’s internal control policies, adequate documentation must be maintained to support all transactions, including evidence of approval and authorization by designated personnel. Condition: 2 of the 25 nonpayroll transactions tested did not have the required approval and authorization forms retained, thus, the auditor could not verify if the expenses were properly approved and authorized. Questioned Costs: None. Cause: Management has not designed a proper system of internal control to ensure that all nonpayroll disbursements have authorized supporting documentation. Effect: Without a proper authorization process, unallowable costs or activities may be charged to the federal program, which could lead to the withdrawal of funding from the federal government. Auditor’s Recommendations: Management should design and implement an internal control system that properly maintains the required documentation. Management Response: All Nations Health Center has a more lenient approval process for must have charges that are under the “auto-pay” status. All Nations has moved away from this leniency and will require all “auto-pay” must have charges to go through the regular approval process.
Criteria or Specific Requirement 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. One of the objectives of internal control over compliance as found in 2 CFR section 200.1 include that transactions should be properly recorded and accounted for in order to permit the preparation of reliable financial statements and federal reports. Condition This deficiency is related to the financial statements finding 2023-01, as listed in Part II above. The City’s financial statements required material audit adjusting journal entries for the financial statements to be presented in accordance with generally accepted accounting principles (GAAP). The financial statements are required to be the product of a financial reporting system that offers reasonable assurance that management is able to produce financial statements in accordance with GAAP. A portion of the adjustments were related to expenditures which were paid by and applied to funding provided by the ARPA Coronavirus State and Local Fiscal Recovery Funds Program. The issue pertained to the financial statement assertion of cutoff; the expenditures were allowable expenditures in accordance with the federal award requirements. Cause The City’s year-end procedures did not identify certain necessary adjustments in a timely manner in order to remove capital outlay expenditures that were incorrectly recorded during the fiscal year ended September 30, 2023. Effect or Potential Effect Adjusting journal entries were proposed as certain accounts were misstated on the unadjusted financial statements, resulting in expenditures being incorrectly included in the unadjusted schedule of expenditures of federal awards. Questioned Costs None. Context During testing of subsequent disbursements and the potential for unrecorded liabilities and during internal control and compliance testing of the major Federal program, it was noted there were two invoices, amounting to a total of $415,821, recorded within accounts payable as capital outlay expenditures which were improperly recorded in the fiscal year ended September 30, 2023. As evidenced by the invoice date and ship date within the invoices, the equipment was not shipped, and the equipment was not received by the City, until after year-end. The expenditures should be recorded in the fiscal year ended September 30, 2024. Repeat Finding This is a variation of a prior year finding from 2022. See summary schedule of prior audit findings. Recommendation Management should ensure year-end closing procedures are completed in a timely manner and are sufficient to assure accounts and financial statements are prepared in accordance with GAAP. Management should assess the risk associated with this condition and identify any additional processes that can be incorporated into their existing controls to improve the deficiency; such as, minimizing the likelihood of year-end material audit adjustments through review of transactions and balances for general propriety and accuracy within one month after year-end. Follow-up and inquiries can be made timely for any transactions for which proper recording is unclear to management, if any. The Grants Administrator should maintain an up-to-date listing of expenditures by award (for all federal, state, and local awards) and should communicate with the Finance Department on a monthly basis to review the listing and determine the proper period in which the expenditures should be recorded and presented.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2023 (3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001 Federal Agency: United States Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing Number: Various Criteria: According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged. Condition: Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards. BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis. During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required. We deemed this to be a material weakness in internal controls. Cause: In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property. Possible Asserted Effect: Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment. Questioned Costs: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records. Views of Responsible Officials: A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.