ST. MICHAEL'S HOSPITAL, INC.

2021-003 Department of Health and Human ServicesFederal Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 1 TIN#460225414Preparation of Schedule of Expenditures of Federal AwardsMaterial Weakness in Internal Control Over ComplianceCriteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (the schedule) and accompanying notes to the schedule.Condition: The Hospital does not have an internal control system designed to provide for the preparation of the schedule. As auditors, we were requested to assist with the preparation of the schedule.Cause: Auditor assistance with the 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: NoRecommendation: While we recognized that this condition is not unusual for an organization with limited staffing, we recommend management be award 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 ServicesFederal Assistance Listing/CFDA #93.498COVID-19 Provider Relief Fund and American Rescue Plan(ARP)Rural DistributionApplicable Federal Award Number and Year ? Period 1 TIN#460225414ReportingMaterial Weakness in Internal Control Over Compliance and Material NoncomplianceActivities Allowed or Unallowed and Allowable Costs/Costs PrinciplesMaterial Weakness in Internal Control Over Compliance and 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 statues, regulations, and conditions of the federal award. The Hospital selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual results to 2020 and 2021 actual results by quarter. Patient care-related revenues should be reported net of adjustments for all third-party payers, charity care adjustments, bad debt, and any other discounts or adjustments, as applicable when reporting patient care-related revenue sources.Condition: The Hospital?s lost revenue calculation was based upon actual revenue billed and reported within the Hospital?s system and did not consider the impact of the year-end audit adjustments on net patient service revenue by quarter applicable to fiscal year 2020.Cause: The established internal controls did not consider the effect of the year-end audit adjustments by quarter for Period 1 to ensure accurate quarterly reporting of net patient revenue.Effect: The lack of adequate procedures governing program report preparation and submission increases the risk that the lost revenue incurred by quarter was not accurate and the related report could be filed incorrectly. The Hospital returned more funds to HHS than required, had the adjustments been considered by quarter.Questioned Costs: None reported for the activities allowed or unallowed and allowable costs as the amount claimed for lost revenue was understated by $437,093 compared to what was eligible after considering the impact of the audit adjustments on net patient revenue by quarter. Net patient revenue by quarter for fiscal year 2020 on the Period 1 was not accurate.Context: There are twelve key line items related to lost revenue which were tested on the Period 1 Department of Health and Human Services special report. Four of the twelve key line items did not accurately represent net patient service revenue because of the impact of the audit adjustments.Repeat Finding from Prior Years: NoRecommendation: We recommend that the Hospital modify the net charges from patient care reported on future reports to reflect the year-end adjustments to the applicable quarters in the fiscal year.Views of Responsible Officials: Management agrees with the finding.