MUNSON HEALTHCARE AND SUBSIDIARIESNon-Profit

ALN, Federal Agency, and Program Name – 93.912, U.S. Department of Health and Human Services, Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement Federal Award Identification Number and Year – HB1RH49873-01 & HB1RH49873-02, 2025 & 2025 Pass through Entity – N/A Finding Type – Material weakness and material noncompliance with laws and regulations Repeat Finding – No Criteria – Per the FFATA Act (Pub. L. 109–282) and 2 CFR § 170.200–220, recipients of federal awards must report applicable subaward data in SAM.gov in a timely and accurate manner. The reporting requirement applies to all active federal awards subject to FFATA. Condition – Testing identified that the Organization issued subawards under ALN 93.912 but did not submit the required FFATA subaward reports to SAM.gov during the audit period. After identification of this noncompliance, the Organization submitted the required FFATA subaward report to SAM.gov. Questioned Costs – None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context – During the audit period, the Organization received federal funding under the Rural Health Care Services Outreach Program (ALN 93.912) from the U.S. Department of Health and Human Services. As part of carrying out the grant, the Organization issued a subaward to a clinic to support program objectives. Because the subaward exceeded the $30,000 reporting threshold, the Organization was required to submit subaward information in the FFATA Subaward Reporting System (SAM.gov) no later than the end of the month following each subaward obligation. The following table summarizes the transactions examined and the non-compliance identified: Cause and Effect - The Organization lacked internal controls to ensure FFATA reporting requirements were identified and monitored. Responsibilities for FFATA reporting were not assigned, and no procedures were in place to track subawards or trigger reporting obligations. Failure to submit FFATA reports timely results in noncompliance with federal transparency requirements and limits publicly available information regarding federal subaward spending. Recommendation – The Organization should develop and implement internal controls to ensure compliance with FFATA reporting requirements, including assigning responsibility for tracking subaward obligations, establishing procedures for timely SAM.gov reporting, and performing periodic monitoring to verify ongoing compliance. Views of Responsible Officials and Corrective Action Plan – Management accepts the finding and has already taken steps to file the missing report and update their policies to ensure all future reports are filed as required.

Assistance Listing Number, Federal Agency, and Program Name 93.155, U.S. Department of Health and Human Services, COVID 19 Rural Health Research Centers Federal Award Identification Number and Year N/A, 2022 Pass through Entity Michigan Center for Rural Health Finding Type Significant deficiency and material noncompliance with laws and regulations Repeat Finding No Criteria Per review of the federal agency grant agreements, Munson Healthcare and Subsidiaries (the "Organization") was required to complete quarterly reporting on the funding received. The reports were required to follow various directions, as outlined in the reporting template. These directions included, but were not limited to, reporting on the amount of funding spent to date and reporting on the types of expenses for which the funding was used. Condition The Organization's controls in place over reporting submissions did not identify that the guidelines were not followed related to the options selected to indicate to the awarding agency how funding was spent. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Refer to context below for additional information. Context Quarterly reporting was required for each award obtained during 2022. The Organization ensured that all required reporting was completed and submitted within the required timeline; however, the Organization did not check the appropriate boxes to indicate how the funding had been spent. Additionally, the second and third quarter reports did not indicate that any funding had been spent by the Organization when, in fact, all funding was spent in the second quarter. Cause and Effect At the time reports were submitted, the Organization concluded to check various boxes, indicating all possible types of expenditures that could be used to support the funding. The decision to do this was made as a result of a large pool of expenses and grants and the need for time to sort through expenses and apply them to the grants as appropriate based on the grant terms. The selection of too many boxes ultimately led to misreporting on the uses of funding once specific expenses were allocated to the funds. Since an amended report was not submitted, the submitted reports were concluded to be inaccurate, but the schedule of expenditures of federal awards was not impacted. Recommendation We recommend Munson Health and Subsidiaries implement controls to ensure reports are completed in accordance with the grant agreement guidelines. Views of Responsible Officials and Corrective Action Plan At the end of each contract, a final reconciliation will be completed, and amended reports will be submitted as needed.