The New York and Presbyterian HospitalNon-Profit

Criteria or specified requirement (including statutory, regulatory, or other citation: 2 CFR section 200.303 of the Uniform Guidance requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The 2 CFR section 200.303 indicates that the internal controls required to be established by a non-federal entity receiving federal awards should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission. 2 CFR section 200.403 states the following: “Costs must meet the following general criteria in order to be allowable under Federal awards: (a) be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles; (b) conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items; (c) be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity; (d) be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost; (e) be determined in accordance with generally accepted accounting principles; (f) not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period; (g) be adequately documented; and (h) cost must be incurred during the approved budget period.” Condition: The New York and Presbyterian Hospital (the Hospital) has processes and internal controls in place to ensure costs submitted to the Federal Emergency Management Agency (“FEMA”) in relation to the Disaster Grants – Public Assistance program were eligible under FEMA’s provisions and were allowable COVID-19-related expenses. These internal controls include ensuring completeness and accuracy of the costs to ensure the costs comply with the terms and conditions of the award. The Hospital’s internal controls did not identify that management inadvertently included certain costs in the FEMA reimbursement submission that were based on the invoiced amounts from a specific vendor that differed from the actual amounts paid by the Hospital. Cause: The Hospital’s internal controls did not identify that management inadvertently included certain costs in the FEMA reimbursement submission that were based on the invoiced amounts from a specific vendor that differed from the actual amounts paid by the Hospital. The difference was due to payment discount provisions utilized in accordance with a previously existing vendor agreement for one specific vendor, resulting in an overstatement of amounts included in the FEMA reimbursement request submitted in the Grants Portal. Additionally, through the Uniform Guidance audit procedures and management’s further review of submitted costs, duplicated items totaling approximately $184,400 were identified within the population of submitted costs. Effect or potential effect: Due to the above, there is a misstatement of the amounts reported in the FEMA reimbursement submission in the Grants Portal resulting in questioned costs of approximately $268,900. Questioned costs: Approximately $268,900, representing the difference between the amounts paid for certain invoices as compared to the amounts incorrectly submitted in the Grants Portal and certain duplicated items. Context: During our testing of FEMA expenditures underlying the grant for FEMA project number 140215, we identified expenditures that were paid at discounted amounts (in accordance with payment terms with a specific vendor) but included in the FEMA reimbursement submission in the Grants Portal at the full invoice amount, without consideration to the discount taken. The invoiced amounts exceeded the actual amounts paid by approximately $84,500. The terms and conditions of the FEMA award require recipients to submit eligible costs incurred limited to the amount paid, thus this issue results in questioned costs. Additionally, through the Uniform Guidance audit procedures and management’s further review of submitted costs, duplicated items totaling approximately $184,400 were identified within the population of submitted costs. The total FEMA expenditures for project number 140215 included on the Hospital’s schedule of expenditures of federal awards is $174.1 million, which includes $16.9 million related to the specific vendor for the payment-related issue described above. The FEMA-obligated amount under this grant is the third obligation for costs that the Hospital submitted to FEMA for reimbursement under this project. The project was initially established through FEMA’s optional expedited funding application and subsequently amended to a streamlined project under FEMA’s provisions; the amendment also extended the grant period beyond the initial ninety-day period of the original application to cover the period through July 1, 2022. The Hospital has adjusted for a portion of the questioned costs in a subsequent claim submission and management has indicated that they will follow this same process for the balance of the questioned cost items. Additionally, management anticipates that any reimbursement revisions, such as for the questioned costs described above, identified related to the third obligated amount will be addressed through the reconciliation of the overall project cost, inclusive of expected payments to the Hospital for additional eligible costs that have been submitted by the Hospital. Identification as a repeat finding, if applicable: The finding is not a repeat finding. Recommendation: Management should correct the cost summary schedule for this project during the reconciliation of the overall project cost, or address in another manner as directed by FEMA. Additionally, management should continue to review on an ongoing basis for similar costs included in the FEMA reimbursement submission for potential submission errors related to discounted amounts. View of responsible officials: Management agrees with the finding.