Finding 530133 (2021-003)

Material Weakness
Requirement
B
Questioned Costs
-
Year
2021
Accepted
2025-03-25
Audit: 348226
Organization: Astria Health (WA)
Auditor: Moss Adams LLP

AI Summary

  • Core Issue: The Organization misclassified expenses as allowable under federal guidelines, leading to potential noncompliance.
  • Impacted Requirements: Compliance with the 2021 Compliance Supplement and 2 CFR 200.403(h) regarding allowable costs for federal awards.
  • Recommended Follow-Up: Management should develop clear policies to ensure understanding and adherence to federal award terms and compliance requirements.

Finding Text

Finding 2021-003 – Allowable Costs/Cost Principles – Material Weakness in Internal Control Over Compliance and Instance of Material Noncompliance. See finding 2021-002 for the included table. Criteria: 2021 Compliance Supplement and 2 CFR 200.403(h) stated that a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. In addition, the PRF terms and conditions noted that to be considered an allowable expense under PRF, the expense must be used to prevent, prepare for, and respond to COVID-19 and that those expenses were not reimbursed from other sources and other sources were not obligated to reimburse them. Condition/Context: The Organization decided that it was critical to keep Astria Toppenish Hospital (Toppenish) operating during the COVID-19 pandemic despite Toppenish experiencing losses. As a result, the Organization determined that all expenses of the Organization not explicitly unallowable per the related guidance and not reimbursed or obligated to be reimbursed by other sources qualified as allowable expenses that prevented, prepared for, and responded to COVID-19 during the period of availability that they were experiencing losses for Toppenish. Internal unaudited financial statements had losses in excess of the PRF funds used for expenses. Support was audited for expenses selected; however, because there were no financial statement audits performed from 2018 – 2020, we were unable to audit the Toppenish losses calculated by management. Repeat Findings from Prior Year(s): This is not a repeat finding. Cause/Effect: In addition to the challenges encountered while operating a health system during the COVID-19 pandemic, leading up to the audit period, the Organization was significantly impacted by bankruptcy and turnover of leadership. As a result, no financial statement audits were performed from 2018 – 2020. A financial statement audit was performed in 2021; however, the related Toppenish expenses were incurred prior to December 31, 2020. We were unable to obtain audit evidence supporting Toppenish’s losses for the year ended December 31, 2020. As a result of these matters, we were unable to determine whether the Organization complied with the allowable costs/cost principles requirements applicable to the major program. Questioned costs: Could not be determined. Recommendation: We recommend management implement policies and procedures to ensure that the Organization understands the terms and conditions of the Federal award and can meet the related compliance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization will review and modify policies and procedures over the program to ensure management implements policies and procedures to ensure there is understanding of the terms and conditions of Federal awards.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 530128 2021-002
    Material Weakness
  • 530129 2021-002
    Material Weakness
  • 530130 2021-002
    Material Weakness
  • 530131 2021-003
    Material Weakness
  • 530132 2021-003
    Material Weakness
  • 1106570 2021-002
    Material Weakness
  • 1106571 2021-002
    Material Weakness
  • 1106572 2021-002
    Material Weakness
  • 1106573 2021-003
    Material Weakness
  • 1106574 2021-003
    Material Weakness
  • 1106575 2021-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.498 Covid 19 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution Astria Toppenish Hospital $10.34M
93.498 Covid 19 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution Astria Sunnyside Hospital $8.32M
93.498 Covid 19 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution Astria Health $5.12M
93.697 Covid 19 Testing and Mitigation for Rural Health Clinics $692,349
21.029 Covid-19 Coronavirus Relief Fund $105,921