Veterans Memorial HospitalLocal Government

Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #421030129 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria: 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. Condition: The Hospital selected option II to calculate lost revenue, which consists of a comparison of actual results during the period of availability to the approved budget. The Hospital did not have a budget for the entire reporting period that was approved prior to March 27, 2020. For the periods that the client did not have an approved budget, $0 was entered for net patient revenues even though there were patient revenues for this period. Cause: The Hospital did have an approved budget prior to March 27, 2020 for fiscal year 2020, but the approved budget did not cover the entire period of availability. Effect: The reporting to HHS for Period 4 was considered incorrect. The Hospital did not have a budget approved prior to March 27, 2020 for the entire period of availability. The Medical Center reported $0 for quarter 3 and 4 of 2021 and quarters 1, 2, 3 and 4 of 2022. Questioned Costs: None. The Hospital claimed expenses for all Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution amounts in Period 4, so did not use lost revenue to support any of these. Context: Key line items were tested on the Period 4 HHS report. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital implement procedures to ensure the lost revenue calculation claimed meets the requirements of the federal program. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #421030129 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Significant Deficiency in Internal Control Over Compliance Criteria: 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. Condition: The Hospital did not retain evidence of the review and approval of the expenditure listing and lost revenue calculation by a separate individual outside of the preparer. In addition, The Hospital’s special report submitted to the Department of Health and Human Services for Period 4 TIN #421030129 did not have evidence that it was reviewed and approved by a separate individual outside of the preparer. Cause: The Hospital did not have an internal control process in place to ensure a secondary review and approval of the expenditure listing, lost revenue calculation, and report submitted to the Department of Health and Human Services for Period 4 was documented. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures or lost revenue may be claimed under the program and the special report might not be accurately completed. Questioned Costs: None reported. Context: A nonstatistical sample of 41 expenditures were selected for testing, which accounted for $971,367 of $1,077,594 direct program expenditures. The entire lost revenue calculation was tested, and key line items were tested on the Period 4 HHS report. Repeat Finding from Prior Years: Yes Recommendation: We recommend the Hospital implement a control process which includes a secondary review and approval of the expenditure listing and lost revenue calculation and a secondary review and approval of the required reports to be submitted to the federal agency be documented. Views of Responsible Officials: Management agrees with the finding.

2021-003 Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #421030129 Preparation of Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance - Other Criteria: Proper controls over financial reporting include the ability 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. Assistance was requested in reviewing the completeness and accuracy of the Schedule. Cause: Auditor assistance with preparation of the Schedule is not unusual as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft the Schedule that is correct without the assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: 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.

2021-004 Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #421030129 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Significant Deficiency in Internal Control Over Compliance Criteria: 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 Hospital is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: The Hospital?s lost revenue calculation was not reviewed and approved by a separate individual outside of the preparer. In addition, The Hospital?s special report submitted to the Department of Health and Human Services for Period 1 TIN #421030129 was not reviewed and approved by a separate individual outside of the preparer. Cause: The Hospital did not have an internal control process in place to ensure a secondary review and approval of the lost revenue calculation was documented. In addition, the review and approval of the report submitted to the Department of Health and Human Services for Period 1 was not performed by someone other than the preparer of the report. Effect: Without a secondary review and approval, there is a possibility that ineligible lost revenue may be claimed under the program and the special report might not be accurately completed. Questioned Costs: None reported. Context: The lost revenue calculation for all applicable quarters was tested and reviewed. Key line items were tested on the Period 1 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital implement a control process which includes a secondary review and approval of the lost revenue calculation and a secondary review and approval of the required reports to be submitted to the federal agency be documented. Views of Responsible Officials: Management agrees with the finding.