SAINT LUKE'S MEMORIAL HOSPITAL, INC.Non-Profit

Finding No. 2022-001 - Reporting Federal Program 21.027 - Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Criteria As provided by the Worker Relief Program guidelines, all grantees receiving payment for their personnel must submit a report within 30 days of the date the applicant/grantee received its award detailing use of funds and evidencing that all premium payments were made. Condition As a result of our audit procedures, we noted one instance in which the Organization reported the use of funds to the federal grantor after the required timeframe limit as follows: Fund Required Date Reported Date Past Due Days Coronavirus State and Local Fiscal Recovery Funds (Worker Relief Program) March 16, 2022 March 22, 2023 371 Context As part of the reporting test for the Worker Relief Program, we noted that report required to be submitted 30 days after the funds were received and used, was submitted after the due date. Cause The Organization was not aware of the requirement, since it did not receive a request from AAFAF specifying that it had to submit a breakdown of the use of funds within 30 days of the date the applicant/grantee received its award. During the year December 31, 2022, the Organization submitted all other reports requested by AAFAF. Effect Failure to make the required reports submissions may be considered by the grantor as a noncompliance with the criteria mentioned above and could lead to administrative sanctions by the grantor. Questioned Cost None. Identification of a repeat finding None. Recommendation The Organization should continue to monitor and review guidelines for federal awards under the CARES Act and other legislation to ensure it is up-to-date on the applicable requirements and changes therein. In addition, the Organization should consider consulting with AAFAF when available guidance may be subject to interpretation or when new awards, if any, are received. Views of responsible officials and corrective action plan The Organization?s management agrees with this finding. Please refer to the corrective action plan on page 55.

Finding No. 2021-001 - Activities Allowed or Unallowed ? Other Expenses Federal Program 21.019 - Coronavirus Relief Fund ? CARES Act Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Criteria As stated in the compliance supplement, funds are designed to provide ready funding to address unforeseen financial needs and risks created by the COVID-19 public health emergency. Governments may use fund payments for eligible expenses subject to the restrictions set forth in section 601(d) of Social Security Act. Payments must be used to cover costs that are: 1. Necessary expenditures incurred due to the public health emergency with respect to COVID-19; 2. Not accounted for in the governments? most recently approved as of March 27, 2020; and 3. Incurred during the period that begins on March 1, 2020 and ends on December 30, 2021 Condition During our testing of payroll related expenses, we identified 22 instances in which the Organization estimated the portion of employee benefits claimed using certain internally developed averages, instead of claiming the actual benefits paid to the employees. Context Out of 781 employees included in the report, we selected 22 employees, or 3% of the total population, and noted that for all of the selected employees, management claimed the related employee benefits based on estimated amounts, instead of actual benefits paid. Cause The request for reimbursement of employee benefits using estimated amounts was the result of an administrative error, while completing the Funds Monthly Report sent to the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF). Effect As a result of this condition, AAFAF may issue warnings and/or impose penalties on the Organization. However, this situation was mitigated by the submission of a revised version of the Funds Monthly Report for the month ended December 31, 2021, including the actual amounts paid for employee benefits. Questioned Cost None, since the actual amounts paid for such employee benefits exceeded the amounts claimed in the original Funds Monthly Report submitted to AAFAF. Identification of a repeat finding None. Recommendation The Organization should obtain a better understanding of the compliance requirements applicable to its federal awards to ensure proper compliance. Also, management must exercise due care when completing the Funds Monthly Report provided to AAFAF to ensure the completeness and accuracy of the information submitted. Views of responsible officials and corrective action plan The Organization?s management agrees with this finding. Please refer to the corrective action plan on page 54.

Finding No. 2020-001 - Activities Allowed or Unallowed - Hazard Pay Eligibility Federal Program CFDA 21.019 - Coronavirus Relief Fund Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Criteria As stated in the Federal Register, Hazard Pay may be covered using payments from the Coronavirus Relief Fund (the Fund) if it is provided for performing hazardous duty or work involving physical hardship that in each case is related to COVID?19. This means that, whereas payroll and benefits of an employee who is substantially dedicated to mitigating or responding to the COVID?19 public health emergency may generally be covered in full using payments from the Fund. Hazard Pay specifically may only be covered to the extent it is directly related to COVID-19. In addition as per the Fund?s guidelines, Hazard Pay is allowable only if it is related for duties to directly respond to COVID-19, independent of the category of employee, usually reserved for First Responders. The guidelines recommend the following model for Hazard Pay: a. First Responders: are those employees that, because of the nature of their responsibilities, are continuously exposed to COVID-19 contagion and are employees performing substantial services within the emergency rooms, the COVID-19 intensive care units and within the temporary COVID-19 triage areas that a hospital may have established in response to the pandemic. b. The Hazard Pay program suggests the following apportionment for First Responders and the hospital has the discretion to classify the employees within the risk categories stated below: i. Very High Risk: $1,250 each ii. High Risk: $1,000 each iii. Medium Risk: $900 each iv. Lower Risk: $800 each Condition During our test, we identified certain ineligible employees that were included as part of the Hazard Pay program incentive. Cause The original guidelines issued by the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF) for the Hazard Pay program provided a general definition for qualifying employees and that the eligibility criteria could be determined based on the Occupational Safety and Health Administration (OSHA) guidelines. However, such original Hazard Pay program guidelines were subsequently clarified by AAFAF, providing more specific criteria and definitions for qualifying employees. Based on the general guidelines issued by AAFAF, the Organization included certain employees that did not meet the Hazard Pay program criteria, since the Organization did not consult with AAFAF about the eligibility of certain Not Substantially Dedicated employees, as defined in the Federal Register. Effect Failure to obtain further guidance from AAFAF resulted in the inclusion of ineligible employees in the payment of the Hazard Pay incentive. However, no questioned costs resulted from this instance of noncompliance, since the Organization revised the Coronavirus Relief Fund Midterm Use of Funds Report submitted to AAFAF for the month of December 2020 to reflect the funds allocated to ineligible employees as additional compensation paid by the Organization from its own resources, instead of the Hazard Pay program. Questioned Cost None, since payments to ineligible employees were recharacterized as additional compensation paid from the Organization?s own resources, instead of federal awards. Such federal awards were allocated to other qualifying employees under the Hazard Pay program. Context Of the 1,123 employees that received the Hazard Pay incentive, we selected 5 employees for testing and noted 1 instances of noncompliance. Total ineligible Hazard Pay incentives paid amounted to $307,363, out of total incentives paid of $1,063,975. Identification of a repeat finding None Recommendation The Organization should continue to monitor and review guidelines for federal awards under the CARES Act to ensure it is up-to-date on the applicable requirements and changes therein. In addition, the Organization should consider consulting with AAFAF when available guidance may be subject to interpretation or when new awards, if any, are received. Views of responsible officials and planned corrective actions The Organization?s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Organization?s response on page 50.