Finding 1219154 (2025-001)

BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2025 Criteria: Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Section 200.430(a) states that compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Costs of compensation are allowable to the extent the compensation is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both Federal and non-Federal activities; follows an appointment made in accordance with the recipient's or subrecipient's laws, rules, or written policies and meets the requirements of Federal statute, where applicable; and is determined and supported by records that accurately reflect the work performed. 2 CFR 200.403(b) further states costs must meet the criteria of conforming to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items to be allowable under Federal awards. This includes the auditor to determine if the awards contain any negotiated wage or salary rates, or contain any restrictions on salaries and wages, such as the NIH restriction on the amount that may be charged for individual salaries (https://grants.nih.gov/grants/policy/salcap_summary.htm). Additionally, 2 CFR 200.400(d) requires the accounting practices of the recipient and subrecipient to be consistent with the cost principles and support the accumulation of costs as required by the cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Furthermore, 2 CFR 200.403 states the factors affecting allowability of costs. These factors include the cost to (a) be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principes and (g) be adequately documented to meet the criteria to be allowable under Federal awards. 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. Condition: During our testing of payroll for Beth Israel Deaconess Medical Center (BIDMC), an affiliate of Beth Israel Lahey Health, Inc., management did not consistently adhere to the specific award conditions set forth in the Notice of Award (NOA) related to salary limitations for 1 out of 12 of our samples related to our testing. The control operator applied an erroneous National Institutes of Health (NIH) Salary Cap limit when calculating the payroll allocation for an individual’s time allocated to a specific NIH grant selected for testing. As a result, the portion of the individual’s salary charged to the federal grant exceeded the maximum allowable NIH Salary Cap, resulting in an unallowable cost of $41 charged to the award. Furthermore, Joslin Diabetes Center (the Center), an affiliate of Beth Israel Lahey Health, Inc., manually matches purchase orders to the corresponding invoice once received. During our testing for 1 out of 25, we identified an invoice that was incorrectly matched to the purchase order for the Federal award selected for testing. This invoice was processed for payment and subsequently included in the monthly reimbursement draw. At the time of testing, the correct invoice corresponding to the valid purchase order for the selected grant had not yet been received by the Center. This resulted in the expenditure in the amount of $14 being BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended September 30, 2025 allocated to the incorrect Federal award as well as the Federal award charged not being supported by adequate documentation. Cause: The conditions results from a lack of effective operation of internal controls over the allowability of costs related to Federal awards; specifically, ensuring the cost conforms to any limitations set forth in the Federal award as to the amount of cost items at BIDMC as well as ensuring the cost is allocable to the Federal grant and is adequately documented at the Center. Possible Asserted Effect: Failure to maintain sufficient internal controls to ensure a cost is allowable to a Federal award may result in unallowable costs being charged to Federal awards. 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 that BILH enhance its internal controls over Federal award expenditures to ensure, where applicable, all costs charged to Federal awards conform to any limitations or salary caps set forth in the Federal award agreement, are accurately allocated to the correct grant and are adequately documented.