Franciscan Missionaries of Our Lady Health System, Inc.

Finding No: 2025-001 Cash Management Federal Agency: U.S. Department of Health and Human Services Pass-Through Entities: N/A Assistance Listing Number: 93.493 Federal Program: Congressional Directives Federal Award Year: September 30, 2023 – September 29, 2026 Per section 2 CFR 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury and disbursement by the non-federal entity for direct program or project costs. Interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS). Expenditures must be incurred prior to the date of the reimbursement request. Per section 2 CFR 200.303, non-Federal entities must establish, document 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. Condition Found The System entity did not minimize the time elapsing between the transfer of funds and disbursement and did not remit interest earned on advances to the designated federal agency. The System requested reimbursement of federal grant funds of $1,042,278 over 350 days in advance of incurring the related expenditures for the St. Francis Medical Center Community Project Funding Congressionally Directed Spending – Construction award (ALN 93.493) and did not perform the required interest calculation or remit interest timely, representing a departure from the Uniform Guidance cash management requirements. We tested 100% of the expenditures and related cash draw activity for this award during the audit period; therefore, no sampling was used and no extrapolation was necessary. Possible Cause and Asserted Effect The System's internal controls did not ensure the federal funds requested for the program were either already expended or encumbered to be expended timely and did not implement the process steps and control to periodically identify and calculate the resulting accumulated interest earned on federal cash balances drawn in advance related to this program. Failing to minimize the time between the transfer and disbursement of funds, as well as failing to remit interest earned on advances, constitutes noncompliance with the Uniform Guidance.Questioned Cost Interest earned of $44,750 Statistical Validity 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 No. Recommendation We recommend that the System strengthen its internal controls over cash management controls to ensure that all federal fund drawdowns are based on incurred expenditures and documented immediate cash needs, and that a process is implemented to periodically calculate and remit any interest earned on advance balances as required by the Uniform Guidance. View of Responsible Officials Management concurs with this finding. The System is implementing a management review control through periodic inquiry and review of advance fundings to ensure drawdowns are supported by incurred expenditures or are for immediate cash needs and any interest calculations to ensure timely compliance with the Uniform Guidance. Corrective Action Plan In the event that the System receives federal cash advances prior to the cash expenditures, the System will perform an additional financial review of any advanced payments compared to the related expenditures. Should accounting identify advances not yet spent, they will inquire with the grant administrator responsible for the grant to review their advance fundings, any potential resulting interest calculations. Anticipated Completion Date June 30, 2026 Name of Contact Person for Corrective Action Amanda Hymel, Corporate Controller

Finding No: 2024-001 Allowable Costs/Cost Principles Federal Agency: U.S. Department of Homeland Security Pass-Through Entities: N/A Assistance Listing Number: 97.036 Federal Program: COVID-19 – Disaster Grants-Public Assistance (Presidentially Declared Disasters) Federal Award Year: Disaster 711118, declaration date March 24, 2020 Criteria or Requirement Section 200.430 compensation - personal services, more specifically (i) standards for documentation of personnel expenses notes charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition Found A Kronos ransomware attack did not allow the time tracking to work for the December 2021 pay period. In order to pay the employees, the System estimated the hours incurred based on an average of the last three pay cycles. Consistent with other employes impacted from this ransomware attack, the approximate 50 employees in this Federal Emergency Management Agency (FEMA) claim were asked to true-up their time for actual hours. For this pay period, the System claimed the estimated payroll of approximately $116,600 with FEMA. The System did not adjust the payroll claimed for FEMA reimbursement in subsequent months. Of the 40 sample items, two were selected from the above pay period and subsequent time sheets noted actual hours incurred were less than the estimated amount for approximately $300. Possible Cause The System’s level of detail of tracking the adjustments was not sufficient to identify the amount that should have been adjusted with FEMA. The System has support for the estimated calculation. Questioned Cost $300 Effect Failure to properly maintain adequate support for each expenditure may prevent the System from being in compliance with the requirements set forth by the Uniform Guidance. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year A similar finding was not reported in prior year audit. Recommendation The System should be reminded to maintain documentation of actual time incurred when charging payroll to a federal award or to identify other allowable costs to claim. View of Responsible Officials Management concurs with this finding. Effective December 2021, the Kronos time tracking module was resolved.

Finding No: 2023-001 Activities allowed/unallowed and allowable costs Federal Agency: U.S. Department of Health and Human Services Pass-Through Entities: N/A Assistance Listing Number: 93.498 Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Year: January 1 to March 31, 2023 (Period 4) and July 1 to September 30, 2023 (Period 5) Criteria or Requirement Per 2 CFR 200.303, 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. Condition Found, Including Perspective Bonuses, that were claimed to be COVID-related as reported via the PRF portal, were paid out to St. Dominic employees for which there was no supporting documentation to validate they were allowable COVID-related bonuses in accordance with the System’s policies. Possible Cause Change in control owners at St. Dominic resulting in management’s failure to retain sufficient documentation to support the bonus payments. Questioned Cost $3,000 for all St. Dominic employees Effect Federal funds were possibly expended for unallowable purposes as management could not provide documentation to support the bonuses were COVID-19 related. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year Not a repeat finding. Recommendation The System should strengthen controls over the retention of documentation to ensure that management can provide the necessary documentation to support grant expenditures. View of Responsible Officials Management concurs with this finding. Effective January 2022, the System has transitioned the St. Dominic payroll to be processed centrally at the System in accordance with all System’s processes and procedures.

Finding No: 2023-002 Reporting Federal Agency: U.S. Department of Health and Human Services Pass-Through Entities: N/A Assistance Listing Number: 93.498 Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Year: January 1 to March 31, 2023 (Period 4) and July 1 to September 30, 2023 (Period 5) Criteria or Requirement Per 2 CFR 200.303, 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. Condition Found, Including Perspective The review of lost revenue and related personnel expenses was not at a sufficient level of detail to demonstrate the supporting expenditures agreed to the portal reports. Although management reviewed and reconciled the expenditures to the portal reports, it was not evident how the 2022 adjustments to lost revenue made by HRSA and identified during the 2022 single audit impacted the current year portal reporting. Only a portion of the adjustments were reflected in the Period 4 and Period 5 reporting and management was not tracking which HRSA adjustments had been made, what was left to be made, and to which entities the adjustments were related to. Possible Cause Management did not have a single owner of the portal reports reconciliation process whom could identify that the HRSA adjustments were not being tracked. Questioned Cost None Effect During the audit, the System updated the reconciliation to agree to the portal reports for lost revenue amounts that had been adjusted and determined the remaining portion of the 2022 adjustments that needed to be included in Period 6 reporting. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year Not a repeat finding. Recommendation The System should strengthen controls over the management review process to ensure the amounts reported the HRSA portal are supported. View of Responsible Officials Management concurs with the finding. This did not result in an overstatement of qualifying expenditures and no repayment of funding was required. The reconciliation review process will be enhanced for funding that applies to multiple funding periods.

Finding No: 2022 001 Activities Allowed or Unallowed/Allowable Costs Federal Agency: U.S. Department of Health and Human Services Pass Through Entities: N/A Assistance Listing Number: 93.461 Program: HRSA COVID 19 Claims Reimbursement for the Uninsured Program and the COVID 19 Coverage Assistance Fund Award Year: February 4, 2020 through April 5, 2022 (a) Criteria or Requirement The HRSA COVID 19 Claims Reimbursement for the Uninsured Program and the COVID 19 Coverage Assistance Fund reimburses health care related expenses attributable to COVID 19 testing for the uninsured and treatment of uninsured individuals with COVID 19. Reimbursement includes COVID 19 testing and testing related items, COVID 19 treatment and COVID 19 vaccine administration fees. The HRSA FAQ document dated May 2020 specified that for inpatients COVID 19 must be the primary reason for treatment or for vaccine administration. Per 2 CFR 200.303, 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. (b) Condition Found, Including Perspective During our test work, we selected a sample of 50 reimbursements received from HRSA for COVID 19 uninsured claims during the fiscal year. We noted one outpatient instance in which the reimbursement received may have covered the entire patient visit not only the COVID 19 test. (c) Possible Cause When identifying patient activities under the program for the audit period of July 1, 2021 to April 5, 2022 (end of program), total charges for uninsured patients with a COVID 19 diagnosis code, were included in the outpatient submissions for reimbursement. Additionally, HRSA?s reimbursement formulary was never published. (d) Questioned Cost Known questioned costs $5,601 and likely questioned costs $258,764, which represents total outpatient reimbursements for claims without COVID 19 as a primary diagnosis for which reimbursement exceeded $416.78. (e) Effect Federal funds were possibly expended for unallowable purposes as the expenditures were for a diagnosis other than COVID 19 as a primary diagnosis. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year Not a repeat finding. (h) Recommendation We recommend that the System enhance the processes in place to document its review of potential overpayments. (i) View of Responsible Officials FMOL took every precaution to ensure the correct process was implemented for HRSA billing and payment. We followed the program guidelines for screening self pay patients that received COVID services. Once the patient was approved by HRSA, they supplied a patient ID through their provision portal. Those qualifying visits were further modified to bill claims for the approved patients with COVID services and diagnoses. There were instances in which we questioned HRSA to supply further specific details regarding billing and payment, but we were told the information was proprietary. In addition, we questioned SSI (the selected clearinghouse) to query HRSA for additional billing criteria details to be proactive. However, the same response was provided. Therefore, we continued to follow the original program guidelines of identifying, screening and claims submissions for patients receiving COVID services and diagnosis. HRSA would determine the eligible charges upon submission for consideration. In accordance with HRSA guidelines, any overpayment identified by the System is refunded to the program. Any other overpayments identified by HRSA are also refunded accordingly. Additional communication will be provided to team members regarding account documentation with special attention to the HRSA program. We will have the trainer and department managers remind staff members to notate all accounts with any communication and actions taken including those accounts identified for review and repayments as applicable.

Finding No: 2022 002 Activities Allowed or Unallowed/Allowable Costs Federal Agency: U.S. Department of Health and Human Services Pass Through Entity: N/A Assistance Listing Number: 93.498 Program: COVID 19 ? Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Award Year: January 1, 2022 to March 31, 2022 (Period 2) July 1, 2022 to September 30, 2022 (Period 3) (a) Criteria or Requirement Per 2 CFR 200.303, 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. (b) Condition Found, Including Perspective During our test work, we performed procedures to recalculate the lost revenue reported in the portal for period 2 and found that the lost revenue calculated by the System was understated by $16,007,000. (c) Possible Cause The System controls to ensure the accuracy of the lost revenue reported for portal period ended September 30, 2022, did not operate effectively. (d) Questioned Cost None (e) Effect The System was in compliance with the program requirement that Federal funds were not expended for unallowable purposes and however, evidence of the effective operation of management review controls was not maintained in accordance with Federal requirements. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year Not a repeat finding. (h) Recommendation We recommend that the System strengthen controls over the management review process to ensure the accuracy of calculations reported the HRSA portal. (i) View of Responsible Officials Management concurs with the finding. This did not result in an overstatement of qualifying expenditures and no repayment of funding was required. While appropriate controls exist, but did not always operate as designed, relative to management review and recalculation of expenditures, opportunity exists to retrain staff and further enhance controls.

Finding No: 2022 003 Procurement Federal Agency: U.S. Department of Education Pass Through Entity: N/A Assistance Listing Number: 84.425F Program: COVID 19 ? Educational Stabilization Fund Award Year: May 14, 2020 through June 30, 2023 (a) Criteria or Requirement Per 2 CFR 200.303, 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. (b) Condition Found, Including Perspective Procurement disbursements were related to two vendors. For one of the two vendors tested, open and competitive bidding was not performed and therefore, the System was not in compliance with Federal guidelines. (c) Possible Cause The System has a management review process in place to review and approve procurement transactions in accordance with their procurement policies. The System management review control that was in place did not operate effectively to ensure open and competitive bidding occurred. (d) Questioned Cost $255,415 (e) Effect Without performing the open and competitive bidding process, the System could have charged costs to the grant that were unallowable. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year Not a repeat finding. (h) Recommendation We recommend that the System strengthen controls over the management review process to ensure that the open and competitive bidding process is being performed on all applicable procurement transactions. (i) View of Responsible Officials Management concurs with the finding. While appropriate controls exist, but did not always operate as designed, relative to management review of expenditures, opportunity exists to retrain staff and further enhance controls. The system acknowledges that all acquisitions of property or services that exceed the simplified acquisition threshold (SAT) of $10,000 under a Federal award or sub award must use formal procurement methods to include documented procurement procedures and methods of procurement. This would include sealed bids, vendor quotes, or noncompetitive procurement where certain conditions apply.

Finding No: 2021-001 Activities Allowed and Allowable Costs Federal Agency: U.S. Department of Treasury Pass-Through Entity: Mississippi State Department of Health CFDA Number: 21.019 Program: COVID-19 Coronavirus Relief Fund Award Year: July 1, 2020 through June 30, 2021 (a) Criteria or Requirement In accordance with 2 CFR section 200.303 (a), entities are expected to 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. The Coronavirus Relief Fund (CRF) is designed to provide ready funding to address unforeseen financial needs and risk created by the COVID-19 public health emergency, and governments may use payments for eligible expenses incurred due to the public health emergency. Per 2 CFR 200.303, 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. (b) Condition Found, Including Perspective During our test work of time and effort reporting, we selected a sample of 80 employees who had reported time to the CRF cost center used to track COVID-19 related expenditures. Within our sample of 80, we noted 2 instances in which a supervisor had incorrectly approved hours to this cost center that were not recorded on the time cards as related to COVID-19. As such hours and wages that were meant to be recorded to the employee?s department were incorrectly coded to the cost center in support of the CRF grant. (c) Possible Cause In accordance with the System?s policy, it is the responsibility of each employee, in conjunction with the department director or his/her signee, to ensure that time records for the pay period are accurate. Additionally, all time records are to be approved for accuracy by the department director or designee following the close of the pay period. While the time cards correctly identified the shift periods relating to the COVID-19 work outside of normal duties, lack of review over the time cards resulted in time and effort hours related to normal activities to be charged to the CRF cost center rather than the employee?s department. As such, certain wages related to normal activities were inappropriately recorded as an expense to the CRF. (d) Questioned Cost We estimate likely questioned costs totaling $60,000. (e) Effect Noncompliance resulted costs being charged to the CRF grant that were not allowable. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year Not a repeat finding. (h) Recommendation We recommend that the System implement controls to verify that time and expense on time cards are expensed to the proper cost center by strengthening the controls over review and approval. (i) Views of Responsible Officials Management concurs with the finding. Employee time on the timecards were transferred to the COVID cost center to correctly reflect the time employees spent on COVID related work. However, after the time was transferred to the COVID cost center, the employee was then not transferred back into their department. As the employee was not transferred back into their department, the time keeping system, Kronos captured all the time under the COVID cost center and the full time was incorrectly charged to the COVID cost center. Typically, when employees work in multiple departments they clock in and out from that department and then clock into their next department. In the early stages of the pandemic the System was still establishing policies and procedures related to COVID time keeping which in turn resulted in time being transferred from one department to the next by timekeepers and supervisors and resulted in the errors. Since then, there has been policies established for time keeping, as well as training for supervisors on how to transfer time more accurately. The System feels that there is appropriate levels of review and approval over timecards.

Finding No: 2021-002 Activities Allowed and Allowable Costs Federal Agency: U.S. Department of Homeland Security Pass-Through Entity: State of Louisiana CFDA Number: 97.036 Program: COVID?19 Disaster Grants- Public Assistance Award Year: July 1, 2020 through June 30, 2021 (a) Criteria or Requirement In accordance with 2 CFR section 200.303 (a), entities are expected to 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. The COVID-19 Disaster Grants ? Public Assistance (FEMA) is designed to provide assistance to state, tribal, territorial, and local governments, and certain types of private nonprofit organizations so that communities can quickly respond to and recover from major disasters or emergencies declared by the president. Per 2 CFR 200.303, 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. (b) Condition Found, Including Perspective During our allowable costs test work of overtime and effort pay related to the FEMA grant, we selected a sample of 40 payroll expenses related to reported FEMA COVID-19 expenditures. During our sampling, we noted that the System had incorrectly allocated overtime to hours not related to COVID-19 patients as defined by grant. This resulted in an overstatement of overtime expenditures allocated to the FEMA grant. (c) Possible Cause To calculate the COVID-19 overtime expenditures under the grant, the System used patient records to identify all patients that were diagnosed with COVID-19 during the period. A percentage of COVID-19 patient days compared to total patient days was calculated for the time period based on discharge date of the patient, and this percentage was used to calculate the amount of overtime allocable to the grant that was worked for the period. By using this methodology, it resulted in patient days outside of the period being included in the calculated percentage. As such, the amount charged to FEMA was inappropriately overstated. (d) Questioned Cost We estimate likely questioned costs totaling $94,000. (e) Effect Noncompliance resulted costs being charged to the FEMA grant that were not allowable. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year Not a repeat finding. (h) Recommendation We recommend that the System implement controls to verify the accuracy of the patient days in determining the allocation of overtime worked during the period for accuracy and allowability under the grant by strengthening the controls over review and approval. (i) View of Responsible Officials Management concurs with the finding. The original calculation of overtime related to COVID included patient days outside of the month of overtime salaries being requested. Management?s original calculation of the percentage of COVID inpatients was based on posting date. The calculation resulted in higher percentages as all the dates of a patient?s stay were included even if those dates spanned into other months. Management reran the percentage of COVID inpatient days based on the service date and pay period and recalculated the overtime related to COVID. As the amount was less that the original amount claimed with FEMA, management will amend the request for reimbursement once the project is through FEMA review and the State is ready to pay the System.

Finding No: 2020-01 Special Tests and Provisions ? Disbursement Notification Federal Agency: U.S. Department of Education CFDA Number: 84.268 Program: Student Financial Aid Cluster Award Year: July 1, 2019 through June 30, 2020 (a)Criteria Under the Student Financial Aid Cluster, schools must notify students when federal funds are credited to the students? accounts in accordance with 34 CFR section 668.165. Following disbursement of Direct Loans, Federal Perkins Loans, and TEACH Grant program funds, schools must notify students or their parents, in writing, of the amount and type of funds that have been credited to the student?s account. This notification must also state the student?s ability to cancel all or a portion of these funds and the process to do so. Schools with an affirmative confirmation process must notify students within 30 days before or 30 days after the funds are disbursed. (b)Condition During our test work over the Student Financial Aid Cluster, we selected a sample of 60 students who had received financial aid funding during the fiscal year. Within our sample, we noted 3 instances in which a student was not notified of a Direct Loan being credited to his or her account for the fall 2019 semester. (c)Cause The Senior Financial Aid Counselor (the Counselor) receives a weekly report listing all students who had financial aid funds allocated to their accounts. This report is in excel and lists the student?s email and the type, amount, and date of each disbursement. The process involves mail merge within Microsoft Word to send out personalized emails to these students from the Counselor?s email account. The emails are automatically personalized with each student?s name and email address with amount and type of funds disbursed as listed in the report. The students who did not receive notifications were on the list of students who received disbursements and were on the list linked to Mail Merge. A Mail Merge issue caused the email to not be sent. Lack of a control monitoring that all students with disbursements were sent notification emails through Mail Merge resulted in a lack of notification to some students.(d)Questioned Cost None identified. (e)Effect Noncompliance resulted in the student not being notified funding was credited to their account. Additionally, the student did not receive the information on their right to cancel all or part of this funding. (f)Recommendation We recommend that the System implement controls to verify all students who received loan disbursements and were on the Mail Merge list were actually sent the appropriate notification within the required timeframe. (g)Management Response Management concurs with the finding. The current process in place did exclude a notification email for three students that received loan disbursement and should have been notified. (h)Corrective Action Plan Name of Contact Person for Corrective Action: Wendy Leblanc Corrective Action Planned: The System management and the Office of Financial Aid reviewed its controls over loan disbursement notification. The System added a management review control to ensure that timely notifications were sent to all students receiving loan disbursements. The System implemented a control whereby the Assistant Director of Financial Aid reviews the emails sent and documents this review on the disbursement listing. In addition, the Financial Aid Counselor and another staff member also reviews the emails sent with the disbursement listing and documents this review on the disbursement listing. Anticipated Completion Date: April 7, 2021

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