THE BRETHREN HOME COMMUNITYNon-Profit

Finding 2021-001 - Significant Deficiency in Internal Control ? Activities Allowed/Unallowed, Allowable Costs/Cost Principles, and Reporting Assistance Listing Number: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Award Number/Year: N/A / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of Provider Relief Funds (PRF) payments must also comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services (HHS). Condition / Context: The Corporation did not complete the Period 1 PRF reporting in accordance with the HHS guidance. The Corporation selected Option i for the lost revenue calculation, but excluded from patient care revenue the amount attributable to independent living related services provided to residents. There was also not a policy in place to apply a review process to the calculation. Effect: The results reported to the Health Resources & Services Administration (HRSA) were not in accordance with established U.S. Department of Health and Human Services reporting guidance. If Option i was properly reported, it would result in approximately $164,000 of additional lost revenue; however, management believes the calculation should remain the same but under Option iii, excluding independent living revenue due to the changes in that level of care being due to factors other than COVID. Questioned Costs: None reported. Cause: Management believed that the most appropriate option to select was Option i, not Option iii, based on their interpretation of the guidance. As this was the first federal program of its kind received by the Corporation, management did not have the appropriate individual assigned to review and approve the reporting prior to the submission. Recommendation: We recommend that management change their selected reporting option from Option i to Option iii in the next required submission, if revenue attributable to independent living related services will continue to be excluded from patient care revenues. View of Responsible Officials: The Corporation believes that to get the most accurate view of how COVID impacted the community that independent living revenue should be excluded. This belief is supported by planned construction that would impact current and comparative years when calculating lost revenue that was not COVID related. Therefore, the Corporation will utilize option iii for the next HHS filing.

Finding 2021-002 - Significant Deficiency in Internal Control - Review and Approval of Allowable Costs Assistance Listing Number: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Award Number / Year: N/A / 2020 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Fund (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by the U.S. Department of Health and Human Services (HHS). Activities allowed have been defined as health care related expenses used to prevent, prepare for, and respond to coronavirus or lost revenues that are attributable to coronavirus. Condition / Context: During our testing of the COVID bonus payments, we observed 2 of 40 selections that were input incorrectly into the calculation from the source documents in error and did not represent incremental costs due to COVID. Additionally, the transactions did not contain a review and approval prior to payment to detect potential errors of this nature. Effect: The Corporation lacks proper segregation of duties with respect to the calculations of the payroll bonus amount, which resulted in errors in the payroll COVID bonus calculation. Proper segregation of duties is necessary to prevent a situation where one individual handles a transaction from beginning to end in order to reduce the potential for noncompliance due to error or fraud. As a result of the lack of proper segregation of duties, noncompliance due to error or fraud occurred without being detected and corrected, timely. Questioned Costs: $2,933 Cause: The Corporation lacks a formal review policy related to the calculation of the COVID bonus payments. Recommendation: Management should implement a review process for this calculation. View of Responsible Officials: The Corporation believes the number of people involved in the process and the high-level review of the calculations were sufficient to catch material errors, but will take additional steps to review any new COVID-related bonus payments. These steps will include a secondary review of all COVID-related bonus payments that will be tracked in an Excel workbook. Additionally, the Corporation believes the lost revenue for the reported periods to be sufficient to cover any awards given.