Mercy Health Services, Inc. and SubsidiariesNon-Profit

U.S. Department of Health and Human Services COVID-19 – Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Assistance Listing 93.498 Significant Deficiency and Reporting Noncompliance Criteria: The Provider Relief Fund Distributions and American Rescue Plan Rural Distribution Post-Payment Notice of Reporting Requirements (PPNPR) indicate that Department of Treasury and Federal Emergency Management Agency (FEMA) COVID-19 related funding should be reported as Other Assistance Received by quarter during the period of availability on the Health Resources and Services Administration (HRSA) portal submissions (the Portal). Management is responsible for establishing and maintaining internal control over reporting and procedures related to the fair representation of the portal submission information, including other COVID-19 assistance received. Condition: During or testing of compliance and internal control over the Period 4 Portal submission, we noted that sufficient controls were not in-place to prevent and detect errors over other COVID-19 assistance being reported in the Portal in accordance with the PPNPR. Consequently, we noted approximately $2,154,000 in COVID-19 Coronavirus State and Local Fiscal Recovery Funds from the U.S. Department of Treasury that were not reported under Other Assistance Received, and that FEMA funds reported were understated by approximately $299,000 on the Period 4 Portal submission. Cause: Lack of effectively designed and implemented internal controls over tracking and reporting COVID-19 other assistance required to be reported under the PPNPR guidelines. Due to an incomplete summary of funding, the error was not caught. Effect: Without the proper implementation of an effectively designed system of internal controls over Portal reporting, the internal control system cannot be relied upon to effectively prevent or detect non-compliance for PPNPR reporting requirements. Thus, other COVID-19 assistance received may be omitted or improperly reported. Question Costs: None Context: Our testing noted that Period 4 COVID-19 Other Assistance received was understated by approximately $2,154,000 and $299,000 from U. S. Treasury and FEMA funding, respectively. Total Period 4 COVID-19 Other Assistance reported was $18,312,642. The Period 4 Portal submission also reported total unused lost revenues of approximately $20,903,000. Repeat Finding From Prior Year: No Recommendation: Effective internal controls should be implemented over reporting for COVID-19 funding to track COVID-19 other assistance received to ensure that such amounts are properly reported to meet the PPNPR requirements. Such controls should include appropriate supervisory review to ensure the accuracy of reported information. Views of Responsible Officials and Planned Corrective Actions: Please refer to page 67 for management’s Corrective Action plan.