Finding No: 2023 001 Federal Agency: U.S. Department of Homeland Security Federal Emergency Management Agency Assistance Listing Number: 97.036 Program: COVID 19 – Disaster Grants Public Assistance (Presidentially Declared Disasters) Award Year: July 1, 2022 to June 30, 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 designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal control should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Conditions Found The System did not have adequate controls related to the identification and reporting of federal expenditures for the COVID 19 – Disaster Grants Public Assistance (Presidentially Declared Disasters) program on the SEFA. Specifically, the System lacked controls to ensure expenditures incurred for COVID 19 Disaster Grants Public Assistance (Presidentially Declared Disasters) program were recognized on the SEFA when obligated. As a result, $16,310,090 of FEMA expenditures were omitted from the June 30, 2023 SEFA. Cause Management did not perform appropriate risk assessment procedures related to federal awards that have unique recognition criteria such as FEMA. Specifically, there was not a control in place to ensure FEMA expenditures were recognized on the SEFA based on when the FEMA award was both obligated and expenditures were incurred. Effect Failure to establish effective internal controls over the preparation of the SEFA may prevent the System from reporting accurate program information and completing an audit in accordance with the Uniform Guidance. Questioned Cost Not applicable Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year Not a repeat finding. Recommendation We recommend that the System strengthen its processes and internal controls over ensuring that proper recognition of expenditures have been reported completely and accurately on SEFA. View of Responsible Official Wellstar Health System, Inc. has implemented a control and process to ensure that expenditures are properly reflected on the SEFA. Corrective Action Plan Wellstar Health System, Inc. has implemented a control and process to ensure that expenditures are properly reflected on the SEFA at time of obligation. Anticipated Completion Date: Wellstar Health System, Inc has already implemented the corrective action. Name of Contact Person for Corrective Action: Beth Loudermilk, VP Financial Planning & Analysis