Vandalia Health, IncNon-Profit

Disclaimer of Opinion relating to ALN#93.498 COVID-19 Provider Relief Funds (PRF) and American Rescue Plan (ARP)—MHS Condition—The accompanying Schedule of Expenditures of Federal Awards (“SEFA”) includes the COVID-19 Provider Relief Funds and American Rescue Plan (“PRF”) programs for Monongalia Health System, Inc (MHS), which was acquired by the System in September 2022. It is appropriate for MHS’s PRF to be included on the consolidated SEFA as of December 31, 2023. However, PRF are unique in that the compliance requirements apply to MHS operational results from prior periods which predate the business acquisition and were audited by other auditors. As such, the MHS PRF is unaudited. Effect—The auditors are faced with practical challenges to access all the financial records or obtain sufficient corroborative evidence from these periods before the acquisition. Consequently, we were unable to obtain sufficient appropriate audit evidence for the direct and material compliance requirements and therefore, we were unable to perform any audit procedures on the COVID-19 Provider Relief funds and American Rescue Plan program related to MHS as of December 31, 2023, and we do not express an opinion on the compliance of MHS with the specific requirements of PRF. Cause—Monongalia Health System, Inc (MHS) was acquired by the System in September 2022. As an acquired entity, MHS changed its fiscal year end from June 30th to December 31st to align with the System’s fiscal year-end. MHS was officially consolidated with the System’s financial statements since. Therefore, there are practical challenges to report the PRF balances reportable on the December 31, 2023 SEFA as the lost revenues and expenditures relate to periods audited by the predecessor auditor. Criteria—Based on CFR § 200.518 Major program determination, MHS’s PRF program is classified as a high-risk type A program and therefore, a major program. However, due to the circumstances detailed above, the auditors are not able to issue an opinion for the program. Context/Perspective—This issue is isolated to MHS PRF funds that were reportable as a of December 31, 2023 as the underlying lost revenue and expenses related to periods prior to the System’s acquisition of MHS on September 1, 2022. As there is no clear guidance in member substitution transactions that cross over reporting periods, the System has included the program on the SEFA; however, the auditors were unable to audit the program. Questioned Costs—There were approximately $6,469,944 of MHS PRF monies reported on the SEFA. Recommendation—We recommend that the System obtain approval from department of HHS and other regulatory authorities and agree to a path forward when member substitutions arise to determine the most appropriate reporting treatment and allow for a practical audit of funds.

Disclaimer of Opinion relating to ALN#93.498 COVID-19 Provider Relief Funds (PRF) and American Rescue Plan (ARP)—MHS Condition—The accompanying Schedule of Expenditures of Federal Awards (“SEFA”) includes the COVID-19 Provider Relief Funds and American Rescue Plan (“PRF”) programs for Monongalia Health System, Inc (MHS), which was acquired by the System in September 2022. Under the PRF federal reporting guidance, MHS’s PRF program should be included on the SEFA no earlier than fiscal year end of December 31, 2022. It is appropriate for MHS’s PRF to be included on the consolidated SEFA as of December 31, 2022. However, PRF are unique in that the compliance requirements apply to MHS operational results from prior periods which predate the business acquisition and were audited by other auditors. As such, the MHS PRF is unaudited. Effect—The auditors are faced with practical challenges to access all the financial records or obtain sufficient corroborative evidence from these periods before the acquisition. Consequently, we were unable to obtain sufficient appropriate audit evidence for the direct and material compliance requirements and therefore, we were unable to perform any audit procedures on the COVID-19 Provider Relief funds and American Rescue Plan program related to MHS as of December 31, 2022, and we do not express an opinion on the compliance of MHS with the specific requirements of PRF. Cause—Monongalia Health System, Inc (MHS) was acquired by the System in September 2022. As an acquired entity, MHS changed its fiscal year end from June 30th to December 31st to align with the System’s fiscal year-end. MHS was officially consolidated with the System’s financial statements as of fiscal year end December 31, 2022. Therefore, there are practical challenges to report the PRF balances reportable on the December 31, 2022 SEFA as the lost revenues and expenditures relate to periods audited by the predecessor auditor. Criteria—Based on CFR § 200.518 Major program determination, MHS’s PRF program is classified as a high-risk type A program and therefore, a major program. However, due to the circumstances detailed above, the auditors are not able to issue an opinion for the program. Context/Perspective—This issue is isolated to MHS PRF funds that were reportable as a of December 31, 2022 but the underlying lost revenue and expenses related to periods prior to the System’s acquisition of MHS on September 1, 2022. As there is no clear guidance in member substitution transactions that cross over reporting periods, the System has included the program on the SEFA; however, the auditors were unable to audit the program. Questioned Costs—There were approximately $7,051,383 of MHS PRF monies reported on the SEFA. Recommendation—We recommend that the System obtain approval from department of HHS and other regulatory authorities and agree to a path forward when member substitutions arise to determine the most appropriate reporting treatment and allow for a practical audit of funds. Views of Responsible Officials and Planned Corrective Action—Management agrees with the finding and has reached out to contacts at HRSA regarding the preferred treatment of the MHS PRF funds but have not received a response. Kevin Gessler, Vice President at MHS, is the contact person at the System. The expected completion date to receive a response and resolve is September 30, 2024.