Powell Valley Health Care, Inc.Non-Profit

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Provider Relief Fund, Assistance Listing #93.498 Material Weakness and Noncompliance Internal Control over Allowable Cost Compliance Requirement 2021-003 Condition: During the process of identifying expenses that were incurred to prevent, prepare for, or respond to the coronavirus pandemic, management inadvertently claimed duplicated costs. Criteria: The terms and conditions of the CARES Act Provider Relief Fund (PRF) distributions state that funds are to only be used to prevent, prepare for and respond to coronavirus, and that funds may only be used for healthcare-related expenses or lost revenue that is attributable to the coronavirus. Auditor?s Recommendation: We recommend management continue to monitor and enhance its internal controls over federal award compliance to ensure that only eligible costs are included in amounts expended. Management?s Response: Management agrees with the noted finding. However, the Hospital also incurred and reported significant unreimbursed expenses in the PRF reporting portal that if the noted questioned costs had not been reported, the Hospital would have satisfactorily incurred eligible expenses in excess of the PRF funds received, including interest earned on such funds. While we attempted to be diligent and informed to allow us to provide the best opportunities for our community with the utilization of these funds, the constantly changing rules made this impossible. The incredible number of hours it took to track these funds is crippling for a small Critical Access Hospital. The after-the-fact look back of a single audit is great under normal times, however, we were in the middle of a pandemic, and attempted in good faith to follow the ever-changing rules surrounding these funds, we were doomed to fail. The fact that every single funding source was the ?payer of last resort?, ensured confusion. The guidance and FAQ provided changed on an almost daily basis, causing the change in decision of funding sources for projects and equipment. This constant change leads to human error in tracking hundreds of invoices while shifting plans for projects and equipment. The severe supply chain shortage of items such as masks, gowns, and gloves to the project supplies of flooring, HVAC parts, and even contractors, is something we dealt with 24 hours per day. The changing guidance regarding the Medicare Cost report portion reduction seemed an afterthought. The fact that rent and utility costs were acceptable, months if not a full year into the process seemed ?questionable? so we did not claim those costs. Had the guidance been clear, our rent and utility expense would have far exceeded the ?questionable? amounts indicated. However, we are not allowed to make any changes to the categories which would account for this simple adjustment. This change would not affect the result that we had expenses which qualified for reimbursement however, it would again be another method to avoid paying back funds when we have unreimbursed expenses. Anticipated Completion Date: Ongoing. Contact Person: The CFO is responsible for the oversight of this corrective action

Material Weakness and Noncompliance Internal Control over Allowable Cost Compliance Requirement 2021-004 Condition: During the process of identifying expenses that were incurred to prevent, prepare for, or respond to the coronavirus pandemic, management included certain expenses that were paid for by the Powell Hospital District. Criteria: The terms and conditions of the CARES Act Provider Relief Fund (PRF) distributions state that funds are not to be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Auditor?s Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance to ensure that only eligible costs are included in amounts expended and that the same expenses are not paid for by other sources. Management?s Response: Management agrees with the noted finding. However, the Hospital also incurred and reported significant unreimbursed expenses in the PRF reporting portal that if the noted questioned costs had not been reported, the Hospital would have satisfactorily incurred eligible expenses in excess of the PRF funds received, including interest earned on such funds. While we attempted to be diligent and informed to allow us to provide the best opportunities for our community with the utilization of these funds, the constantly changing rules made this impossible. The incredible number of hours it took to track these funds is crippling for a small Critical Access Hospital. The after-the-fact look back of a single audit is great under normal times, however, we were in the middle of a pandemic, and attempted in good faith to follow the ever-changing rules surrounding these funds, we were doomed to fail. The fact that every single funding source was the ?payer of last resort?, ensured confusion. The guidance and FAQ provided changed on an almost daily basis, causing the change in decision of funding sources for projects and equipment. This constant change leads to human error in tracking hundreds of invoices while shifting plans for projects and equipment. The severe supply chain shortage of items such as masks, gowns, and gloves to the project supplies of flooring, HVAC parts, and even contractors, is something we dealt with 24 hours per day. The changing guidance regarding the Medicare Cost report portion reduction seemed an afterthought. The fact that rent and utility costs were acceptable, months if not a full year into the process seemed ?questionable? so we did not claim those costs. Had the guidance been clear, our rent and utility expense would have far exceeded the ?questionable? amounts indicated. However, we are not allowed to make any changes to the categories which would account for this simple adjustment. This change would not affect the result that we had expenses which qualified for reimbursement however, it would again be another method to avoid paying back funds when we have unreimbursed expenses. Anticipated Completion Date: Ongoing. Contact Person: The CFO is responsible for the oversight of this corrective action.