Loma Linda University Medical Center

Finding 2021-002 ? Non-compliance over the allowable costs allocated to the COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) major program. Identification of the federal program: Assistance Listing Number 93.498: ? COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution ? U.S. Department of Health and Human Services ? Federal award identification number ? Not Applicable ? Federal award year ? Period 1 ? January 1, 2020 to June 30, 2021 Criteria or specific requirement (including statutory, regulatory or other citation): The terms and conditions of the award state that, ?the recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.? Condition: During our testing of the PRF program, we noted that the period 1 Department of Health and Human Services (HHS) Portal (the Portal) submission, which was submitted during November 2021, included $477,232 of salary expenditures that were also submitted for reimbursement under the Coronavirus Relief Fund (CRF) program. Cause: Management interpreted PRF FAQs in such a way that labor expenditures under PRF should be adjusted in the period 2 Portal submission instead of period 1. Effect or potential effect: The $477,232 of salary expenditures attributable to Coronavirus were reported as eligible expenditures under two programs as of June 30, 2021. Questioned costs: $477,232 for 93.498. These questioned costs were not determined as part of a tested sample, but represent the full amount of duplicated salary costs noted for the PRF and CRF programs. Context: During our testing over allowable expenses, we observed that both the PRF program (through the period 1 Portal submission) and the CRF program included salary expenditures on the June 30, 2021 Schedule of Expenditures of Federal Awards related to $477,232 of salaries incurred from March 2020 through June 2020. As the CRF award agreement was not put in place until after June 30, 2020, but allows for prior costs to be reimbursed, and as the PRF program reports on the SEFA based on periods, as outlined in the OMB Compliance Supplement, these salaries are correctly reported in the July 1, 2020 through June 30, 2021 SEFA period under each program; however, the expenditures should not be reported under both programs. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management ensure that PRF expenditures submitted in the Portal are not reimbursed from other sources. Views of responsible officials: Management reported funds received from other sources in the Payment Received Period in which they were received. We based our understanding of the timing of the reporting of funds from different sources to be addressed by the HRSA FAQ which includes the following guidance: ?If FEMA funds are received during the same Payment Received Period in which provider is reporting on use of Provider Relief Fund payments, the receipt and application of each payment type is required in the Provider Relief Fund reporting process.? As the above-noted CRF funds were obligated and received after the Payment Received Period for Reporting Period 1 (April 10, 2020 to June 30, 2020), after careful consideration of the HRSA guidance and consistent with the Organization?s basis of accounting, we reported these funds received in Reporting Period 2. As a result, there was no overall duplication of net expenses reported in Reporting Periods 1 and 2 combined, however Reporting Period 1 includes $477,232 of eligible PRF expenses that were subsequently reported and reimbursed under the CRF program during PRF Reporting Period 2. Furthermore, lost revenues and expenses reported in the PRF portal in Reporting Period 1 significantly exceeded PRF funds received through June 30, 2020 and as a result, there was effectively no reimbursement under the PRF of the above noted funds in Reporting Period 1.

August 15, 2022 Please see management?s action plan below in response to EY?s Federal Award Finding and Questions Costs, 2021-002 ? Non-compliance over the allowable costs allocated to the COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) major program. Management?s Action Plan: Management reported funds received from other sources in the Payment Received Period in which they were received. We based our understanding of the timing of the reporting of funds from different sources to be addressed by the HRSA FAQ which includes the following guidance: ?If FEMA funds are received during the same Payment Received Period in which provider is reporting on use of Provider Relief Fund payments, the receipt and application of each payment type is required in the Provider Relief Fund reporting process.? As the above-noted CRF funds were obligated and received after the Payment Received Period for Reporting Period 1 (April 10, 2020 to June 30, 2020), after careful consideration of the HRSA guidance and consistent with the Organization?s basis of accounting, we recorded the funds received effectively in the subsequent reporting period. As a result, there was no overall duplication of net expenses, however Reporting Period 1 includes $477,232 of eligible PRF expenses that were subsequently reported and reimbursed under the CRF program during PRF Reporting Period 2. Furthermore, lost revenues and expenses reported in the PRF portal in Reporting Period 1 significantly exceeded PRF funds received through June 30, 2020 and as a result, there was effectively no reimbursement under the PRF of the above noted funds in Reporting Period 1. Management will consider the auditor?s interpretation in future reporting periods by reporting any other funding obligated and received if known at the time of the Portal submission deadline. Responsible party: Emily Ndlela, LLUH Vice President for Finance ? FP&A and LLUSS Expected Completion Date: September 30, 2022 with our Period 3 portal submission