STAPELEY HALL-WESLEY ENHANCED OBL GRP-COVID FUNDSNon-Profit

Finding 2021-001 - Material Weakness in Internal Control - Activities Allowed and Unallowed; Allowable Costs/Cost Principles Assistance Listing Number: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Not applicable Award Number/Year: N/A / 2021 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 revenues 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: A sample of 60 invoices was selected for testing. During our testing, we noted the following exceptions: - Four invoices selected for testing contained items that were not clearly identified as being used to prevent, prepare for or respond to coronavirus. Further, the Obligated Group did not have a formal policy to address the allocation of shared items to the program that may benefit multiple uses. - One invoice selected for testing did not contain any supporting documentation. - 17 invoices selected for testing were lacking documentation of review and approval of the items charged to the program. However, these invoices were for allowable expenses described in the PRF terms and conditions. This was not a statistically valid sample. Effect: As a result of the control deficiencies noted, there were costs charged to the program that did not contain the appropriate documentation and may have been for unallowable purposes or inconsistent with the terms and conditions of the award. Questioned Costs: $2,785 related to the items that were not clearly identified as being used to prevent, prepare for or respond to coronavirus, and the invoice that did not contain any supporting documentation. Cause: The Obligated Group lacked formal approved policies and procedures related to the administration of the award. Recommendation: We recommend that management develop and implement formal policies and procedures for administration of the federal award program that includes assigning an individual with the appropriate skills, knowledge and expertise of the award to review and approve expenditures prior to being allocated to the program. Views of Responsible Officials: The items charged were for toilet paper, towel rolls and trash bags purchased and were items designated for COVID areas and disposal of waste. Labels were used to label COVID supplies. Additionally, the employee who made the purchase of the one item with missing descriptions on the support no longer works for the Obligated Group. As such, additional documentation over the purchase could not be located. The Obligated Group will implement policies and procedures to ensure there is appropriate review of costs charged to the program if any additional similar funding is ever sought or received in the future. Responsible Party: Jeff Petty, President and CEO Estimated Time to Completion: 30 days Corrective Action Not Started or In Progress: In progress. The Obligated Group will implement policies and procedures to ensure there is appropriate review of costs charged to the program if any additional similar funding is ever sought or received in the future.

Finding 2021-002 - Material Weakness in Internal Control - Reporting Assistance Listing Number: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Not applicable Award Number/Year: N/A / 2021 Compliance Requirement: Reporting Criteria: All recipients of Provider Relief Fund (PRF) payments must comply with the reporting requirements described in the PRF terms and conditions and specified in the directions issued by the U.S. Department of Health and Human Services (HHS) (the Guidance). Condition/Context: Of the nine submissions selected for testing, two submissions claimed expenses that did not agree to underlying expense details and two of the Period 2 submissions claimed expenses that were previously claimed in their Period 1 submissions. Additionally, the Obligated Group did not correctly apply the Guidance in their calculation of lost revenues. The Obligated Group selected reporting Option 2 and erroneously excluded amounts attributable to amortization revenue of $1,830,218, which would have increased the amount of lost revenue. Furthermore, there was no formal documentation of review and approval of the nine submissions selected for testing or of the lost revenue calculations prior to them being submitted. Effect: The amounts reported to Health Resources and Services Administration (HRSA) were not in accordance with the established HHS reporting requirements. Questioned Costs: $42,179. Cause: Management failed to review the submissions prior to finalizing. Recommendation: We recommend that management develop and implement a formal policy that includes assigning a knowledgeable person to review and approve expenditures prior to being charged to the program. Additionally, we recommend that management develop and implement a formal policy that includes assigning a knowledgeable person to review and approve lost revenue calculations and submissions prior to being finalized. Views of Responsible Officials: The Obligated Group agrees with the finding. It is believed that verifiable lost revenues were more than sufficient to fully cover the funds received even eliminating these expenditures. Nonetheless, if any additional similar funding is ever sought or received, the Obligated Group will implement policies and procedures to ensure there is appropriate review of the submissions and lost revenue calculations. Responsible Party: Jeff Petty, President and CEO Estimated Time to Completion: 30 days Corrective Action Not Started or In Progress: In progress. The Obligated Group will implement policies and procedures to ensure there is appropriate review of the submissions and lost revenue calculations.