SOUTHERN OHIO MEDICAL CENTER AND SUBSIDIARIES

Assistance Listing, Federal Agency, and Program Name - 93.498, U.S. Department of Health and Human Services, COVID-19 - Provider Relief Fund and American Rescue Plan Rural Distribution Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The ARP Rural Fund Payment Terms and Conditions specify that control and use of the ARP distribution must be delegated to the recipient entity that was eligible for and received the payment. The Post Payment Notice of Reporting Requirements for Provider Relief Fund Distributions and American Rescue Plan Distributions dated April 7, 2023 requires a parent entity to report on it's subsidiaries use of the APR Rural Payments. Condition - SOMC Medical Care Foundation, Inc. (MCF) received $1.28M of ARP funding during period 4. As the recipient entity, MCF used the ARP funding in accordance with the terms and conditions, however the reporting on the use of MCF's ARP distributions was not properly completed. The parent company, Southern Ohio Medical Center, completed a consolidated period 4 report, which is appropriate based on the reporting requirements, however the expenses that were reported for the use of the $1.28M received by MCF were expenses of the parent company, not expenses of MCF. Questioned Costs - None Identification of How Questioned Costs Were Computed - SOMC Medical Care Foundation, Inc. had $1.3M of lost revenue during the period of performance, which was reported within the period 4 portal submission and was not applied to any other funding sources, therefore while the reporting on the use of the funds was incorrect as described above, the recipient entity did have allowable expenses/lost revenue to support the expenditures on the SEFA as of June 30, 2023, therefore creating no questioned costs. Context - The Organization reported expenses of the parent company rather than expenses of the recipient entity, MCF, when reporting on the use of the period 4 ARP distributions. Cause and Effect - The Organization was not aware that allowable expenses/lost revenue reported in the PRF Reporting Portal for ARP funding had to be expenses/lost revenue of the recipient entity, therefore the reporting on MCF's use of the ARP distributions was not completed in accordance with the reporting requirements. Recommendation - The Organization should review all applicable terms and conditions and reporting requirements for funds received. Views of Responsible Officials and Corrective Action Plan - Management of Southern Ohio Medical Center and Subsidiaries are committed to complying with all terms, conditions, and reporting requirements related to funds received. Management will carefully read and follow all notices relating to reporting requirements and terms and conditions for each type of future funds awarded, paying particular attention to requirements as they pertain to parent and subsidiary reporting. In addition, SOMC will ensure that any and all updated guidance provided after the receipt of funds is reviewed and included in the application of used funds. Although, SOMC incorrectly reported the use funds received for the subsidiary MCF on the consolidated period 4 report, it is important to note that the ARP funds were used and applied to more than $1.3 million of lost revenue during the expense and lost revenue period. SOMC management cannot amend the period 4 report to reflect this, but management has updated the detailed internal records identifying the use of funds by applying $1.28 million of MCF lost revenue to use of funds for the appropriate periods.

CFDA Number, Federal Agency, and Program Name - - 93.498, Health and Human Services, COVID-19 Provider Relief Fund. Finding Type - Material Weakness and material noncompliance with laws and regulations. Repeat finding - No. Criteria - Unreimbursed covid expenses reported within the HHS reporting portal should be properly supported and reviewed for accuracy. Condition - Personal protective equipment expenses originally input into the HHS portal submission for period one were $3,363,770. During the audit, the client was only able to provide support for $1,324,312 of personal protective equipment expenses that were incurred during the period of performance from 1/1/2020 to 6/30/2021. The original amount reported in the portal included purchase orders and invoices for personal protective equipment, which resulted in certain costs being double counted in the clients original analysis, causing the overstatement. Questioned Costs - None. Identification of How Questioned Costs Were Computed - While the client was not able to support $2,039,458 of the personal protective equipment expenses that were originally input into the portal submission, the client did incur and track other unreimbursed covid expenses that were not input into the "Other PRF Expenses" section of the portal submission. The client provided adequate support for an additional $2,039,458 of covid payroll expenditures that were incurred during the same period of performance (1/1/2020-6/30/2021), which were reconciled to the underlying accounting records, payroll journals, and subjected to allowability testing during our audit. No issues were noted during testing of the additional payroll expenses used to support the total expenditures reported on the SEFA, therefore we concluded there were no questioned costs. Context - The client input $17,912,327 of PRF expenses in the period one portal submission, but was unable to provide support for $2,039,458 that was included in the population of expenses. The client did not perform an adequate review of the underlying detail for personal protective equipment expenses to ensure expenses were properly accumulated and not double counted. Cause and Effect - The lack of review of expenditures entered into the HHS reporting portal can cause improper reporting of allowable expenditures to the federal agency to justify the use of the federal awards. Recommendation - Expenses accumulated and reported to HHS through the portal submission should be reviewed and approved by the appropriate individuals to ensure accuracy and completeness of the data reported on the use of the federal awards. Views of Responsible Officials and Planned Corrective Actions - Management will use data query techniques to extract data from the materials management and inventory systems to obtain the correct cost of COVID related PPE items. In addition, Management will ensure that all data is validated and supported by a paid invoice. Management will internally audit and validate costs prior to HHS portal submission. Management will also correct any future portal submissions with this corrected data.