St. John's Riverside HospitalNon-Profit

Criteria In accordance with the Federal Emergency Management Agency (FEMA) Public Assistance Program and Policy Guide, version 2.1, Chapter 2: V.P., costs are not eligible for reimbursement if an entity received funding from another source (i.e. patient revenue, insurance, etc.) for the same work that FEMA funded. This is referred to by FEMA as ?duplication of benefits?. Additionally, FEMA issued a Memorandum on February 15, 2023, titled ?Hypothetical Reasonable Applicant Methods? that illustrates the basic elements of a method for accounting for (estimating) the amount of duplication of benefits within net patient service revenue. Condition and Context In July 2023, the Hospital received an Applicant Review Memo from the Homeland Security Operational Analysis Center (HSOAC) that it has conducted a review for duplication of benefits and summarizing a recommendation for the reduction of the Hospital?s COVID-19 Public Assistance (PA) equipment expenditures within previously obligated FEMA projects, in the amount of $1.2 million. The amount in question was derived from a calculation provided by the HSOAC, which determined a disallowable threshold percentage of equipment using the Hospital?s most recent pre-pandemic year (2019) and calculating a proportion of equipment expenses to total patient care revenue. This threshold percentage is then multiplied by total patient care revenue for the fiscal years ending December 31, 2020 and 2021, respectively, to determine the potential disallowable costs. The Hospital believes that there has been no duplication of benefits based on the use of an alternative methodology. The Hospital intends to appeal the disallowed costs. Based on the fact that FEMA allows for alternative methods to calculate the potential duplication of benefits amount and the lack of clarity of what constitutes a ?Hypothetical Reasonable Applicant Method? in the FEMA guidance, we are unable to obtain sufficient and appropriate audit evidence as to whether the disallowed costs of $1.2 million are allowable. Questioned costs Cannot be determined. Statistical Sample Not applicable Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend the Hospital work with FEMA to identify an acceptable methodology to calculate (estimate) the amount (if any) of the duplication of benefits. Additionally, we also recommend the Hospital follow the FEMA appeals process to resolve their disagreement of the disallowed (deobligated) costs. View of Responsible Official Management agrees with the auditor?s recommendation and will work with FEMA to identify an acceptable methodology to calculate if any duplication of benefits. The Hospital will also appeal the disallowed costs presented by FEMA.

2020 001 Reporting Federal Communications Commission ? COVID-19 Telehealth Program (Federal assistance listing number 32.006) Federal Grant Number and Years: 0494 (3/13/2020-?12/31/2020) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Prior Year Findings: None Finding Type: Significant Deficiency Criteria In accordance with 2 CFR ? 200.510 (b) Schedule of expenditures of Federal awards (SEFA), St. John?s Riverside Hospital and Subsidiary (the Hospital) must prepare a schedule of expenditures of Federal awards for the period covered by the Hospital?s financial statements, which must include the total Federal awards expended as determined in accordance with ? 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass through entity and identifying number assigned by the pass through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs, also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in ? 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. Include notes that describe that significant accounting policies used in preparing the schedule and notes whether or not the auditee elected to use the 10% de minimis cost rate as covered in ? 200.414.In addition, in accordance with 2 CFR ? 200.502(b), Basis for determining Federal awards expended, the Hospital is also required to make the following disclosures for Loan programs: (1) Value of new loans made or received during the audit period; plus (2) Beginning of the audit period balance of loans from previous years for which the Federal Government imposes continuing compliance requirements; plus (3) Any interest subsidy, cash, or administrative cost allowance received. Additionally, in accordance with the OMB Uniform Guidance, the Hospital shall maintain internal controls over Federal programs designed to provide reasonable assurance that the SEFA presentation and disclosure is complete and accurate in order to be in compliance with the OMB Uniform Guidance noted above. Condition and Context: While the Hospital has a process in place and internal control designed to ensure the completeness and accuracy of the SEFA and related disclosures, the review of the SEFA to identify all the expenditures incurred in fiscal year 2020 as part of that process was not operating effectively. The Hospital did not include all the expenditures incurred from March 13, 2020 to December 13, 2020 for the COVID-19 Telehealth Program (Federal assistance listing number 32.006) on the SEFA for the year ended December 31, 2020. The complete expenditures related to the program were added to the SEFA upon identification from the auditor and became a major program. Based on procedures performed, the SEFA was complete and accurate after these adjustments. Cause: The Hospital?s grant manager did not properly identify all the expenditures related to the grant incurred in fiscal year 2020 to ensure the completeness of SEFA, and the Hospital?s review process over the preparation of the SEFA did not initially detect this incompleteness. Effect: The Hospital?s SEFA may not be complete or accurate in future reporting periods. Questioned costs: None as this is an internal control finding only. Recommendation: We recommend that the Hospital strengthen its processes and internal controls to ensure that the grant manager is aware of all Federal grant?s reporting requirements and with the preparation of the SEFA. Also, we recommend that a director from the Hospital?s corporate finance department perform a detail review on the SEFA to ensure the completeness and accuracy of the SEFA with a particular focus on grants with time gaps between when the expenditures are incurred and when reimbursements are received. View of Responsible Official Management agrees with the auditor?s recommendation and will strengthen procedures on the preparation and review of the SEFA and related disclosures to ensure they are prepared completely and accurately.