MARCUS DALY MEMORIAL HOSPITALNon-Profit

2021-002: Excess Compensation Consideration Type of Finding: Significant Deficiency in Internal Control Over Compliance Condition: Due to the methodology of calculating allowable costs for reporting, the excess compensation requirement of the compliance supplement was not testable. Criteria: The Provider Relief Funds are to be used to prevent, prepare for, and respond to coronavirus and the funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. Cause of Condition: Methodology incorporated for calculating allowable costs. Effect of Condition: The Hospital?s methodology used did not allow specific testing to be performed on excess compensation. Noted that there is minimal risk that there would be salary expense included in the allowable costs that would exceed this requirement, and any minimal amount that may exceed it would be covered by lost revenues reported by the Hospital. Recommendation: Although it is unlikely that there would be any excess compensation beyond the HHS requirement for allowable costs, we recommend building this consideration into the methodology used for calculating allowable costs in the future. Management?s Response: Management believes there is no material amount of compensation included that could have exceeded this requirement, and additionally feels that any excess compensation that should have been adjusted off would be covered by lost revenues reported but not yet applied towards Provider Relief Funding.

2021-003: Selection of Option 1 for Calculation of Lost Revenues Type of Finding: Internal Control over Compliance ? Significant Deficiency Statement of Condition: The Hospital?s selected Option 1 for their calculation of lost revenue on their portal submission, but they used the methodology of Option 3 in their actual calculation. Criteria: The Provider Relief Funds are to be used to prevent, prepare for, and respond to coronavirus and the funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. Cause of Condition: Management oversight. Effect of Condition: As a result of selecting the wrong lost revenue option (Option 1) on the submission to HRSA, the Hospital's internal controls over compliance were not operating effectively. Recommendation: Although not in compliance as a result of the option chosen for reporting of lost revenues for Period 1, management?s calculation of lost revenues was allowable under another option and would otherwise be in compliance. We recommend reviewing all the reporting requirements to ensure proper reporting in future periods. Management?s Response: Management will review reporting requirements to ensure proper reporting in future periods. However, under Option 3 there were sufficient lost revenues to support the PRF distributions received.