KING'S DAUGHTERS MEDICAL CENTER

Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number 97.036 Federal Emergency Management Agency Passed through Mississippi Emergency Management Agency Program Year 2023-2024 Criteria or Specific Requirement – Management is required to establish and maintain effective internal controls to ensure compliance with federal statues, regulations, and the terms and conditions of the federal award, including those related to Activities Allowed/Unallowed and Cost Principles (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623). Noncompliance with these requirements can result in questioned costs and reimbursement for ineligible expenditures. Condition – The Medical Center’s internal control over compliance allowed submission of expenses in which assistance from another source and expenses in which there was no underlying support. Cause – The Medical Center did not identify expenses reimbursed from other sources nor utilize medication cost formulas appropriate for the calculation of reimbursement amounts claimed and did not identify expenses that did not have support. Effect or Potential Effect – The Medical Center’s failure to determine expenditure reimbursement by other sources and unsupported expenses can lead to repayment of the grant award. Questioned Costs – Out of a population of 254 Disaster Grant expenses totaling $2,046,647 during the fiscal year ended September 30, 2024, Forvis Mazars selected a random sample of 40 expenses totaling $417,763 to test for compliance. Out of this sample of 40, 1 expense had activities with questioned costs of $4,496. This was not intended to be a statistically valid sample. In addition, discovered by the Medical Center, there were medications submitted as expenses billed to patients and formulas utilized in the calculation of COVID mediation costs which were not appropriately adjusted, allowing for potential questioned costs of $179,857. The questioned costs of $4,496 sampled above were also included in this amount. Additionally, $17,066 of costs were identified by the Medical Center as not being supported. The amount of total questioned costs is $196,923. Context – The Medical Center provided a listing of expenses which did not agree to the amount claimed on Disaster Grant submission, costs that were reimbursed by other sources, and potential over calculation of cost of COVID drugs included in submission. Prior Year Auditing Finding – N/A Recommendation – The Medical Center should implement a process to ensure adequate detail review of allowable expenses and possible reimbursement sources are in comparison to terms and conditions. Views of Responsible Officials and Planned Corrective Actions – Management concurs with the finding and will implement additional internal controls over the identification of eligible expenditures for the Disaster Grants program. Expenditures identified as potential grant program expenditures will be reviewed by the controller and final approval of each expense by the chief financial officer to ensure they are eligible expenses and have not been reimbursed by any other sources. We anticipate these additional controls to be in place by September 30. 2025. The Chief Development Officer will oversee the corrective action.

Finding 2021-003 ? Allowable Activities and Costs for Provider Relief Fund Significant Deficiency in Internal Control Over Compliance Federal Assistance Listing Number: 93.498 COVID-19 ? Provider Relief Fund Federal Agency: U.S. Department of Health and Human Services Award Year: 2020 Federal Award Identification: PRF 20200001 Pass-Through Entity: N/A Criteria: Per 2 CFR 200.303, a non-federal entity must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Per the terms and conditions for accepting payments from the Provider Relief Fund (PRF), the Medical Center certified to the following: ?All information reported in the future relating to PRF payments received, would be true, accurate and complete. ?The Medical Center would maintain appropriate records and cost documentation including, as applicable, documentation described in 45 CFR 75.302 ? Financial management to substantiate the reimbursement of costs under the award, and that all funds would only be used to prevent, prepare for, and respond to the coronavirus. Condition: The Medical Center paid hazard pay four times during the HRSA reporting period 1. The hazard pay was based upon the Board of Trustee approval of ten percent of base rate of pay and the number of hours worked with an estimated amount depending upon timing of the hazard pay payout. There were errors in the spreadsheet used to prepare and support the amounts for hazard pay. Cause: The errors in the spreadsheet were caused by human error and the sense of urgency to compensate employees for working in hazardous conditions. Although there was an independent review performed of the hazard pay, the errors were not detected in the spreadsheet used to compute the hazard pay. Effect: Errors in the hazard pay calculation resulted in the hazard payouts that were not consistent with the Board of Trustees approval. Questioned Costs: The errors in the spreadsheet used to prepare the hazard pay resulted in undeterminable questioned cost. Perspective: We noted 50 out of 60 hazard pay payments tested were not consistent with the Board of Trustees approval. The sample was not a statistically valid sample. Repeat Finding: This is not a repeat finding since this is the first year the Medical Center received these funds. Recommendations: A detailed independent review of the hazard pay should be performed and documented. View of Responsible Officials: See management?s response to the finding in the accompanying Corrective Action Plan.

Finding 2021-004 ? Reporting for Provider Relief Fund Significant Deficiency in Internal Control Over Compliance and Noncompliance Federal Assistance Listing Number: 93.498 COVID-19 ? Provider Relief Fund Federal Agency: U.S. Department of Health and Human Services Award Year: 2020 Federal Award Identification: PRF 20200001 Pass-Through Entity: N/A Criteria: Per 2 CFR 200.303, a non-federal entity must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Per the terms and conditions for accepting payments from the Provider Relief Fund (PRF), the Medical Center certified to the following: ?All information reported in the future relating to PRF payments received, would be true, accurate and complete. ?The Medical Center would maintain appropriate records and cost documentation including, as applicable, documentation described in 45 CFR 75.302 ? Financial management to substantiate the reimbursement of costs under the award, and that all funds would only be used to prevent, prepare for, and respond to the coronavirus. Condition: There was an error in the spreadsheet used to prepare and support the amounts reported in the Provider Relief Fund (?PRF?) portal submission; therefore, there was an overstatement of lost revenue reported in the PRF portal. Cause: The error in the spreadsheet was caused by human error. Although there was a review performed by the Chief Finance Officer of the PRF portal submission, the error was not detected in the spreadsheet used to prepare the PRF portal submission. Effect: Errors in the amounts reported in the PRF portal resulted in questioned costs. Questioned Costs: The error in the spreadsheet used to prepare the portal submission resulted in questioned costs of $155,184. Perspective: The Medical Center reported lost revenues of $4,886,633 in the first reporting period, of which $171,956 was eligible for lost revenue reimbursement; therefore $4,714,677 was carried forward to the second reporting period and in the second reporting period still remains carried forward. The Medical Center?s lost revenue carryforward exceeds the amount of the reported questioned costs. Repeat Finding: This is not a repeat finding since this is the first year the Medical Center received these funds. Recommendations: A detailed independent review of the spreadsheet used to prepare the PRF portal submission should be performed and documented. View of Responsible Officials: See management?s response to the finding in the accompanying Corrective Action Plan.

Uncertainty related to which COVID-19 expenses would be applied to the CRF funds, timing of the financial statement audit for the fiscal year ended September 30, 2020, and the change in auditors from the fiscal year ended September 30, 2020 to September 30, 2021 led to the untimely issuance of the fiscal year 2020 single audit. Section 2 CFR 200.512 (a) (1) of the Uniform Guidance states that the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period.