Shelby County Health Care CorporationNon-Profit

Finding 2022-001 Management?s review of allowable costs Federal Programs: COVID-19 Coronavirus State and Local Fiscal Recovery Funds CFDA No.: 21.027 Federal Agency: U.S. Department of the Treasury Federal Award Years: CFDA 21.027 ? March 3, 2022 ? December 31, 2024 Criteria 45 CFR section 75.303 (a) states 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government,? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 45 CFR section 75.303 (b) states the non-federal entity must: Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. Recipients of coronavirus state and local fiscal recovery funds must support all expenses with adequate documentation and maintain proper control documentation to substantiate that these funds were used for health care-related expenses. Condition Management reviews quarterly expenditure reports to ensure compliance with the laws and regulations of the federal program, specifically the allowability of the related expenditures. There was no evidence of review of the expenditure reports. Cause and Effect ROH?s controls were not designed or implemented effectively to maintain evidence of management?s review, and the issue stems from the fact the review took place verbally. This level of review results in the inability to show evidence that the review has taken place. By ROH not providing evidence of the review of the expenditure reports, the appropriate review procedures may be insufficient in evaluating ROH?s compliance with the laws and regulations of the federal program. Questioned Cost None. Statistically Valid Sample 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. This is not a repeat finding. Recommendation We recommend that management implement appropriate controls and processes to ensure that once all costs incurred by the grant are properly reviewed for allowability that the evidence of review is maintained. Management?s Response ROH will implement controls and processes to ensure all costs are manually reviewed and approved to ensure allowability under the grant and that evidence of review is maintained.

Finding No. 2022-002 Management review of grant report submissions Federal Programs: COVID-19 Coronavirus State and Local Fiscal Recovery Funds, COVID-19 Provider Relief Fund CFDA No.: 21.027, 93.498 Federal Agency: U.S. Department of the Treasury, U.S. Department of Health and Human Services Federal Award Years: CFDA 21.027 ? March 3, 2022 ? December 31, 2024 CFDA 93.498 ? January 1, 2021 ? December 31, 2022 Criteria 45 CFR section 75.303 (a) states 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government,? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 45 CFR section 75.303 (b) states the non-federal entity must: Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. Recipients of provider relief funds and coronavirus state and local fiscal recovery funds must support all expenses with adequate documentation and maintain proper control documentation to substantiate that these funds were used for health care-related expenses or lost revenues attributable to coronavirus. Condition Management reviews grant reports prior to their submission to the U.S. Department of Health and Human Services or the City of Memphis, Tennessee to ensure compliance with the laws and regulations of the federal program. There was no evidence of review of the grant report submissions. Cause and Effect ROH?s controls were not designed or implemented effectively to maintain evidence of management?s review, and the issue stems from the fact the review took place verbally. This level of review results in the inability to show evidence that the review has taken place. By ROH not providing evidence of the review of the grant report submissions, the appropriate review procedures may be insufficient in evaluating ROH?s compliance with the laws and regulations of the federal program. Questioned Cost None. Statistically Valid Sample 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. This is a repeat finding. Recommendation We recommend that management implement appropriate controls and processes to ensure that once the grant reports are reviewed prior to submission that the evidence of review is maintained. Management?s Response ROH will implement controls and processes to ensure grant reports are reviewed prior to submission and that evidence of review is maintained.

Finding 2022-003 Management?s review of program income Federal Programs: HIV Emergency Relief Project Grants CFDA No.: 93.914 Federal Agency: U.S. Department of Health and Human Services Federal Award Years: CFDA 93.914 ? March 1, 2021 ? February 28, 2022 March 1, 2022 ? February 28, 2023 Criteria Per 2 CFR section 280 (and as clarified by Health Resources and Services Administration Program Clarification Notice 15-03), program income, which is defined as all income directly generated by the supported activity, should be added to the federal award by the grantee, and subjected to the same terms, conditions, and regulations applicable to the federal award itself. Condition Regional One Health has an established control to review program income prior to submission to the granting agency, but did not effectively review program income prior to submission to the granting agency Cause and Effect We noted that internal controls had not been appropriately designed and implemented to mitigate the risk of noncompliance with federal program income requirements. The deficiency in internal controls over program income could result in Regional One Health failing to comply with the applicable compliance provisions. Questioned Cost None. Statistically Valid Sample 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. This is not a repeat finding. Recommendation We recommend that management reviews program income to ensure compliance with the applicable program income provisions and that evidence of the review is maintained. Management?s Response ROH will implement controls and processes to ensure program income calculations are manually reviewed and approved to ensure appropriateness under the grant and that evidence of review is maintained.

Findings and Questioned costs Relating to Federal Rewards Finding 2021-001 Management's review of allowable costs Federal Programs: COVID-19 Coronavirus Relief Fund, COVID-19 Provider Relief Fund CFDA No.: 21.019, 93.498 Federal Agency: U.S. Department of Health and Human Services Federal Award Years: CFDA 21.019 ? July 1, 2020 ? June 30, 2021 CFDA 93.498 ? January 1, 2020 ? December 31, 2021 Criteria 45 CFR section 75.303 (a) states 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government,? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 45 CFR section 75.303 (b) states the non-federal entity must: Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. Recipients of provider relief funds must support all expenses with adequate documentation and maintain proper control documentation to substantiate that these funds were used for health care-related expenses or lost revenues attributable to coronavirus. Condition Management reviews monthly COVID cost center reports to ensure compliance with the laws and regulations of the federal programs, specifically the allowability of the related expenditures. There was no evidence of review of the COVID cost center reports. Cause and Effect ROH?s controls were not designed or implemented effectively to maintain evidence of management?s review, and the issue stems from the fact the review took place verbally. This level of review results in the inability to show evidence that the review has taken place. By ROH not providing evidence of the review of the grant report submissions, the appropriate review procedures may be insufficient in evaluating ROH?s compliance with the laws and regulations of the federal program. Questioned Cost None. Statistically Valid Sample 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. This is not a repeat finding. Recommendation We recommend that management implement appropriate controls and processes to ensure that once all costs incurred by the grant are properly reviewed for allowability that the evidence of review is maintained. Management?s Response ROH will implement controls and processes to ensure all costs are manually reviewed and approved to ensure allowability under the grant and that evidence of review is maintained.

Finding No. 2021-002 Management review of grant report submissions Federal Programs: COVID-19 Coronavirus Relief Fund, COVID-19 Provider Relief Fund CFDA No.: 21.019, 93.498 Federal Agency: U.S. Department of Health and Human Services Federal Award Years: CFDA 21.019 ? July 1, 2020 ? June 30, 2021 CFDA 93.498 ? January 1, 2020 ? December 31, 2021 Criteria 45 CFR section 75.303 (a) states 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government,? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 45 CFR section 75.303 (b) states the non-federal entity must: Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. Recipients of provider relief funds must support all expenses with adequate documentation and maintain proper control documentation to substantiate that these funds were used for health care-related expenses or lost revenues attributable to coronavirus. Condition Management reviews grant reports prior to their submission to the U.S. Department of Health and Human Services to ensure compliance with the laws and regulations of the federal program. There was no evidence of review of the grant report submissions. Cause and Effect ROH?s controls were not designed or implemented effectively to maintain evidence of management?s review, and the issue stems from the fact the review took place verbally. This level of review results in the inability to show evidence that the review has taken place. By ROH not providing evidence of the review of the grant report submissions, the appropriate review procedures may be insufficient in evaluating ROH?s compliance with the laws and regulations of the federal program. Questioned Cost None. Statistically Valid Sample 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. This is not a repeat finding. Recommendation We recommend that management implement appropriate controls and processes to ensure that once the grant reports are reviewed prior to submission that the evidence of review is maintained. Management?s Response ROH will implement controls and processes to ensure grant reports are reviewed prior to submission and that evidence of review is maintained.

(3) Findings and Questioned costs Relating to Federal Rewards Finding No. 2019?001 ? Program Income Federal Program: HIV Emergency Relief Project Grants CFDA #: 93.914 Federal Agency: U.S. Department of Health and Human Services Pass-through Entity: Shelby County, Tennessee Award years: March 1, 2018 through February 28, 2019, March 1, 2019 through February 28, 2020 (a) Criteria Per 2 CFR section 280 (and as clarified by Health Resources and Services Administration Program Clarification Notice 15-03), program income, which is defined as all income directly generated by the supported activity, should be added to the federal award by the grantee, and subjected to the same terms, conditions and regulations applicable to the federal award itself. (b) Condition The organization lacks internal controls designed to effectively identify and quantify program income generated from activities directly supported by each grant, and to add such program income to the total grant funding for purposes of ensuring proper compliance with the program?s applicable compliance provisions regarding uses of program income. (c) Questioned Costs None (d) Whether the sampling was a statistically valid sample The sample was not intended to be, and was not, a statistically valid sample. (e) Identification of whether the audit finding is a repeat of a finding in the immediately prior audit The audit finding is not a repeat of a finding in the immediately prior audit. (f) Context We noted that internal controls had not been appropriately designed and implemented to mitigate the risk of noncompliance with federal program income requirements. (g) Effect The deficiency in internal controls over program income could result in Regional One Health failing to comply with the applicable compliance provisions. (h) Recommendation We recommend that management of Regional One Health develop and implement processes to ensure compliance with the applicable program income provisions. (i) Management?s Response Regional One Health is updating its written procedures for identifying program income and will monitor these procedures during the year to ensure compliance. The anticipated completion and implementation of these procedures is November 30, 2019.