EAST BAY INTEGRATED CARE, INC.Local Government

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #942515405 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition Found: EBIC claimed expenses which were calculated incorrectly and were improperly included within the report which caused the HHS special report to be inaccurate. EBIC originally utilized a methodology to calculate Other Related Healthcare expenses related to the excess time incurred following its COVID protective protocols taken by its providers in administration of care which did not capture the true estimate of expenses for these activities. The original methodology calculated a difference in time spent during billed encounters and not the excess time associated with the COVID protective protocols. The updated methodology, utilizing an estimate of time for nurses and aides to follow COVID protective protocols to be taken for all applicable patients visit encounters, better captured these expenses. We noted that $202,340 of additional expenses was calculated using the updated methodology. EBIC incorrectly calculated its Personnel expenses related to with its COVID Incident Command Center meeting expenses. We found that that the original calculation of these expenses included salary rates for three meeting participants in excess of the terms and conditions for the grant. We also noted that one meeting date?s expense was utilized multiple times in the calculation. The updated calculation capped the salary rate of the three employees mentioned above to agree with the salary limit thresholds of the grant as well as eliminated the expenses associated with the error in reporting a specific meeting date multiple times in the calculation. Cause: Management knew that staff was spending additional time with various COVID protocols (personal protective equipment, cleaning items used to provide care, etc.) and developed a methodology to try to quantify the additional costs. This methodology was not adequately reviewed and vetted to ensure that the results were reasonable. After the HHS special report was submitted, it was determined that the initial calculation needed to be revised. Effect: The lack of adequate policies governing the creation and critical review of a methodology for determining incremental staff time spent enacting COVID protective protocols increases the risk that the report could be filed incorrectly. Personnel expenses were reported as $351,782 and Other Related Healthcare expenses were reported as $471,184. Had EBIC calculated the expenses correctly, the Personnel expenses would have been $320,644 and Other Related Healthcare expenses would have been $502,322. Questioned Costs: The amount of costs in excess of the executive compensation limit was $31,138; however, this is not considered a questioned cost due to additional eligible costs that could have been claimed based on the revised expense calculations. Context/Sampling: The calculation for Personnel and Other Related Healthcare for all applicable quarters was tested. Key line items were tested on the Period 1 Department of Health and Human Services special reports. Repeat Finding from Prior Year(s): No. Recommendation: We recommend that EBIC enhance internal control policies to ensure that the support for the HHS special report is reviewed and approved prior to submission to ensure that all items included meet the terms and conditions of the grant and are properly included in the reports required to be submitted to the federal agency and that the evidence of this review and approval should be maintained. View of responsible official and planned corrective action: Management agrees to the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #942515405 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition Found: As a result of our audit, we noted there was a lack of evidence of formal review and approval over tracking of federal expenditures that were claimed for the program. In addition, evidence that EBIC?s special report submitted to the Department of Health and Human Services for Period 1 was reviewed and approved by an individual outside of the preparer was not documented. Cause: EBIC did not have internal controls in place to ensure the review and approval of the tracking of expenditures claimed or the special report submitted to the Department of Health and Human Services for Period 1 was documented. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None Reported. Repeat Finding from Prior Year(s): No. Recommendation: We recommend that EBIC enhance internal control policies to ensure that formal documentation of review and approval of federal reporting is obtained and retained. View of responsible official and planned corrective action: Management agrees to the finding