Bon Secours Mercy Health

Federal Agency: U.S. Department of Health and Human Services Federal Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Award Number: 93.498 Federal Award Year: PRF reporting period 4 Compliance Requirement Reporting (L) ? Special Reporting Criteria or Requirement Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart D, Section 200.303), the nonfederal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Under the terms and conditions of the award, Provider Relief Funds (PRF) is subject to 45 CFR section 75.302 (Financial management and standards for financial management systems). The PRF program requires special reporting through the Provider Relief Fund Reporting Portal that contains key line items containing critical information, which includes the Calculation of Lost Revenues Attributable to Coronavirus. The Provider Relief Fund Distributions and American Rescue Plan Rural Distribution Post-Payment Notice of Reporting Requirements states that reporting entities that also received an ARP Rural payment must expend the ARP Rural funds on eligible expenses and/or lost revenues attributable to COVID-19 before PRF payments may be used on remining eligible expenses and/or lost revenues attributable to COVID-19. Condition Found, Including Perspective During our testing over reporting, we observed management did not have effective internal controls in place to ensure lost revenues reported in the Portal were correctly stated. Lost revenue is tracked by management at the system level and is allocated to various programs when reporting requirements require separate portal reporting. Management?s internal lost revenue calculation correctly captured all lost revenues, including reductions for ARP funds separately reported, and that calculation was appropriately attached to the Period 4 Portal submission. The Portal report has a cumulative calculation of available lost revenue, and the cumulative total calculation within the portal was not properly reduced to capture $15,518,774 that was separately claimed in ARP subsidiary Period 4 reports, resulting in an overstatement of the Total Lost Revenues for the Period of Availability and the Total Unused Lost Revenues amounts in the Period 4 general distribution Portal report. Cause and Possible Asserted Effect Controls were not operating effectively to detect and correct duplicate lost revenues shown on the portal reporting between the parent entity and the stand-alone subsidiary reports for ARP funds. Although the lost revenues were calculated correctly and captured within the attached supporting documentation used to determine Portal amounts, controls were not operating effectively to detect and correct an overstatement of the Total Lost Revenues for the Period of Availability and the Total Unused Lost Revenues. Questioned Costs There are no questioned costs associated with this finding. Despite the overstatement in the Portal report, there was still sufficient lost revenues in excess of PRF payments received for Period 4 and therefore the Company has demonstrated it did earn all of the PRF payments received. This matter was isolated to the error in reporting requirements under the Federal grant program. Identification of whether the audit finding is a repeat of a finding in the immediately prior audit and if so, the applicable prior year finding number The audit finding is not a repeat finding. Recommendations We recommend that the Company enhance their internal control process to ensure the data underlying the portal reporting is appropriately reviewed by an individual other than the preparer to ensure that overstated lost revenue information is not reported. Views of Responsible Officials As indicated within the portal filing summary for the general reporting Period 4, the Company?s lost revenues exceeded PRF and ARP Rural payments received to-date. As a result, there were sufficient qualifying lost revenues to receive and earn all PRF and ARP Rural funds received, regardless of the reporting error identified and described in the ?condition found? section above. Therefore, management believes no repayment of PRF or ARP Rural funds received would be required. Management is implementing a process to add additional review steps prior to finalizing future reporting submissions.

Federal Agency: U.S. Department of Labor Federal Program: Disability Employment Policy Development Federal Award Number: 17.720 Federal Award Year: July 1, 2021 through June 30, 2022; July 1, 2022 through June 30, 2023 Compliance Requirement Allowable Costs (B), Cash Management (C) Criteria or Requirement Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart D, Section 200.303), the nonfederal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Costs must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. Program costs must be paid by non-federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)) (i.e., the non-federal entity must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity). Condition Found, Including Perspective For 3 out of 40 payroll samples tested, an internet stipend was charged twice to the program. The amount of the overcharge to the program was $120 and the total sampled payroll population was $98,294. For 1 out of 40 other than payroll samples, compensation for a training session was charged to the program that was not incurred by the entity. The amount of the overcharge to the program was $100 and the total other than payroll sampled population was $188,437. Cause and Possible Asserted Effect Controls were not operating effectively to detect and correct charges to the program that were duplicated or not incurred by the entity. Questioned Costs Questioned costs totaled $220. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Identification of whether the audit finding is a repeat of a finding in the immediately prior audit and if so, the applicable prior year finding number The audit finding is not a repeat finding. Recommendations We recommend that the Company enhance their internal control process to ensure the appropriateness of the expenses charged to the program. Views of Responsible Officials Management agrees with the findings and will implement a more detailed review process of the invoicing prior to submission. This review process will include a review of the expenditures being requested for reimbursement with no materiality threshold.

Federal Agency: U.S. Department of Education Federal Program: Student Financial Assistance Cluster Federal Award Number: 84.063 Federal Pell Grant Program and 84.268 Federal Direct Student Loans Federal Award Year: July 1, 2021 through June 30, 2022 Compliance Requirement Special Tests and Provisions (N) ? Enrollment Reporting Criteria or Requirement Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CRF 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, (Subpart D, Section 200.303), the nonfederal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Under the Pell grant and direct loan programs, institutions are responsible for timely reporting, whether they report directly or via a third-party servicer. Institutions must complete and return the enrollment reporting roster file within 15 days of receipt. An institution determines how often it receives the enrollment reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in the data elements for the Campus Record and the Program Record, and submit the changes electronically through the batch method, spreadsheet submittal, or the National Student Loan Data System (NSLDS) website (Pell, 34 CFR 690.83(b)(2); FFEL, 34 CFR 682.610; Direct Loan, 34 CFR 685.309). The institution must report the status change in its next updated enrollment reporting roster file (due within 60 days of the change). Condition Found, Including Perspective During our procedures for enrollment reporting, we identified 2 out of 40 student samples from Mercy College of Ohio in which enrollment status changes were not reported to NSLDS within the timeframe required. Cause and Possible Asserted Effect Managements? control to ensure that all reports of student status changes are submitted to NSLDS on a timely basis was not operating effectively to identify instances of student enrollments not being reported correctly on a timely basis. Questioned Costs There are no questioned costs associated with this finding. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Identification of whether the audit finding is a repeat of a finding in the immediately prior audit and if so, the applicable prior year finding number The audit finding is not a repeat finding. Recommendation We recommend that the University strengthen its processes and control regarding the configuration and timing of enrollment reporting to the National Student Clearinghouse to ensure that all student status changes are communicated timely to NSLDS. Views of Responsible Officials Management agrees with the findings and recommendations. BSMH has developed controls around the timeliness of enrollment reporting as indicated in our Corrective Action Plan. BSMH?s enhanced processes and procedures includes additional safeguards around submissions to the National Student Loan Database Systems (NSLDS). The instances related to timeliness of reporting of certain students was due to an error in the data pulled from the Student Information System. The system failed to include newly registered spring 2022 students. BSMH makes note that this system failure was detected internally and corrected in the spring 2022 semester, prior to the independent audit of this program.

Federal Agency: U.S. Department of Education Federal Program: COVID-19 Education Stabilization Fund Federal Award Number: 84.425F Federal Award Year: May 6, 2020 - Jan. 15, 2022 Compliance Requirement Procurement and Suspension and Debarment Criteria or Requirement According to Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), the General procurement standards, 2 CFR 200.318(a) states non-federal entities must have and use documented procurement procedures that are consistent with the applicable Federal law and standards. The procurement policy should include the formal and informal methods of procurement for non-federal entities described in 2 CFR 200.320. The Uniform Guidance section 2 CFR 200.214 also restricts awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise ineligible for participation in Federal assistance programs or activities. In addition, 2 CFR 200.303 requires non-federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to ensure the procurement policy appropriately describes procurement methods required by the Uniform Guidance and addresses suspension and debarment requirements. Condition Found, Including Perspective The Company?s written procurement policy did not include provisions related to the micro-purchase threshold or the small purchase threshold. In addition, there were not provisions to address the requirement to determine whether a vendor is suspended or debarred. Cause and Possible Asserted Effect The Company did not update their procurement policy for the Uniform Guidance principles. A procurement policy which does not reflect the current procurement requirements may result in procurement actions which do not comply with federal regulations. The Company did not perform suspension and debarment procedures over vendors which may result in procurement actions which do not comply with federal regulations. Questioned Costs There are no questioned costs associated with this finding. Identification of whether the audit finding is a repeat of a finding in the immediately prior audit and if so, the applicable prior year finding number The audit finding is not a repeat finding. Recommendations We recommend that the Company update their written procurement policy to comply with the Uniform Guidance principles. We recommend that the Company update their written procurement policy to include procedures related to performing suspension and debarment verification prior to disbursing federal funds to comply with the Uniform Guidance principles. Views of Responsible Officials As recommended, the Institutions of Higher Education (IHEs), which are consolidating subsidiaries of Bon Secours Mercy Health, will create and implement a procurement policy specific to expenditures made from the institutional portion of the COVID 19 Higher Education Emergency Relief Funds (HEERF). This will include a requirement to determine if a vendor is suspended or disbarred. Management subsequently verified all vendors with procurement transactions over $25,000 in this federal award year were not suspended or debarred.

Federal Agency: U.S. Department of Education Federal Program: COVID-19 Education Stabilization Fund Federal Award Number: 84.425E/84.425F Federal Award Year: May 6, 2020 - Jan. 15, 2022 Compliance Requirement Reporting Criteria or Requirement The terms and conditions for HEERF recipients include the following reporting provisions: The HEERF institutional quarterly portion reporting requirements involve publicly posting completed forms on the institution?s website. The forms must be conspicuously posted on the institution?s primary website on the same page the reports of the Institutions of Higher Education?s (IHE) activities as to the emergency financial aid grants to students (Student Aid Portion) are posted. A new, separate form must be posted covering aggregate amounts spent for HEERF I, HEERF II, and HEERF III funds each quarterly reporting period (March 31, June 30, September 30, December 31), concluding after an institution has expended and liquidated all (a)(1) Institutional Portion, (a)(2), and (a)(3) funds and checks the ?final report? box. IHEs must post this quarterly report form no later than 10 days after the end of each calendar quarter (April 10, July 10, October 10, January 10) apart from the first report, which was due July 10, 2021. Quarterly Public Reporting for (a)(1) Student Aid Portion (Assistance Listings 84.425E): For CARES, beginning on May 6, 2020, ED required institutions that received a HEERF I Section 18004(a)(1) Student Aid Portion award to publicly post certain information on their website no later than 30 days after award, and update that information every 45 days thereafter (by posting a new report). On August 31, 2020, ED revised the Electronic Announcement by decreasing the frequency of reporting after the initial 30-day period from every 45 days thereafter to every calendar quarter. Grantees posting a 45-day report on or after August 31, 2020, should instead post a report every calendar quarter, with the first calendar quarter report due by October 10, 2020 and covering the period from after their last 45-day or 30-day report through the end of the calendar quarter on September 30, 2020. Institutions must publicly post their report as soon as possible, but no later than 30 days after the publication of the notice or 30 days after the date ED first obligated funds under HEERF I, II, or III to the institution for Emergency Financial Aid Grants to Students, whichever comes later. The report must be updated no later than 10 days after the end of each calendar quarter (March 31, June 30, September 30, December 31). Key Line Items ? The following are identified as critical information for the Quarterly Public Reporting for Student Aid Portion: 1. The total amount of Emergency Financial Aid Grants distributed to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms as of the date of submission (i.e., as of the initial report and every calendar quarter thereafter). 2. The estimated total number of students at the institution that are eligible to receive Emergency Financial Aid Grants to Students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms. 3. The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms. 4. The method(s) used by the institution to determine which students receive Emergency Financial Aid Grants and how much they would receive under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms. Condition Found, Including Perspective During our testing of reporting, we selected all quarterly and annual required reports for testing. Bon Secours Mercy Health has three IHEs each with quarterly reporting. The testing of the quarterly student aid reports and quarterly institutional reports identified 3 instances of quarterly student aid reports being reported late and 2 instances of institutional funds being reported late. In addition, the testing of the quarterly student aid reports identified 4 quarterly reports did not meet the key line item requirements outlined above. The reports did not include the total number of students eligible to receive the grants or the method used by the IHEs to determine how much different classes of eligible students would receive if the student applied for the funding. Cause and Possible Asserted Effect The control for review of reports prior to submission and public posting on the website of the IHEs did not operate effectively. Without effective controls in place, reports could be submitted and posted publicly without all required information or outside the required timeframe, resulting in non-compliance with grant requirements. Questioned Costs There are no questioned costs associated with this finding. Statistical Validity The samples were not intended to be, and were not, statistically valid samples. Identification of whether the audit finding is a repeat of a finding in the immediately prior audit and if so, the applicable prior year finding number The audit finding is not a repeat finding. Recommendations We recommend that the Company strengthen its internal control and monitoring procedures to ensure there is proper review of reports and reporting requirements. Views of Responsible Officials Management recognizes the robust reporting requirements, both quarterly and annually, with respect to HEERF funds. In certain circumstances documentation could not be provided on when the IHEs websites were updated with Quarterly Budget and Expenditure Reporting, certain Quarterly Budget and Expenditure Reports were not published on the IHEs websites within the ten (10) day reporting requirement, and certain elements required to be reported were not included. All Annual HEERF reports were filed accurately and timely. As recommended, the IHEs have reinforced procedures regarding the Quarterly Budget and Expenditure Reporting of student and institutional portions of HEERF funds, will ensure that all reporting aspects are published on the IHEs websites, will adhere to the ten (10) day reporting deadline for publication on the IHEs website, and will maintain adequate documentation to support that such reporting was published within the required timeframe. As of September 27, 2022, the IHEs websites have been updated to reflect the required HEERF reporting information.

Federal Agency: U.S. Department of Agriculture Federal Program: WIC Special Supplemental Nutrition Program for Women, Infants and Children, CFDA No. 10.557 Pass-through Entity: Ohio Department of Health Pass-through Award Number: 05030011WA1320, 05010011WA1421 Pass-through Award Year: Oct. 1, 2019 - Sept. 30, 2020; Oct. 1, 2020 - Sept. 30, 2021 Criteria or Requirement: 2 CFR Section 200.514(c) requires the auditor to perform procedures to obtain an understanding of internal control over federal programs sufficient to plan the audit to support a low assessed level of control risk of noncompliance for major programs and perform testing of internal control. Internal control procedures included controls over 2 CFR 200.305(b)(3) under cash management to ensure that program costs were paid using non-federal entity funds before submitting a payment request. Condition Found, Including Perspective: During our testing of the Company's compliance of cash management, a formal control for management review of quarterly reimbursement reports submitted through Grant Management Information System (GMIS) did not operate consistently. This was identified through sampling the quarterly reimbursement report and not being able to obtain sufficient documentation to support management's review of the quarterly report for one of the four quarters tested. Cause and Possible Asserted Effect: A formal control for management review of the reimbursement request did not occur. This resulted in one quarter not being properly reviewed prior to submission; therefore, the Company did not maintain the proper level of internal control to ensure compliance with the requirements of cash management. This control failure could allow inappropriate expenses to be submitted for reimbursement. Questioned Costs: There are no questioned costs associated with this finding. Statistical Validity: The samples were not intended to be, and were not, statistically valid samples. Identification of whether the audit finding is a repeat of a finding in the immediately prior audit and if so, the applicable prior year finding number: The audit finding is not a repeat finding. Recommendations: We recommend that the Company strengthen its internal control and monitoring procedures to ensure there is proper management review when submitting monthly/quarterly cash reimbursement requests. Views of Responsible Officials: Management acknowledges the importance of an effective control environment, including appropriate review and approval of cash drawdowns prior to initiation of such activity. Management emphasizes a review process was occurring but acknowledges it was not consistently documented and therefore created a lack of audit trail, resulting in this finding. Prospectively, a consistent, documented, and evidenced review process by the WIC Program Manager prior to drawdown request submission has been implemented within the WIC Special Supplemental Nutrition Program for Women, Infants, and Children Program.

Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus Relief Fund, CFDA No. 21.019 Pass-through Entity: Greenville County Offices Pass-through Award Number: 1700-1 Pass-through Award Year: Mar. 1 2020 - Dec. 31, 2020 Criteria or Requirement: Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Subpart D, Section 200.303), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per Department of Treasury guidance in the Federal Register Vol. 86, No. 10 dated January 15, 2021, the CARES Act provides that payments from the Fund may only be used to cover costs that are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19) and recipients should keep records sufficient to demonstrate that the amount of fund payments to the recipient has been used in accordance with section 601(d) of the Social Security Act. Condition Found, Including Perspective: During our testing of activities allowed or unallowed and allowable costs/cost principles, we selected a sample of 40 expenditures of other than payroll costs. Our sample was selected from a list of amounts charged to the Coronavirus Relief Fund Program. The sample identified one expenditure that was charged twice to the award. The sample also identified three expenditures where management was unable to provide supporting documents. These four expenditures totaled $430,934 and were charged to the Community Health Grant from Greenville County, SC. The total other than payroll sample was $585,293 and the total other than payroll population was $3,061,633. Cause and Possible Asserted Effect: The control to review supporting documentation for grant expenditures and the management review control to review the listing of expenditures prior to submission of the grant reporting did not operate effectively. Without effective controls in place, expenditures could be reported that are no accurate, are unallowable, or outside of the stated period of performance, resulting in non-compliance with grant requirements. Questioned Costs: Known questioned costs totaled $430,934. Statistical Validity: The samples were not intended to be, and were not, statistically valid samples. Identification of whether the audit finding is a repeat of a finding in the immediately prior audit and if so, the applicable prior year finding number: The audit finding is not a repeat finding. Recommendations: We recommend that the Company strengthen its internal control and monitoring procedures to ensure there is proper management review prior to submitting expenditure reports for grants. Views of Responsible Officials: This was a new funding program originating to support healthcare facilities dealing with the onset of the COVID-19 pandemic. The root cause of the finding is due to the new program and initial collection of the support required. Following the original grant development, stronger controls have been put in place and will be monitored if funding is received in future periods.

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