Ashley Medical Center

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #450255914 Activities Allowed or Unallowed, Allowable Costs/Costs Principles Material Weakness 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. The Medical Center claimed expenses based on specifically identified COVID related expenses. Condition: The Medical Center does not have an adequate internal control policy in place to ensure review and approval of cash disbursements claimed under the federal programs were documented and to ensure that expenses claimed in the Report were complete, accurate, and reduced by other funding sources. Cause: The Medical Center did not have an adequate internal control policy in place to ensure review and approval of cash disbursements claimed under the federal programs were documented and to ensure that expenses claimed in the Report were complete, accurate, and reduced by other funding sources. Effect: The lack of adequate policies governing cash disbursements and Report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: A nonstatistical sample of 32 of 156 expenditures were selected for testing. Repeat Finding from Prior Years: Yes, 2021‐005 Recommendation: We recommend that the Medical Center enhance internal control policies to ensure all amounts reimbursed by other funding sources are adequately documented and reduced from the eligible expenditure listing and are properly recorded in the Report required to be submitted to the federal agency. We also recommend that the Medical Center enhance internal control policies to ensure that the required Report are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the Report required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #450255914 Activities Allowed or Unallowed, Allowable Costs/Costs Principles, and Reporting Material Weakness 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 Medical Center’s final expenditure listing, lost revenue calculation identified as eligible and claimed under the Provider Relief Fund program, and special report submitted to the Department of Health and Human Services for Period 4 did not have evidence of being reviewed and approved by a separate individual outside of the preparer. Cause: The Medical Center did not have an adequate internal control policy in place to ensure review and approval over specifically identified invoices, the final expenditure listing, the lost revenue calculation, or preparation of HHS Period 4 reporting were documented. Effect: The lack of adequate policies governing the review and approval of invoices, expenditure listing, lost revenue calculation and the HHS Period 4 report increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program. Questioned Costs: None reported. Context: Detail testing was completed over the final expenditure listing of the expenses along with the calculation for lost revenue for activities allowed and unallowable and allowable cost/cost principles. The overall expense listing and lost revenue worksheet did not have evidence of a review by someone other than the preparer (i.e., population of two). The Report submitted to HHS also did not have a documented secondary review and approval (i.e., population of one). Repeat Finding from Prior Years: Yes, 2021‐006 Recommendation: We recommend that the Medical Center enhance internal control policies to ensure all invoices are reviewed and approved to ensure all expenses claimed under the federal program are necessary, correct, and meet the requirements of the federal program. We also recommend the Medical Center implement a control process which includes a secondary review and approval of the final expenditure listing and lost revenue calculation used to claim the allowable costs under the federal program and that there is documented evidence of the review and approval. In addition, the Report submitted to HHS should have a secondary review and approval that is documented. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #450255914 Activities Allowed or Unallowed, Allowable Costs/Costs Principles Material Weakness 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 Medical Center selected lost revenue calculation option i which is actual to actual methodology of calculating lost revenues attributable to coronavirus. The Medical Center did not incorporate the financial audit adjustments into the actual revenue amounts reported within the HHS special report for the fiscal years 2019, 2020, and 2021. Cause: The Medical Center did not have a policy in place to incorporate the financial audit adjustments into the actual revenue amounts reported within the HHS special report for the fiscal years 2019, 2020, and 2021. These entries should have been applied on a quarterly basis. Effect: The fiscal year 2019 audit adjustments not incorporated would have reduced net patient service revenue by $34,822. The fiscal year 2020 audit adjustments would have reduced net patient service revenue by $81,355. The fiscal year 2021 audit adjustments would have increased net patient service revenue by $167,235. Overall, the effect on lost revenue after applying these quarterly to the applicable quarters resulted in the Medical Center claiming more lost revenue than it should have. These errors noted indicate there is lack of adequate policies governing the review and approval of the lost revenue calculation and the HHS Period 4 report. Without a secondary review and approval, there is a possibility that these errors occur. Questioned Costs: None reported. While lost revenue was overstated by $170,615, the Medical Center reported excess lost revenue of $521,021. Context: All key line items in the HHS report for Period 4 were tested. Repeat Finding from Prior Years: Yes, 2021‐007 Recommendation: We recommend that the Medical Center enhance internal control policies to ensure the lost revenue calculation is supported by internal financials. This would include implementing a secondary review and approval over the final lost revenue calculation. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #450255914 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 Medical Center claimed lost revenues that were incorrectly calculated or not supported. These were improperly included within the HHS Report Period 4 and caused the Report to be inaccurate. Cause: The Medical Center over claimed lost revenue under option i by not factoring in the audit adjustments for fiscal years 2019, 2020, and 2021. Effect: The lack of adequate policies over the special report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. While lost revenue was overstated by $170,615, the Medical Center reported excess lost revenue of $521,021. Context: All key line items in the HHS report for Period 4 were tested. Repeat Finding from Prior Years: Yes, 2021‐008 Recommendation: We recommend that the Medical Center enhance internal control policies to ensure that the required reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. 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 #450255914 Department of Health and Human Services Federal Assistance Listing/CFDA #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Preparation of Schedule of Expenditures of Federal Awards Material Weakness 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 Medical Center does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft 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 Medical Center meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Medical Center would not be able to draft a Schedule that is correct without 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 Medical Center?s schedule of expenditures of federal awards and internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

2021-005 Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #450255914 Activities Allowed or Unallowed, Allowable Costs/Costs Principles Material Weakness in Internal Control Over Compliance and 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. The Medical Center claimed expenses based on specifically identified COVID related expenses. Condition: The Medical Center claimed expenses that were reimbursed by other funding sources. These expenses were improperly included within the HHS Special Report ? Period 1 (Report) which caused the Report to be inaccurate. Cause: The Medical Center submitted expenses that were to be reimbursed by other funding sources (i.e. Medicare). The Medical Center did not have an adequate internal control policy in place to ensure review and approval of cash disbursements claimed under the federal programs were documented and to ensure that expenses claimed in the Report were complete and accurate. Expenses reported were not reduced by other funding sources. Effect: The lack of adequate policies governing cash disbursements and Report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. The Medical Center submitted expenses over their actual allowable expenses. Questioned Costs: There are questioned costs of $44,423 (actual) that were reimbursed or will be reimbursed by other funding sources. Context: A nonstatistical sample of 63 expenditures were selected for testing, which accounted for $629,718 of $735,153 direct program expenditures. The questioned costs of $44,423 were reimbursed by a different funding source (i.e. Medicare cost reimbursed percentage used the filed cost report for fiscal year 2021). The Report section, Other PRF Expenses, included expenses that were reimbursed or would be reimbursed by other funding sources. Repeat Finding from Prior Years: No Recommendation: We recommend that the Medical Center enhance internal control policies to ensure all amounts reimbursed by other funding sources are adequately documented and reduced from the eligible expenditure listing and are properly recorded in the Report required to be submitted to the federal agency. We also recommend that the Medical Center enhance internal control policies to ensure that the required Report are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the Report required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the findings

2021-006 Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #450255914 Activities Allowed or Unallowed, Allowable Costs/Costs Principles, and Reporting Material Weakness 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 Medical Center had one invoice identified as eligible that was not reviewed and approved. In addition, the Medical Center?s final expenditure listing, lost revenue calculation identified as eligible and claimed under the Provider Relief Fund program, and special report submitted to the Department of Health and Human Services for Period 1 did not have evidence of being reviewed and approved by a separate individual outside of the preparer. Cause: The Medical Center did not have an adequate internal control policy in place to ensure review and approval over specifically identified invoices, the final expenditure listing, the lost revenue calculation, or preparation of HHS Period 1 reporting were documented. Effect: The lack of adequate policies governing the review and approval of invoices, expenditure listing, lost revenue calculation and the HHS Period 1 report increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program. Questioned Costs: None reported. Context: Detail testing was completed over $629,718 of the expenses along with the calculation for lost revenue for activities allowed and unallowable and allowable cost/cost principles. A nonstatistical sample of 63 expenditures were selected for detailed testing, 1 invoice did not have evidence of being reviewed and approved. The overall expense listing and lost revenue worksheet did not have evidence of a review by someone other than the preparer (i.e., population of two). The Report submitted to HHS also did not have a documented secondary review and approval (i.e., population of one). Repeat Finding from Prior Years: No Recommendation: We recommend that the Medical Center enhance internal control policies to ensure all invoices are reviewed and approved to ensure all expenses claimed under the federal program are necessary, correct, and meet the requirements of the federal program. We also recommend the Medical Center implement a control process which includes a secondary review and approval of the final expenditure listing and lost revenue calculation used to claim the allowable costs under the federal program and that there is documented evidence of the review and approval. In addition, the Report submitted to HHS should have a secondary review and approval that is documented. Views of Responsible Officials: Management agrees with the finding

2021-007 Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #450255914 Activities Allowed or Unallowed, Allowable Costs/Costs Principles 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 Medical Center selected lost revenue calculation option i which is actual to actual methodology of calculating lost revenues attributable to coronavirus. The Medical Center did not incorporate the financial audit adjustments into the actual revenue amounts reported within the HHS special report for the fiscal years 2019, 2020, and 2021. Cause: The Medical Center did not have a policy in place to incorporate the financial audit adjustments into the actual revenue amounts reported within the HHS special report for the fiscal years 2019, 2020, and 2021. These entries related to the Medicare Cost Report estimate and should have been applied on a quarterly basis. Effect: The fiscal year 2019 audit adjustments not incorporated would have reduced net patient service revenue by $69,643. The fiscal year 2020 audit adjustments would have reduced net patient service revenue by $81,355. The fiscal year 2021 audit adjustments would have increased net patient service revenue by $167,235. Overall, the effect on lost revenue after applying these quarterly to the applicable quarters resulted in the Medical Center claiming more lost revenue than it should have. These errors noted indicate there is lack of adequate policies governing the review and approval of the lost revenue calculation and the HHS Period 1 report. Without a secondary review and approval, there is a possibility that these errors occur. Questioned Costs: There are questioned costs of $121,367 after the audit adjustments are applied quarterly in the lost revenue calculation. Context: The option i lost revenue calculation did not incorporate the audit adjustments for the fiscal years 2019, 2020, and 2021. After incorporating these adjustments over the applicable quarters, the Medical Center had over reported lost revenue by $121,367. Repeat Finding from Prior Years: No Recommendation: We recommend that the Medical Center enhance internal control policies to ensure the lost revenue calculation is supported by internal financials. This would include implementing a secondary review and approval over the final lost revenue calculation. Views of Responsible Officials: Management agrees with the findings

2021-008 Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #450255914 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 Medical Center claimed lost revenues and expenses that were incorrectly calculated or not supported. These were improperly included within the HHS Report Period 1 and caused the Report to be inaccurate. Cause: The Medical Center submitted expenses that were to be reimbursed by other funding sources (i.e., Medicare). The Medical Center over claimed lost revenue under option i by not factoring in the audit adjustments for fiscal years 2019, 2020, and 2021. Effect: The lack of adequate policies over the special report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. The Medical Center submitted expenses over their actual allowable expenses. Questioned Costs: There are questioned costs related to expenses and lost revenues that were included in the report. See Findings 2021-005 and 2021-007 for the specific questioned costs. Context: The special report section, Other PRF Expenses, included expenses that were claimed by other sources (see Finding 2021-005). The special report section, Lost Revenues, included overstated lost revenue (see Finding 2021-007). Repeat Finding from Prior Years: No Recommendation: We recommend that the Medical Center enhance internal control policies to ensure all amounts reimbursed by other funding sources are adequately documented and reduced from the eligible expenditure listing and are properly recorded in the reports required to be submitted to the federal agency and to ensure the appropriate lost revenue calculations are included. We also recommend that the Medical Center enhance internal control policies to ensure that the required reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the findings