Astria Health

Finding 2021-002 – Reporting – Material Weakness in Internal Control Over Compliance and Instance of Material Noncompliance. See finding 2021-002 for the included table. Criteria: 2021 Compliance Supplement and 2 CFR 200.303(a) stated that 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 terms and conditions of the federal award. Condition/Context: Under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program (Provider Relief Fund), providers are required to submit reporting to the Health Resources Services Administration (HRSA) that describes the uses of the funds and how the provider complied with the terms and conditions of the program. The Organization received general and targeted funds for six different entities within the Organization. Repeat Findings from Prior Year(s): This is not a repeat finding. Cause and Effect: In addition to the challenges encountered while operating a health system during the Coronavirus (COVID-19) pandemic, leading up to the audit period, the Organization was significantly impacted by bankruptcy, turnover of leadership, and the lack of team members that had expertise with grant management and accounting. Those factors coupled with the evolving nature of PRF guidance led to incorrect reporting. The most significant effects noted were: - Lost revenues reported for Period 1 and Period 2 improperly included 2019 revenues from Astria Regional Medical Center, which closed due to reasons unrelated to the COVID-19 pandemic. This overstated lost revenues by approximately $140 million. However, as that issue related to a general distribution, it was determined Period 1 general distributions of $5,124,268 to Astria Health and Subsidiaries could be allocated to another entity within the Organization. Astria Sunnyside Hospital had unreimbursed lost revenue in excess of the Period 1 general distributions. As a result, while there are reporting issues as outlined in this finding, there are no related questioned costs arising from this matter. - Expenditures reported by the Organization were not supported by detailed schedules prior to the commencement of the single audit. After the start of related audit, management compiled and provided a detailed listing of expenditures that exceeded the $10,337,509 reported as expenditures for testing. - The Organization did not have proper controls in place to ensure the reports are prepared and reviewed by separate individuals and that evidence of review was documented and retained.- The Organization did not have proper document retention controls in place to support timely submission of three of five reports filed with HRSA. Questioned costs: None to be reported. Recommendation: We recommend management implement policies and procedures to ensure required reports for grants are prepared and reviewed by separate individuals with evidence of review documented and that financial reports are submitted timely with underlying support properly documented. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization will review and modify policies and procedures over Federal Grant Awards to ensure management implements policies and procedures to ensure there is understanding of the terms and conditions of Federal awards and that reports are prepared and reviewed by separate individuals with evidence of review documented.

Finding 2021-003 – Allowable Costs/Cost Principles – Material Weakness in Internal Control Over Compliance and Instance of Material Noncompliance. See finding 2021-002 for the included table. Criteria: 2021 Compliance Supplement and 2 CFR 200.403(h) stated that a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. In addition, the PRF terms and conditions noted that to be considered an allowable expense under PRF, the expense must be used to prevent, prepare for, and respond to COVID-19 and that those expenses were not reimbursed from other sources and other sources were not obligated to reimburse them. Condition/Context: The Organization decided that it was critical to keep Astria Toppenish Hospital (Toppenish) operating during the COVID-19 pandemic despite Toppenish experiencing losses. As a result, the Organization determined that all expenses of the Organization not explicitly unallowable per the related guidance and not reimbursed or obligated to be reimbursed by other sources qualified as allowable expenses that prevented, prepared for, and responded to COVID-19 during the period of availability that they were experiencing losses for Toppenish. Internal unaudited financial statements had losses in excess of the PRF funds used for expenses. Support was audited for expenses selected; however, because there were no financial statement audits performed from 2018 – 2020, we were unable to audit the Toppenish losses calculated by management. Repeat Findings from Prior Year(s): This is not a repeat finding. Cause/Effect: In addition to the challenges encountered while operating a health system during the COVID-19 pandemic, leading up to the audit period, the Organization was significantly impacted by bankruptcy and turnover of leadership. As a result, no financial statement audits were performed from 2018 – 2020. A financial statement audit was performed in 2021; however, the related Toppenish expenses were incurred prior to December 31, 2020. We were unable to obtain audit evidence supporting Toppenish’s losses for the year ended December 31, 2020. As a result of these matters, we were unable to determine whether the Organization complied with the allowable costs/cost principles requirements applicable to the major program. Questioned costs: Could not be determined. Recommendation: We recommend management implement policies and procedures to ensure that the Organization understands the terms and conditions of the Federal award and can meet the related compliance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization will review and modify policies and procedures over the program to ensure management implements policies and procedures to ensure there is understanding of the terms and conditions of Federal awards.