Davis Health SystemNon-Profit

Finding 2021-004: SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS A material weakness in Internal Controls over Major Program Program: Provider Relief Fund AL Number: 93.498 Federal Agencies: U.S. Department of Health and Human Services Passed-Through Entities: N/A Award Number: N/A Award Year: 2020 Compliance Requirement: Reporting Questioned Costs: None Criteria: All recipients of Provider Relief Funds (PRF) payments must comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services. Condition and Context: The System did not complete the PRF reporting in accordance with the U.S. Department of Health and Human Services guidance. We noted that the System had multiple errors in the underlying data as well as errors in the reports that were submitted. The System had insufficient controls in place to enable it to properly follow the reporting guidance. Effect: The amounts reported to HRSA were not in accordance with established U.S. Department of Health and Human Services guidance. When using the proper guidance and amounts, the System had sufficient expenses and lost revenue to justify retaining the PRF received. Cause: The System has insufficient controls in place to identify and correct errors before reporting is completed. Recommendation: We recommend that Management implement procedures to ensure that the most recent guidelines are reviewed and understood and that all information is detail reviewed and errors addressed before reporting. Corrective Action Plan: Davis Health System, Inc., Subsidiary, and Affiliates agrees with the finding and has begun the process of implementing controls sufficient to identify and correct errors prior to the completion of PRF reporting, which will include reviews of reconciliations to underlying accounting reports and records. Contact Person: William Koch, Chief Financial Officer, Reed Street and Gorman Avenue, P.O. Box 1697, Elkins, WV 26241

Finding 2021-005: SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS A material weakness in Internal Controls over Major Program Program: Provider Relief Fund AL Number: 93.498 Federal Agencies: U.S. Department of Health and Human Services Passed-Through Entities: N/A Award Number: N/A Award Year: 2020 Compliance Requirement: Reporting Questioned Costs: None Criteria: Provider Relief Fund (PRF) payment amounts (excluding SNF and Nursing Home Infection Control Distribution payments) not fully expended on health care-related expenses attributable to coronavirus may be applied to patient care lost revenues, if applicable. Recipients may choose to apply PRF payments toward lost revenues using one of three options: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted and actual patient care revenues. Option iii: calculated by any reasonable method of estimating revenues. Condition and Context: In one of the System?s reporting submissions, the System reported lost revenues under Option ii rather than Option iii. The System?s methodology for option iii was to use budget-to-actual patient revenues utilizing the 2020 Budget as the base period. Effect: The amounts reported to HRSA were not in accordance with established U.S. Department of Health and Human Services guidance. When using the proper guidance, the System had sufficient lost revenue to justify retaining the PRF received. Cause: The System has insufficient controls in place to identify and correct errors before reporting is completed. Recommendation: We recommend that Management implement procedures to ensure that the most recent guidelines are reviewed and understood and that all information is detail reviewed and errors addressed before reporting. Corrective Action Plan: Davis Health System, Inc., Subsidiary, and Affiliates agrees with the finding and has worked extensively over the past two years to monitor the changing guidelines surrounding the various Federal and State programs designed to respond to the COVID-19 Pandemic. Management will further this effort by continuing to attend various CPE?s and read all available guidance as it becomes available to ensure that the most recent guidelines are followed on a going-forward basis. Additionally, in future reporting periods, management will modify the historical revenue information to report under option iii to ensure compliance with applicable program requirements. Contact Person: William Koch, Chief Financial Officer, Reed Street and Gorman Avenue, P.O. Box 1697, Elkins, WV 26241