Northside Hospital, Inc.

Finding 2019-001 Federal Agencies ? Department of Health and Human Services Federal Award ? Research and Development Cluster CFDA Number ? Various Grant Award Periods ? July 1, 2018 through June 30, 2019 and July 1, 2019 through June 30, 2020 Compliance Requirement ? Failure to Prepare a Schedule of Expenditures of Federal Awards (?SEFA?); Material weakness in internal control over compliance with Federal Programs; noncompliance Criteria: According to Title 2 CFR 200.510(b), an auditee must prepare a SEFA for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with Title 2 CFA 200.502. At a minimum, the SEFA must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in Title 2 CFA 200.502(b), identify in the notes to the SEFA the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the SEFA. (6) Include notes that describe that significant accounting policies used in preparing the SEFA, and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in Title 2 CFR 200.414. In addition, Title 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over with 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 that a SEFA is prepared timely, accurately, and completely as required by Title 2 CFR 200.510(b). Conditions Found: Northside did not file its SEFA with the Federal Audit Clearing House (?FAC?) for the fiscal year ended September 30, 2019 on a timely basis as required by Title 2 CFR 200.510(b). Questioned Cost: None. Context: In preparation for the 2020 SEFA, Northside management and we identified that Northside expended more than $750,000 of Federal awards for the fiscal year ended September 30, 2019 but inadvertently did not prepare, on a timely basis, its SEFA in accordance with the requirements of Title 2 CFR 200.510(b) for such period, and, therefore, did not have a corresponding compliance audit as required by the terms and conditions of the related Federal programs. Cause, Effect, and Perspective: Northside inadvertently did not identify its total expenditures of Federal awards subject to the Uniform Guidance in a timely manner. As a result, Northside incorrectly concluded that the Federal awards expended for the fiscal year ended September 30, 2019 were below the $750,000 threshold for a single audit or program-specific audit per Title 2 CFR 200.501. Repeat Finding: No Recommendations: We recommend that Northside review its current policies, procedures, and internal controls over compliance with Federal awards and revise existing policies, procedures, and internal controls over compliance with Federal awards, as applicable, to ensure the SEFA is prepared timely and in accordance with Title 2 CFR 200.510(b). View of Responsible Official: See Corrective Action Plan.