COVENANT HEALTH, INC.

Completeness of the Schedule of Expenditures of Federal Awards - Federal Agency: Department of Health and Human Services. Award Name: Health Resources and Services Administration: Community Project Funding/Congressionally Directed Spending – Construction. Program Year: January 1, 2024 – December 31, 2024. Assistance Listing Number: 93.493. Criteria: Management is responsible for preparing a complete and accurate Schedule of Expenditures of Federal Awards. Condition: During compliance testing, it was determined that the Schedule of Expenditures of Federal Awards provided to us to begin our audit was not complete and accurate. Context: Management was unable to fully reconcile the Schedule of Expenditures of Federal Awards to the general ledger. Cause: The information contained in the Schedule of Expenditures of Federal Awards was not accurate. Effect: As a result of the condition, management was unable to fully reconcile the Schedule of Expenditures of Federal Awards to the general ledger. Recommendation: In the future, management should ensure it implements appropriate processes and controls to ensure the Schedule of Expenditures of Federal Awards contains complete and accurate data. Views of Responsible Officials: Management acknowledges the finding and will implement appropriate processes and controls to ensure the Schedule of Expenditures of Federal Awards contains complete and accurate data.

Federal Agency: Department of Health and Human Services. Award Name: American Rescue Plan Act Funding. Program Year: January 1, 2023 – December 31, 2023. Assistance Listing Number: 93.527. Criteria: Management was responsible for only charging allowable costs under the grant. Condition: During compliance testing, it was identified that an employee's wages were being charged to the grant after the employee was terminated. Context: Costs charged to the grant were inaccurate. Cause: Management did not remove the terminated employee from the grant expense calculation. Effect: As a result, amounts charged to the program were overstated by $30,884. Recommendation: Management should review the grant cost worksheet to ensure accuracy of employees prior to submitting for reimbursement. Views of Responsible Officials: Management acknowledges the finding. Management noted there was turnover in fiscal year 2023 which led to lack of some reviews. Controls have been put in place to ensure all worksheets are reviewed for accuracy by the CFO prior to requesting drawdown amount.

Finding 2022-101: Accuracy of Reporting Federal Agency: U.S. Department of Health and Human Services Award Name: COVID-19 Provider Relief Funds Program Year: Provider Relief Reporting Periods 3 and 4 Assistance Listing Number: 93.498 Criteria: Management was responsible for reporting accurate lost revenues based on the terms of the grant agreement. Condition: During compliance testing, it was identified that certain revenues included in the final report were not accurate based on the definitions of the grant agreement and supporting documentation. Context: The lost revenues reported for the periods were not accurate. Cause: The supporting documentation retained that calculated lost revenues did not agree to the financial records in the general ledger. Effect: As a result of the condition, the System?s required reporting for this grant was misstated. The misstated amount did not negatively impact the amount of lost revenue applied against funding received Recommendation: In the future, the System should ensure it implements appropriate processes and controls to ensure a review is performed prior to submission to the awarding agency. Views of Responsible Officials: Management acknowledges the finding and will submit an amended report to the awarding agency, as applicable.

Finding 2022-102: Timeliness of Reporting Federal Agency: U.S. Department of Health and Human Services Award Name: COVID-19 Provider Relief Funds Program Year: Provider Relief Reporting Period 4 Assistance Listing Number: 93.498 Criteria: Management was responsible for submitting timely reporting based on the terms of the grant agreement which specified submission through the HRSA Portal by March 31, 2023. Condition: During compliance testing, it was determined that the required filing was not submitted within the noted time frame. Context: The required submission was not submitted timely based on the terms of the grant agreement. Cause: Management has processes and controls over the reporting process, however, as result of employee turnover this procedure was not performed. Effect: As a result of the condition, required reporting was not submitted timely based on the terms of the grant agreement. Recommendation: In the future, the System should ensure it implements appropriate processes and controls to ensure required reports are filed timely in accordance with the terms of the grant agreement. Views of Responsible Officials: Management acknowledges the finding. Management is reviewing the current process and is making improvements to streamline the reporting process to ensure timely filings of the required reports to the awarding agency occur on a consistent basis.

Finding 2021-102: Accuracy of Reporting Federal Agency: U.S. Department of Health and Human Services Award Name: COVID-19 Provider Relief Funds Program Year: 2021 - Provider Relief Reporting Period 1 Assistance Listing Number: 93.498 Criteria: Management was responsible for reporting expenses related to COVID-19 based on the terms of the grant agreement. Condition: One portal of Covenant Health Inc.'s report filing from one recipient included general costs that were not specifically identifiable as COVID-19 specific expenditures based on the definitions of the grant agreement and supporting documentation. Context: The expenses reported for the period were not specifically identifiable as COVID-19. Cause: Expenses were not specifically segregated as COVID-19 related expenses. Effect: As a result of the condition, Covenant Health, Inc. required reporting for this grant included expenses not segregated as COVID-19 related. Recommendation: Covenant Health, Inc. should ensure it implements appropriate processes and controls to ensure expenses identified for reporting meet the definitions of the grant reporting. View of Responsible Officials: Personnel have been replaced/retrained and additional monitoring is being implemented.