FREEMAN REGIONAL HEALTH SERVICES

2022-003 Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance 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 federal awards that provides reasonable assurance that the Facility is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: The Facility?s expense tracking spreadsheet which identified the expenses claimed under the federal program as allowable costs included three expenses which related to a future period. The Facility also claimed the cost of eleven chairs which had been returned to the third-party vendor during November 2022. A formula error was also identified within the calculation of clinic salaries and fringe benefits claimed under the federal program which was based upon a prorated basis of COVID related clinic visits as a percentage of total clinic visits. The Facility had multiple individuals identifying and compiling eligible expenses; however, the Facility?s review and approval process over the Facility?s expense tracking spreadsheet was not formally documented. Cause: The Facility?s review and approval process over the Facility?s expense tracking spreadsheet did not identify the future period expenses, the cost of the returned chairs, or the formula error. Effect: The Facility?s expense tracking spreadsheet which identified the expenses claimed under the federal program as allowable costs had more expenses identified than funds received; therefore, the expenses relating to a future period and the cost of the eleven chairs had no effect on the amount of federal expenditures included in the schedule of expenditures of federal awards for the year ending December 31, 2022 as excess expenses had been identified by the Facility on their expense tracking spreadsheet. Additional clinic salaries and fringe benefits could have been claimed under the federal program due to the formula error identified. Additionally, it is hard to determine if a review and approval process occurred as no documentation was retained to support the process. Questioned Costs: No questioned costs to report as the Facility?s expense tracking spreadsheet which identified the expenses claimed under the federal program as allowable costs included excess expenses over the amount of funds received. Context: Summary level testing was performed over clinic salaries and fringe benefits claimed under the federal program. In addition, a nonstatistical sample of 24 ($110,187) from a population of 127 nonpayroll items ($142,733) were tested. Repeat Finding from Prior Years: No Recommendation: We recommend the Facility implement a control process which includes an independent review and approval of the expense tracking spreadsheet which identifies the expenses claimed under the federal program as allowable costs and retain documentation of the review process. Views of Responsible Officials: Management agrees with the finding.

2022-004 Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Equipment and Real Property Management Significant Deficiency 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 federal awards that provides reasonable assurance that the Facility is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non-Federal entity must conform with equipment and real property management procedures identified in 2 CFR 200.313 (c) through (e). Condition: Federal-funded equipment and real property is not distinguished separately from non-federal-funded equipment and real property within the Facility?s fixed asset listing. Cause: The Facility has not implemented controls over equipment and real property management to comply with federal requirements. Effect: Without established internal controls over equipment and real property management, there is an increased risk that equipment and real property could be misappropriated or the federal agency would not be notified or reimbursed if the federal funded equipment and real property was disposed. Questioned Costs: None reported. Context: A nonstatistical sample of 3 ($52,061) from a population of 13 capitalized assets ($88,913) were tested. Repeat Finding from Prior Years: No Recommendation: We recommend the Facility implement control processes to conform with the Uniform Guidance equipment and real property management requirements noted above. Views of Responsible Officials: Management agrees with the finding.

2022-005 Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Procurement, Suspension, and Debarment 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 federal awards that provides reasonable assurance that the Facility is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non-Federal entity?s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. In addition, as outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Facility did not obtain quotes from multiple vendors as it relates to the procurement and purchasing of flooring which was over the micro-purchase threshold. In addition, the vendor was not verified against the central contractor registry prior to transaction inception or on a periodic basis to ensure the vendor was not suspended or debarred. Cause: The Facility did not follow their procurement policies currently in place. Effect: Without obtaining multiple quotes and performing a vendor check for suspension and debarment, demonstrating that the Facility complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: Covered transactions entered into by the Facility over the micro-purchase threshold totaled $73,531. Questioned costs are unable to be identified as multiple quotes were not received by the Facility to ensure the price paid was reasonable. Context: Sampling was not used as only one vendor was utilized by the Facility for flooring purchases. Repeat Finding from Prior Years: No Recommendation: We recommend the Facility review their procurement policies in place, implement internal control processes to ensure compliance with their procurement policies, and retain documentation to support procurement, suspension and debarment procedures performed. Views of Responsible Officials: Management agrees with the finding.

2021-003 Department of Health and Human Services Federal Financial 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 & Period 2 TIN #460232450 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and 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 federal awards that provides reasonable assurance that the Facility is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal awards. Condition: The Facility?s special report submitted to the Department of Health and Human Services (HHS) for Period 2 TIN #460232450 was not initially assessed for allowability under the nursing home infection control distribution terms and conditions. As a result, the Period 2 report was reopened and resubmitted with expenses that were allowable under the nursing home infection control distribution. However, the resubmitted Period 2 report included nursing home COVID specific payroll that was also claimed under Period 1. As the nursing home and hospital are in the same facility, it was difficult to determine that the payroll costs claimed for some departments were specific to the nursing home. In addition, the special report submitted to HHS for Period 1 contained rent expense that was also claimed under the Paycheck Protection Program (PPP) loan. The Facility?s Period 1 tracking spreadsheet contained formula errors that caused underreported employee benefits. The review and approval process over the special report submitted to HHS for Period 1 and Period 2 and the tracking spreadsheet was not formally documented by a separate individual outside of the preparer. Cause: The terms and conditions of the nursing home infection control distribution was not specifically considered prior to the identification of Period 2 allowable expenses, nor assessed upon resubmission for personnel costs previously claimed in Period 1. The review and approval of the report submitted to the Department of Health and Human Services for Period 1 and Period 2 and the tracking spreadsheet was not formally documented by someone other than the preparer of the report, resulting in clerical errors or duplicated expenses not being detected. Effect: There was $10,290 of rent that was claimed in Period 1 in duplicate of the PPP loan forgiveness. In Period 1, formula errors excluded quarter four 2020 and quarter one 2021 employee benefits in error resulting in underreported expenses of $380,898, which would have increased unreimbursed expenses on the Period 1 report. In Period 2, the resubmitted report included $129,693 of COVID specific personnel costs that were previously included on the Period 1 report. The lack of secondary review and approval of expenses being claimed 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: The Period 2 report included $129,693 of COVID specific personnel costs that were claimed under Period 1 funding and the nursing home infection control distribution and $10,290 of rent that was claimed in Period 1 in duplicate of the PPP loan forgiveness. However, the Period 1 report may have included other costs that were reported as unreimbursed that may have qualified under the nursing home infection control distribution that were not subject to testing. Context: Two of the four key line items tested on the Period 1 and Period 2 Department of Health and Human Services special report were incorrect. $67,740 out of $254,443 of Period 2 expenses were detailed tested using nonstatistical sampling, which included $16,076 of personnel costs and $51,663 of other nursing home infection control expenses. Summary level testing was done on Period 1 expenses of $3,769,219. Repeat Finding from Prior Years: No Recommendation: We recommend the Facility review the terms and conditions of the PRF funding and implement a control process which includes a secondary review and approval of the tracking spreadsheet and reports submitted to the Department of Health and Human Services used to support the allowable costs. Views of Responsible Officials: Management agrees with the finding.