STOUGHTON HOSPITAL ASSOCIATION

2021-001 Department of Health and Human ServicesFederal Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan Distribution Applicable federal Award Number and Year ? Period 1 TIN#390832914Preparation of Schedule of Expenditures of Federal AwardsMaterial Weakness in Internal Control over ComplianceCriteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule.Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. As auditors, we assisted with the preparation of the Schedule.Cause: Auditor assistance with preparation of the Schedule is not usual as the Schedule has unique and specialized requirement and preparation is only required when the Hospital meets a specified threshold of federal expenditure.Effect: There is a reasonable possibility that the Hospital would not be able to draft a Schedule that is correct without the assistance of the auditors.Questioned Costs: None reported.Context: Sampling was not used.Repeat Finding from Prior Years: NoRecommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital?s schedule of expenditures of federal awards and the internal controls that impact financial reporting.Views of Responsible Officials: Management agrees with the finding.

2021-002 Department of Health and Human ServicesFederal Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan Distribution Applicable federal Award Number and Year ? Period 1 TIN#390832914Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesSignificant Deficiency in Internal Control Over ComplianceCriteria: 2 CFR 200.303 (a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award.Condition: The Hospital calculated claimed expenses based on officers who attended the Hospital?s COVID-19 meetings. The Hospital claimed an officer?s salary who did not actually attend one of the meetings. In addition, the Hospital claimed 3 days of infection prevention center payroll costs outside of the period of availability.Cause: The Hospital did not have an internal control process in place to ensure that only the officers? who attended the COVID-19 meetings had their salaries included in the expenses tracking spreadsheet and that allowable expenses excluded costs incurred near the end of the period of availability relating to the next period of availability.Effect: Without verifying officers in attendance at meetings and ensuring any July 2021 expenses were excluded, there is a possibility that ineligible expenditures may be claimed under the program.Questioned Costs: There are questioned costs of $116.Context/Sampling: A nonstatistical sample of 60 expenditures were selected for testing, which accounted for $159,681 out of $248,379 direct program expenditures. Of these 60, 1 was not properly supported and 1 payroll selection included a day of infection prevention center payroll costs related to July 2021.Repeat Finding from Prior Years: NoRecommendation: We recommend the Hospital implement a control process which verifies officers attended the COVID-19 meetings prior to including their salaries within the claimed expenses and that allowable expenses exclude costs incurred near the end of the period of availability relating to the next period of availability.Views of Responsible Officials: Management agrees with the finding.

2021-003 Department of Health and Human ServicesCFDA #93.498COVID-19 Provider Relief FundApplicable Federal Award Number and Year ? Period 1 TIN #390832914Activities Allowed or Unallowed and Allowable Costs/Cost PrinciplesMaterial Weakness in Internal Control Over Compliance and Noncompliance ReportingMaterial Weakness in Internal Control Over Compliance and Material NoncomplianceCriteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Hospital selected option i to calculate lost revenue which consists of a comparison of 2019 actual results to 2020 and 2021 actual results by quarter.Condition: The Hospital excluded bad debt from the amounts reported for lost revenue. There was no evidence retained that the Hospital?s special report submitted to the Department of Health and Human Services for Period 1 TIN#390832914 was reviewed and approved by a separate individual outside of the individual who inputted and submitted the report.Cause: The Hospital did not have an internal control process in place to ensure that bad debt was included in the lost revenue calculation. The Hospital did not have an internal control process in place to ensure review and approval of the report submitted to the Department of Health and Human Services for Period 1 was performed and documented.Effect: The lost revenue reported was $6,056,594 for 2020 and $331,430 for 2021. Had the Hospital included bad debt in the lost revenue calculation during the period of availability, the lost revenue would have been $5,188,380 for 2020 and $131,430 for 2021. Lost revenue plus eligible expenses exceeded Period 1 funds received.Questioned Costs: Lost revenue reported would be reduced in Period 1 by $1,068,214 if bad debts are included net patient revenue; however, had the lost revenue calculation included bad debt expense, the lost revenue would have exceeded the Period 1 funds received by $544,168. As a result, there are no question costs for activities allowed or unallowed and allowable costs/cost principles.Context/Sampling: Key line items were tested on the Period 1 Department of Health and Human Services special report.Repeat Finding from Prior Years: NoRecommendation: We recommend the Hospital implement a control process which verifies that lost revenue is calculated correctly and enhance internal control procedures to ensure the special report is reviewed and approved prior to submission.Views of Responsible Officials: Management agrees with the finding.