Kuakini Health SystemNon-Profit

Questioned Costs $ - Finding No. 2022-002: Reporting (Significant Deficiency) Federal Agency: Department of Health and Human Services AL Number and Title: 93.498 ? Provider Relief Fund Award Number: N/A Award Year: 2021 Repeat Finding? No Condition During our audit, we tested all period 2 infection control targeted distribution expenses reported and noted the reported amount included $84,800 in costs incurred prior to the period of availability. Criteria Management is responsible for establishing a system of internal controls that will assist in the Health System?s compliance with the program?s reporting requirements specified in the Health Resources and Service Administration Provider Relief Fund Distributions and American Rescue Plan Rural Distributions Post Payment Notice of Reporting Requirements. Effect Lack of review over the reporting of eligible infection control costs to the federal agency resulted in an overstatement of reported carryover costs for the program?s periods 2 and 3 targeted distributions. As there were other eligible expenses during period 2 to offset the $84,800 in costs incurred prior to the period of availability, the infection control costs reported were correct. However, the eligible carryover balances were overstated in the periods 2 and 3 reports submitted. Cause A review was not performed to ensure reported period 2 infection control costs were proper based on the guidance set forth in the Title 2 U.S. CFR Part 200, which resulted in reporting ineligible costs. Recommendation We recommend that management follow their review process over the reporting of all costs applied towards targeted distributions to ensure proper reporting to the federal agency. We also recommend and management plans to correct cumulative amounts reported in the period 4 submission. Views of Responsible Officials and Planned Corrective Actions Refer to the Corrective Action Plan (Unaudited) for the Health System?s response to the identified deficiency.

Questioned Cost Finding No. 2020-002: Allowable Costs/Cost Principles (Significant Deficiency) $ ? Federal Agency: Department of Health and Human Services CFDA Number and Title: 93.859 and 93.866 ? Research and Development Cluster Award Number: 1P20GM125526-01A1, 5R01AG027060-10, 3R01AG027060-10S1 Award Year: 2020 Repeat Finding? No Condition During our audit, we noted the following: ? For 60 of 60 samples haphazardly selected, we noted that there was no review over the calculation of indirect costs; and ? For 31 of 31 samples haphazardly selected for payroll testing and for 7 of 7 samples haphazardly selected for fringe benefits testing, we noted that there was no review over the allocation of costs among different federal and non-federal projects. Additionally, there was no review over the calculation of fringe benefit costs. We did not identify any errors in the calculation of indirect and fringe benefit costs or the allocation of payroll and fringe benefit costs among different federal and non-federal projects that would indicate noncompliance with the allowability of costs. Criteria Management is responsible for establishing a system of internal controls that will assist in the Health System?s compliance with the B ? Allowable Costs/Cost Principles compliance requirement of Title 2 U.S. CFR Part 200. Effect A lack of review over the calculation of indirect costs and fringe benefit costs and allocation of costs among federal and non-federal projects may result in an over or understatement of allowable costs under the federal award programs which may bring undue risk of noncompliance in accordance with Title 2 U.S. CFR Part 200. Cause Due to a lack of resources among program personnel, a review was not performed. Recommendation We recommend that management incorporate a review process over the application of the indirect cost and fringe benefits rate and over the allocation of costs between federal and non-federal projects to ensure indirect costs and fringe benefits costs are accurate. Views of Responsible Officials and Planned Corrective Actions Refer to the Corrective Action Plan (Unaudited) for the Health System?s response to the identified deficiencies.

Questioned Cost Finding No. 2020-003: Cash Management (Significant Deficiency) $ ? Federal Agency: Department of Health and Human Services CFDA Number and Title: 93.859 and 93.866 ? Research and Development Cluster Award Number: 1P20GM125526-01A1, 5R01AG027060-10, 3R01AG027060-10S1 Award Year: 2020 Repeat Finding? No Condition During our audit, we noted that there was no review and approval process prior to cash being drawn from the Department of Health and Human Services? Payment Management System. However, we did not identify any exceptions in our testing that would indicate noncompliance with the requirements of cash management. Criteria Management is responsible for establishing a system of internal controls that will assist in the Health System?s compliance with the C ? Cash Management compliance requirement of Title 2 U.S. CFR Part 200. Effect Failure to obtain a review and approval prior to cash drawdowns may result in premature or inaccurate cash provided to the Health System. Cause Due to a lack of resources among program personnel, a review and approval was not performed. Recommendation We recommend that management incorporate a review and approval process prior to cash being drawn from the Department of Health and Human Services? Payment Management System. Views of Responsible Officials and Planned Corrective Actions Refer to the Corrective Action Plan (Unaudited) for the Health System?s response to the identified deficiencies.

Questioned Cost Finding No. 2020-004: Procurement, Suspension, and Debarment (Significant Deficiency) $ ? Federal Agency: Department of Health and Human Services CFDA Number and Title: 93.859 and 93.866 ? Research and Development Cluster Award Number: 1P20GM125526-01A1, 5R01AG027060-10, 3R01AG027060-10S1 Award Year: 2020 Repeat Finding? No Condition During our audit, we noted that management did not maintain records sufficient to detail the history of procurement. These records should include rationale for procurement method, vendor selection, and contract price. Management was able to evidence that a check was performed for appropriateness of procurement method, vendor selection, and contract price, but did not maintain the underlying records to support their check. Criteria Management is responsible for establishing a system of internal controls that will assist in the Health System?s compliance with the I ? Procurement, Suspension, and Debarment compliance requirement of Title 2 U.S. CFR Part 200. Effect The Health System may not be following the current Federal procurement rules or the Health System?s procurement rules. Cause Records detailing the history of procurement were not maintained. Recommendation We recommend that management maintain sufficient records that detail the history of procurement. Views of Responsible Officials and Planned Corrective Actions Refer to the Corrective Action Plan (Unaudited) for the Health System?s response to the identified deficiencies.

Questioned Cost Finding No. 2020-005: Reporting (Significant Deficiency) $ ? Federal Agency: Department of Health and Human Services CFDA Number and Title: 93.859 and 93.866 ? Research and Development Cluster Award Number: 1P20GM125526-01A1, 5R01AG027060-10, 3R01AG027060-10S1 Award Year: 2020 Repeat Finding? No Condition During our audit, we selected a haphazard sample of four quarterly Federal Financial Reports to examine, and identified two instances where there was no available evidence to verify the reports were reviewed prior to submission. However, we did not identify any errors in the reports that would indicate noncompliance with federal reporting requirements. Criteria Management is responsible for establishing a system of internal controls that will assist in the Health System?s compliance with the L ? Reporting compliance requirement of Title 2 U.S. CFR Part 200. Effect Lack of review of the Federal Financial Reports may result in potential errors not being identified. Cause Due to a lack of resources among program personnel, a review was not performed. Recommendation We recommend that management incorporate a review process over the Federal Financial Reports prior to submission to ensure reports are prepared completely and accurately. Views of Responsible Officials and Planned Corrective Actions Refer to the Corrective Action Plan (Unaudited) for the Health System?s response to the identified deficiencies.

Questioned Cost Finding No. 2020-006: Subrecipient Monitoring (Significant Deficiency) $ ? Federal Agency: Department of Health and Human Services CFDA Number and Title: 93.859 and 93.866 ? Research and Development Cluster Award Number: 1P20GM125526-01A1, 5R01AG027060-10, 3R01AG027060-10S1 Award Year: 2020 Repeat Finding? No Condition During our audit, we found no evidence of evaluation of the subrecipients? risk of noncompliance at the time of the subaward. Criteria Title 2 U.S. CFR Part 200 requires a pass-through entity to evaluate each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. Effect Without evaluating the subrecipient?s risk of noncompliance and determining the appropriate subrecipient monitoring procedures necessary, the Health System may not be providing the appropriate level of monitoring over its subrecipients. Cause The failure to evaluate each subrecipient?s risk of noncompliance at the time of subaward was due to the Health System being unaware of the risk assessment requirement. Recommendation We recommend that management ensure that personnel monitoring federal programs are familiar with the compliance requirements within Title 2 CFR Part 200, which requires the reporting of all necessary federal award information to subrecipients and risk assessments of subrecipients. This evaluation of risk may include consideration of such factors as the following: ? The subrecipient?s prior experience with the same or similar subawards; ? The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; ? Whether the subrecipient has new personnel or new or substantially changed systems; and ? The extent and results of federal awarding agency monitoring. Views of Responsible Officials and Planned Corrective Actions Refer to the Corrective Action Plan (Unaudited) for the Health System?s response to the identified deficiencies.