HOSPITAL SERVICE DISTRICT NO. 3 PARISH OF ALLEN

Criteria: In accordance with Title 2 U.S. Code of Federal Regulations (CFR) §200.501, a non-Federal entity that expends $750,000 or more in federal awards during its fiscal year is required to have a Single Audit conducted in accordance with Uniform Guidance. Condition: The Hospital expended federal awards in excess of the $750,000 threshold during the prior fiscal year, but the Hospital did not obtain a Single Audit as required under Uniform Guidance. Cause: Management did not have adequate controls in place to identify interim financing associated with the USDA Community Facilities program as a federal award subject to Uniform Guidance. As a result, federal expenditures were not properly identified and evaluated for purposes of determining whether the Single Audit threshold was met. Effect: Failure to obtain the required Single Audit results in noncompliance with Uniform Guidance and may result in increased oversight or sanctions from federal and pass-through agencies. Additionally, federal agencies and other users of the financial statements do not have the benefit of required audit assurance over federal program compliance. Questioned Costs: None noted. Recommendation: We recommend that management implement procedures to identify and track all federal awards, including loans and loan guarantees, and monitor cumulative federal expenditures to determine when the Single Audit threshold is met. Response: Management has taken corrective action by engaging independent auditors to perform the required procedures for the current year and is implementing processes to ensure compliance with Uniform Guidance requirements going forward. Additionally, management is evaluating the appropriate steps to address reporting deficiencies for the prior year, including consultation with the USDA.

Criteria: In accordance with 2 CFR §200.303, the Hospital is required to establish and maintain effective internal controls over federal awards to provide reasonable assurance that transactions are properly recorded, supported, and in compliance with applicable requirements. Condition: During testing of expenditures, we identified an instance where invoices were submitted more than once for reimbursement. The duplicate submissions were not identified through the Hospital’s internal control processes prior to submission. Cause: The Hospital did not have sufficient controls in place to prevent or detect duplicate submissions, including a lack of centralized tracking of invoices submitted for reimbursement and inadequate review procedures over reimbursement requests. Effect: The lack of effective internal controls increases the risk that duplicate or unsupported costs could be submitted for reimbursement and not timely detected. While duplicate invoices were identified, total allowable program costs exceeded reimbursements received; therefore, no financial impact was noted. Questioned Costs: None identified. While a duplicate invoice was submitted, total allowable and eligible expenditures exceeded total reimbursements; therefore, no questioned costs are reported. Recommendation: We recommend that management implement procedures to clearly designate and track expenditures used for federal award reimbursement, maintain detailed schedules that prevent the same expenditure from being applied to multiple funding requests and establish a formal review process over all submissions to ensure compliance. Response: Management acknowledges that certain invoices were submitted more than once for reimbursement. This occurred, in part, due to turnover in key financial management personnel and a lack of formalized procedures for tracking invoices and reimbursement requests. Management notes that sufficient allowable expenditures were incurred to support the total reimbursements received. Corrective actions are being implemented to strengthen internal controls over the reimbursement process, including the establishment of centralized tracking of invoices submitted for reimbursement and additional review procedures to ensure that duplicate submissions are identified and prevented in future reporting periods.

COVID 19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution - Assistance Listing Number 93.498 - U.S. Department of Health and Human Services Criteria or Specific Requirement ? Reporting (45 CFR 75.342) and 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). Condition ? The Hospital is required to prepare and submit period one Provider Relief Fund reporting. This report is to be prepared using accurate financial information and submitted by the deadline established. Questioned costs ? Out of a population of 1,989 Provider Relief Fund expenses totaling $7,177,946 during the fiscal year ended June 30, 2021, FORVIS selected a random sample of 40 expenses totaling $99,025 to test for compliance. Out of this sample of 40, 7 expenses had activities with questioned costs totaling $31,122. Context ? The Hospital provided a listing of expenses by Provider Relief Fund category, which included expenses that were determined to be general and administrative, and not directly used to prevent, prepare for, and respond to the coronavirus; therefore, this was not an allowable expense. Effect ? A recipient?s failure to determine the expenditure is eligible for reimbursement can lead to repayment of the grant award. Prior Year Audit Finding - N/A Cause ? The Hospital included expenses that were not used to prevent, prepare for, and respond to the coronavirus; therefore, this was not an allowable expense. Recommendation ? The Hospital should implement a process to ensure adequate detail review of allowable expenses 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 Provider Relief Fund program. Expenditures identified as potential Provider Relief Fund uses 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 November 2022.