Plaza Nursing Home Company, Inc.Non-Profit

Statement of Condition:  The reporting package and data collection form for the year ended December 31, 2022 was not filed by the deadline of September 30, 2023, to the Federal Audit Clearinghouse. Criteria:  In accordance with 2 CFR Section 200.512(a), the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of Management and Budget. Effect of Condition:  The reporting package and data collection form for the year ended December 31, 2022, was not accessible to the Federal Audit Clearinghouse in a timely manner. Cause of Condition:  Due to turnover in finance department personnel, combined with resource issues, the reporting package and data collection form filing was not submitted within the deadline. Further, the 2021 Uniform Guidance audit will still in process which required that to be completed before the 2022 Uniform Guidance audit could be filed and submitted to the Federal Audit Clearinghouse. Recommendation:  We recommend Cottages adopt policies and procedures, including tracking and monitoring of reporting requirements, to ensure that the audit, reporting package, and data collection form are electronically filed with the Federal Audit Clearinghouse within the applicable deadline. Views of Responsible Official:  We agree with the recommendation. See corrective action plan.

Statement Condition: The Period 3 and 4 Provider Relief Fund reports were submitted with total revenue/net resident charges for each quarter of 2019, 2020, 2021 and 2022 and in total that did not agree to the net resident service revenues per the quarterly internal and year end audited financial statements. Further, Cottages did not update prior year’s net resident service revenue information in the reporting system. Criteria:  Under the terms and conditions of the awards, accurate amounts that agree with the entity's financial records are required to be reported in the Provider Relief Fund report. Cause of Condition:  Cottages did not include all third-party payor revenue sources and/or there were year-end audit adjustments that were recorded after the submission of the Period 3 and 4 Provider Relief Fund reports. Further, the reporting system does not allow for prior periods to be updated for errors. Effect of Condition:  The auditee reported actual annual revenues that were understated by $941,108 in 2109, $63,483 in 2020, $989,746 in 2021, and $84,602 in 2022 which totals $2,078,939. Despite the understatement of revenues for the respective years, there was still sufficient corrected lost revenues over years 2019-2022 of $6,122,747 that far exceeded the amount of lost revenues claimed for Reporting Period 4 of $820,138. Therefore, Cottages incurred enough lost revenue for the funds received in 2021. Recommendation:  We recommend that management implement a control process which includes a documented secondary review of approval of the calculation of the lost revenue. Due to the untimely reporting of this finding, Cottages is past the timeframe for filing revisions to the Period 1, 2 and 3 reports. We also recommend Cottages maintain documentation that details they incurred enough lost revenues to continue to qualify for the full amount of the funding. Views of Responsible Official:  Management agrees with the recommendation. See corrective action plan.

Statement of Condition:  The reporting package and data collection form for the year ended December 31, 2021, was not filed by the deadline of September 30, 2022, to the Federal Audit Clearinghouse. Criteria:  In accordance with 2 CFR Section 200.512(a), the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of Management and Budget. Effect of Condition:  The reporting package and data collection form for the year ended December 31, 2021, was not accessible to the Federal Audit Clearinghouse in a timely manner. Cause of Condition:  Due to turnover in finance department personnel, including the Chief Financial Officer, and the delays in recreating the support for the Provider Relief Reporting in Periods 1 and 2, combined with resource issues, the reporting package and data collection form filing was not submitted within the deadline. Recommendation:  We recommend Cottages adopt policies and procedures, including tracking and monitoring of reporting requirements, to ensure that the audit, reporting package, and data collection form are electronically filed with the Federal Audit Clearinghouse within the applicable deadline. Views of Responsible Official:  We agree with the recommendation. See corrective action plan.

Statement of Condition:  As part of our compliance testing, we reviewed certified submissions to the HHS portal for both Period 1 and Period 2. As a result of this review, we noted that certain expenses were claimed in Period 1 that management did not intend to claim, rather, they intended to utilize lost revenues reported in the submissions. Criteria:  Cottages is required to submit Period 1 and Period 2 Provider Relief Fund (PRF) reports to the Department of Health and Human Services (HHS). The reports require providers to account for and certify that eligible expenses and lost revenue are used to determine proper usage and recognition of funds. Effect of Condition:  While Cottages incurred more than sufficient eligible expenditures and lost revenues to exhibit that Cottages funds were fully utilized, the reporting of the Period 1 and Period 2 expenditures were incorrect, and management did not intend to claim certain expenditures through the PRF Funding. As a result, the Period 1 and Period 2 reporting does not tie to management’s underlying supporting documentation for the Period 1 and Period 2 PRF reports, since expenditures claimed were intended to be a lesser amount than reported. Cause of Condition:  Cottages included certain eligible expenses in its Period 1 Provider Relief Fund reports due to evolving guidance and availability of funding streams at the time the reporting was due. Upon further guidance of the funding over the period of performance, lost revenue was intended to be utilized for use of most of the funding received, versus expenditures. Based on the guidance in existence and funds available at the time, management believed Cottages to be in compliance based on HHS Portal Instructions at the time of submission. Recommendation:  We recommend Cottages maintain documentation that details they incurred enough eligible expenditures and lost revenues to continue to qualify for the full amount of the funding, even though expenditures and lost revenues claimed on the Period 1 and Period 2 report were not what they intended. Due to the untimely reporting of this finding, Cottages is past the timeframe for filing revisions to Period 1 and Period 2 PRF reports. Views of Responsible Official:  We agree with the recommendation. Cottages incurred significant lost revenue and eligible expenditures exceeding the amount of the funds received. See corrective action plan.

Statement Condition: During out audit, it was determined that the original supporting documentation for the PRF Period 1 and 2 Report submissions did not agree to the actual submissions and that there was no evidence retained that the PRF Period 1 report was reviewed and approved by a separate individual outside of the preparer. Further, certain personnel expenses included in other PRF expenses were not supported by documented time studies to substantiate the percentage of salaries and fringe benefits included in PRF Periods 1 and 2 Reports. Criteria:  2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Cause of Condition:  There was turnover in the Chief Financial Officer (CFO) position and finance department during the period that the PRF Period 1 and 2 report submissions were required to be submitted and supporting records could not be located. Although outside consultants were brought in before a new Chief Financial Officer was hired, due to the turnover and small size of the finance department, the auditee did not have an internal control process in place to ensure an independent review was done of the submission and supporting documentation, including documented time studies. Effect of Condition:  While Cottages incurred more than sufficient eligible expenditures and lost revenues to exhibit that Cottages funds were fully utilized, the reporting of the Period 1 and Period 2 expenditures was not supported by the original documentation maintained by the former CFO and outside consultants for certain personnel and fringe benefits, including time studies for allocation of personnel. Recommendation:  We recommend that management implement a control process which includes a documented secondary review of approval. Due to the untimely reporting of this finding, Cottages is past the timeframe for filing revisions to Period 1 and Period 2 PRF reports. Therefore, we also recommend Cottages maintain documentation that details they incurred enough eligible expenditures and lost revenues to continue to qualify for the full amount of the funding, even though certain expenses claimed on the Period 1 and Period 2 Reports are not supported by documented time studies. Views of Responsible Official:  Management agrees with the recommendation. See corrective action plan.

Statement Condition: The Period 1 Provider Relief Fund report was submitted with total revenue/net patient charges for each quarter of 2019 and 2020 and in total that did not agree to the net resident service revenues per the quarterly internal and year end audited financial statements. Criteria:  Under the terms and conditions of the awards, accurate amounts that agree with the entity's financial records are required to be reported in the Provider Relief Fund report. Cause of Condition: It appears that Cottages did not include all third-party payor revenue sources and did not reconcile the submitted numbers back to the audited financial statements. Effect of Condition:  The auditee reported actual revenues that were understated by $941,108 and $63,483 in 2019 and 2020, respectively. However, the reporting did not impact the PRF funding received as only $140.98 of lost revenue was utilized for PRF Reporting Period 1. Recommendation:  We recommend that management implement a control process which includes a documented secondary review of approval. Due to the untimely reporting of this finding, Cottages is past the timeframe for filing revisions to Period 1 and Period 2 PRF reports. Therefore, we also recommend Cottages maintain documentation that details they incurred enough lost revenues to continue to qualify for the full amount of the funding. Views of Responsible Official:  Management agrees with the recommendation. See corrective action plan.