HOSPITAL DE LA CONCEPCION, INC

Finding No. 2020-002 Reporting Federal Program CFDA 21.019 Coronavirus Relief Fund ? COVID - 19 Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Treasury Department Category Significant deficiency in internal controls over compliance / Non-compliance Compliance Requirements Reporting Criteria As stated in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), ? 200.303 Internal controls, ?the non-Federal entity must: (a) 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.? In addition, the grant agreement establishes in its Exhibit A, Grant Plan, Reporting, the following: ?By the 15th day of each month, the Grantee will submit a Use of Funds Grant Report for the prior month?s expenses. The financial report will provide a detailed explanation of how the Grant funds were spent.? Condition Found The Use of Funds report required by the grant agreement and submitted to the pass-through entity for the month of November 2020 contained unallowable expenses of hazard pay amounting to $94,500, incorrectly reported as used. As a result, the monthly reports of Use of Funds required by the grant agreement were amended and re-submitted to the pass-through entity on April 29, 2021 to correct the category of expenses reported for the month of November 2020. The unallowable hazard pay expense was reclassified to covered benefits, which is an allowable expense that had not been claimed by the Hospital. Also, the Hospital included overtime expense for employees not working on COVID ? 19 related areas, among the figures used to compute the expenses claimed for payroll. However, since the payroll expenses of the public health employees was not claimed entirely, the eligibility of the payroll expense claimed by the Hospital was not affected because of the error. Cause In response to the global pandemic of COVID ? 19, the government of the United States enacted various laws to provide grants and support to hospitals and other healthcare entities responding to the coronavirus pandemic, among others, some of which have never been subject to a single audit process. Furthermore, the rules and regulations for the management, reporting and allowability of the federal grants were being developed and published at the same time, and even after, the entities were receiving the federal awards. Also, the publishing of the Office of Management and Budget?s Compliance Supplement addendum for single audits was delayed until late December 2020. This caused confusion among all the recipients of the federal awards. The Hospital interpreted that all the employees of the Hospital were eligible for the hazard pay. However, later in December 2020 when management of the Hospital became aware of the limitations in the allowability of the hazard pay, the Hospital immediately amended the request for the hazard pay funds and re-submitted the request for such funds on December 15, 2021 with the correct amounts. Nonetheless, the Use of Funds report for the month of November 2020 had been already submitted and the Hospital didn?t had knowledge of any mechanisms provided by the pass-through entity for the amendment of the report. During the single audit process, management of the Hospital contacted the pass-through entity to consult the incident of error in the Use of Funds report and the pass-through entity instructed the Hospital to amend the November 2020 amount reported for hazard pay and reclassify such to covered benefits not previously claimed in the report, which was submitted in an amended report for the reporting period of April 2021. Effect The incorrect reporting of expenses may be considered by the grantor and the pass-through entity as a noncompliance with the above-mentioned criteria and could lead to administrative sanctions. Also, the Use of Funds reports to the pass-through entity had to be amended and resubmitted by the Hospital. Questioned Cost None. Context N/A Identification of a repeat finding This is not repeat finding. Views of responsible officials and planned corrective actions The Hospital?s management agrees with this finding. Please refer to the corrective action plan section for the Hospital?s response on page 52.

Finding No. 2020-002 Reporting Condition: The Use of Funds report required by the grant agreement and submitted to the pass-through entity for the month of November 2020 contained unallowable expenses of hazard pay amounting to $94,500, incorrectly reported as used. As a result, the monthly reports of Use of Funds required by the grant agreement were amended and re-submitted to the pass-through entity on April 29, 2021 to correct the category of expenses reported for the month of November 2020. The unallowable hazard pay expense was reclassified to covered benefits, which is an allowable expense that had not been claimed by the Hospital. Also, the Hospital included overtime expense for employees not working on COVID ? 19 related areas, among the figures used to compute the expenses claimed for payroll. However, since the payroll expenses of the public health employees was not claimed entirely, the eligibility of the payroll expense claimed by the Hospital was not affected because of the error. Entity?s Response: The Entity agrees with this finding. Corrective Action Plan: During the course of the audit, more information and educational material about the compliance with the major program?s requirements was made available and the Hospital was able to communicate with the pass-through entity and on April 29, 2021 the Hospital submitted to the pass-through entity the Use of Funds report with the required changes for allowable expenditures, after reconciling all detailed supporting documents to the allowable expenditures. Name of the Contact Person Responsible for the Corrective Action: Lizmari Calderon ? Finance Director Anticipated Completion Date: Completed in April 2021.