SOUTHEASTHEALTH SYSTEM, INC.

Criteria or Specific Requirement – Cash Management (2 CFR 200.305 (b)) Condition – The Organization drew down funds and determined later on these were not allowable expenditures. A subsequent draw down was reduced by the same amount during the audit period. Questioned Costs – None. Context – Out of a population of ten cash draws, a sample of two draws were selected for testing. The sampling methodology used is not and is not intended to be statistically valid. Of the two draws tested, one draw included a request for invoices which were determined later to not be allowable expenses, and a subsequent draw was reduced to offset the difference. Effect – The System's cash management system is not operating within the requirements determined by Department of Education (DOE). Cause – Management of the Organization does not have sufficient controls in place to ensure funds drawn in advance are allowable expenditures. Identification as a Repeat Finding – Not applicable. Recommendation - Management should review cash management processes and establish appropriate controls to ensure funds drawn are for allowable expenditures. Views of Responsible Officials and Planned Corrective Actions – We have since developed an organization policy for cash management for federally sponsored grant programs. SEH has provided and will continue to provide staff education on this policy in the future.

COVID-19 Education Stabilization Fund Higher Education Emergency Relief Fund Federal Assistance Listing Number 84.425 U.S. Department of Education Criteria or Specific Requirement ? Cash Management (2 CFR 200.305 (b)) Condition ? The Organization did not disburse funds drawn down within 3 calendar days Questioned Costs ? None. Context ? Out of a population of fifteen cash draws, a sample of two draws were selected for testing. The sampling methodology used is not and is not intended to be statistically valid. Of the two draws tested, one was not disbursed within the required timeframe of three calendar days. Effect ? The System's cash management system is not operating within the requirements determined by Department of Education (DOE). Cause ? Management of the Organization does not have sufficient controls in place to ensure funds drawn in advance are disbursed within the required timeframe. Identification as a Repeat Finding ? Not applicable. Recommendation - Management should review cash management processes and establish appropriate controls to ensure funds drawn in advance are disbursed within required timeframes. Views of Responsible Officials and Planned Corrective Actions ? SoutheastHEALTH ("SEH") has developed an organization policy for cash management for federally sponsored grant programs. SEH will generally use the reimbursement method unless there is an immediate cash need to minimize the time elapsing between the drawdown and disbursement of funds.

COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Assistance Listing Number 93.498 U.S. Department of Health and Human Services Criteria or Specific Requirement ? Reporting (45 CFR 75.42) and Activities Allowed/Unallowed and Allowable Costs/Cost Principles (Pub. L No 116-136, 134 Stat. 563 and Pub L. No 116-139, 134 Stat. 622 and 623) Condition ? The Organization elected to utilized Option ii to report lost revenues to the U.S. Department of Health and Human Services (DHHS) for reporting Period 1. Under Option ii lost revenues are determined to be the difference between budgeted and actual patient care revenues. Option ii also requires the budget be approved prior to March 27, 2020. In addition, the organization did not identify certain patient service revenue adjustments in their lost revenue calculation, and the Organization excluded 340B contract pharmacy revenue in both its budgeted and actual results. Questioned Costs ? Unknown. Context ?The Provider Relief Fund report for Period 1 was obtained and it was determined that Option ii was utilized to report lost revenues. It was also determined that the budget was not approved for the full period of performance prior to March 27, 2020. The Organization only approved a budget through December 31, 2021 before March 27, 2020. Effect ? The Organization?s reporting of lost revenues to DHHS for Period 1 was not prepared in accordance with the requirements determined by DHHS. In addition, the lost revenues were not properly supported by utilizing Option ii. Cause ? Management of the Organization did not fully understand the various methods and requirements of each of the three options to determine and report lost revenues. Identification as a Repeat Finding ? Not applicable. Recommendation ? Management should continue to review future reporting requirements of each of the three options allowed to report lost revenues.

Student Financial Assistance Cluster, Assistance Listing Number 84.063 Federal Pell Grant Program, Assistance Listing Number 84.268 Federal Direct Student Loans U.S. Department of Education Program Years 2019-2020 and 2020-2021 Criteria or specific requirement ? Special tests and provisions related to return of Title IV funds. Condition ? Return of Title IV funds were not calculated in accordance with 34 CFR Sections 668.22, 682.607, and 685.306. Questioned costs ? Federal Direct Student Loans (ALN 84.268) questioned costs of $933 were calculated on one refund calculation using inaccurate amounts disbursed and amounts that could have been disbursed. Context ? Out of a population of 23 students who withdrew from enrollment and received federal student financial assistance during the year, a sample of five students were selected for testing. The sampling methodology used is not and is not intended to be statistically valid. Of the five students tested, one had miscalculation of return of Title IV funds resulting in underpayment of $933 to the U.S. Department of Education. Additionally, of the five students tested, one student?s return was not made within 45 days of the institution becoming aware the student had withdrawn. Effect ? The Health System returned inaccurate amounts of Title IV funds and returns were not remitted in a timely manner. Cause ? The Health System calculated the amount that could have been disbursed incorrectly. Personnel responsible for returning Title IV funds were not working during the period between when the institution was notified of the student?s withdrawal and 45 days subsequent. Indication as a repeat finding ? No Recommendation ? The Health System should review its procedures for calculating return of Title IV funds for students receiving federal student financial aid who withdraw during the year to ensure that accurate amounts are being returned to the U.S. Department of Education and returns occur in a timely manner. Views of Responsible Officials and Planned Corrective Actions ? Return of Title IV funds were not calculated correctly for one student. The miscalculation arose from a misunderstanding of the definition of aid that could have been disbursed. Since the miscalculation, the College has completed additional Return of Title IV training and has a better understanding of aid that could have been disbursed. In addition, the calculation is completed by one individual and reviewed by another individual to ensure that all calculations are reviewed by both financial aid personnel. Return of Title IV funds were not submitted within the required 45 days for one student. The College has a staff of two that administer all Title IV aid. During the time of this return calculation, one of the staff was new to the Return of Title IV process and did not feel comfortable submitting the calculation without a review by the other staff member. However, due to COVID quarantine restrictions, both financial aid personnel were quarantined back to back, making it not possible to process within the 45 day window. As indicated above, additional training has occurred to allow processing of Return of Title IV funds to be submitted by only one financial aid staff member. A review of the process will still be completed, but will be independent of the original calculation. Also, it is highly unlikely that both staff members will be out again due to COVID quarantine at the same time. Cassandra Hicks, Director of Financial Aid, is responsible for the corrective action which has been completed as of the date of report issuance.

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