SENIOR CHOICE, INC.Non-Profit

Finding 2021-001 - Significant Deficiency in Internal Control - Activities Allowed or Unallowed and Allowable Costs/Cost Principles 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 Organization lacks proper segregation of duties with respect to the calculations of the COVID bonus payment amounts, which resulted in errors in the calculations. 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 an error occurred without being detected and corrected, timely. Questioned Costs: $1,500 Cause: The Organization lacks a formal review policy related to the calculation of the COVID bonus payments. Recommendation: Management should implement proper segregation of duties including a review and approval process for this calculation. Further, management should review the full list of COVID bonus payment amounts to determine if there are additional errors present. View of Responsible Officials: The Organization will implement a review process for the payroll bonus calculation. After the information is gathered and reported by the payroll accountant, the Vice President of Operational Finance will review and approve the data. After review and documentation that there has been a review, the reporting will be submitted. Additionally, the Organization has sufficient additional infection control expenses to cover the questioned costs.

Finding 2021-002 - Significant- Deficiency in Internal Control - Activities Allowed or 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. Provider Relief Funds (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 expense used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. Recipients may choose to apply PRF payments toward lost revenues using one of three options: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted and actual patient care revenues, or Option iii: calculated by any reasonable method of estimating revenues. Condition / Context: The Organization selected option i to account for their lost revenue used to apply towards their PRF payments. In the Organization?s reporting submissions, they only included lost revenues from skilled nursing services and erroneously excluded from their lost revenues amounts attributable to personal care and independent living services provided to residents. This was observed for the period one and period two reports submitted. Effect: The amounts reported to 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 $724,000 of additional lost revenue. Questioned Costs: None reported. Cause: Management incorrectly interpreted the Guidance to exclude personal care and independent living revenue as it was not impacted as significantly by the COVID-19 pandemic. As this was the first federal program of its kind received by the Organization, management did not have the appropriate individual assigned to review and approve the reporting prior to the submission. Recommendation: We recommend that management review their process and procedures to ensure that lost revenues are calculated in accordance with U.S. Department of Health and Human Services reporting guidance. The lost revenue calculation should be corrected on the reporting submitted for the next period. View of Responsible Officials: The Organization will correct the lost revenue calculations in future reporting periods to include all lost revenues amounts attributable to personal care and independent living services provided to residents.