SPRINGPOINT SENIOR LIVING, INC.Non-Profit

Finding 2021-001 - 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: Not Applicable Award Number / Year: Not Applicable / 2021 Criteria: Uniorm Administrative Requirements, 45 CFR 75.303 Internal Controls: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition/Context: During the testing of activities allowed or unallowed, allowable costs/cost principles we observed bonus payments that did not contain a documented review and approval of bonuses paid. The Company did have established policies for these bonus programs, and such payments were deemed to be allowable. Bonuses paid were supported by source documents evidencing the employee met the criteria for bonus payment. However, the source documents did not contain evidence of approval prior to payment. Effect: Transactions containing no evidence of review or approval could result in unallowable costs being charged to the federal program. Questioned Costs: None reported. Cause: As a result of COVID-19 pandemic, the Company experienced an unprecedented increase in the demand on existing resources across all lines of business. The Company prioritized the health and safety of staff and residents first and foremost. While the Company's policy is to document a review and approval of bonuses, resource constraints and competing priorities led to the missing documentation noted in testing. Recommendation: We recommend that management review their existing policies and procedures to ensure that during times of increased demand, the review and approval of transactions charged to the federal award may still be consummated through the use of alternative reviews and approvals. Views of Responsible Officials: Management's adherence to internal controls over review and approval of allowable costs is paramount. Multiple ways to ensure accurate payroll processing are in place, including various monitoring reports that are provided and reviewed throughout all levels of the organization. In a very small number of circumstances, supervisors were unable to document their approvals. Operating in an unprecedented pandemic, management's ultimate responsibility was the safety and care of our residents and employees.