MRHC board releases findings of grant audit

At a special meeting of the Mineral Regional Health Center Board of Directors on Sept. 12, the results of an accounting investigation into the handling of a $10.5 million MRHC Innovations Grant were released to the public.

The investigative materials, which were released by the board after pertinent names of personnel were redacted, were prepared by certified public accountants Sally Hensel and Loren Randall and detail several claims made by Co-Program Director Denyse Traeder regarding the handling of the grant. The claims were analyzed by the accounting firm, who along with providing MRHC with a series of suggested actions, and resulted in concerns about the “tone” of the leadership at the clinic.

“Tone at the top is extremely weak regarding internal controls, accountability, and processes,” the report states. “As long as the top level does not take accountability, internal controls and fiscal and grants management seriously then employees will not take it seriously either. As a non-profit, funded by taxpayer dollars, a high level of scrutiny and oversight is required regarding what is a reasonable and necessary expense to be charged to federal funding sources.”

The conclusions made regarding the leadership at MRHC are evident when examining the report - out of the 17 claims made by Traeder and investigated by the accounting firm, only two could not be confirmed or at least strongly supported.

Furthermore, in a section entitled “Interview Narrative and Background Context Information” there is an apparent lack of confidence in the management of the grant amongst those interviewed.

“When interviewing personnel, each person was asked who the manager of the grant was and each person said that it was (REDACTED),” the report states. “Each person also reported that (REDACTED) should not be the manager of the grant. The repeated reason was that (REDACTED) was the ‘vision’ person but could not do the detail work or ‘manage’ it appropriately. (REDACTED) denies (REDACTED) was ever the manager of the grant and no knowledge of what was charged to where with regards to the grant or the center.”

These confirmed and supported claims range from the purchase of a Subaru and other charges “not permissible under the current terms of the agreement” to the submission of intent to apply for another federal grant, which is “unallowable” under the stipulations of the grant award.

Misallocation of grant funds used towards paying salaries of personnel is also among the charges.

“Numerous personnel have been instructed by (REDACTED) to work on and conduct business for endeavors relating to both for-profit entities that (REDACTED) stands to gain from as well as other businesses/organizations that benefit programs/organizations not related to FMBHP (Frontier Medicine Better Health Partnership),” the report states. “These hours were reimbursed to these individuals from innovation funds.”

The report goes on to state that staff members working for “multiple sources” such as the hospital, clinic or grants “do not provide any time and effort reporting to know what staff was working on and when.”

Further claims cite multiple instances of travelling outside of the state “for reasons other than those directly related to the functions identified within the Scope of Work of the grant.”

Reasoning for the multiple instances of misallocated and misused grant funds can perhaps be found when the report discusses the bookkeeping methods for the innovation grant at the time of the investigation.

“Currently, they are running ‘two sets of books’ regarding the grant funds,” the report states. “One set is being used to file reports and make draw requests, while the other is used to generate bill payments and receive grant funds…the paper trail of who authorizes a transaction is generally absent.”

According to the report, MRHC was contacted “multiple times” by the Office of Accounting and Grants Management in order to “explain charges made to the innovation budget” that were “suspicious and/or were not allowable.”

The result of these interactions was “concern” by the grantor as well as “several items of cost” not being allowed.

The release of the report by the MRHC board comes after several tense board meetings, during which personnel issues as well as Traeder’s claims were discussed in both open and executive sessions.

“That audit did identify issues and recommendations were made out of it,” MRHC CFO Karen Sullivan said in an earlier interview with the Mineral Independent.

“Our board is acting on those recommendations.”