Identification: Significant deficiencies in internal control over compliance. There was inadequate internal controls in place over cash disbursements for financial statement reporting
which causes inadequate internal controls over compliance related to federal programs. See Financial
Statement Findings 2021‐002 and 2021‐003 for a description of these deficiencies, including the views of
responsible officials. 2021-002: Identification: Significant deficiency in internal control over financial reporting. Criteria: SAS 115 requires significant deficiencies in internal control over financial reporting identified in an
audit to be communicated in writing to management and those charged with governance. Management is
responsible for establishing and maintaining effective internal controls over financial statement reporting. Condition: During our audit, we identified 19 out of 66 expenditures selected for testing that lacked
approval of the invoice. In addition, two of the expenditures selected for testing were credit card
transactions in which the credit card statement was approved, but was missing supporting documentation
for the specific credit card transaction and, therefore, individual approval of those transactions. Cause: The Authority has policies and procedures in place for maintaining supporting documentation and
approval of invoices, however, we found that the Authority did not consistently implement the policies and
procedures. Effect: Without adequate internal controls in place, there is increased risk of improper payments and financial statement misstatements. Repeat Finding: N/A. Recommendations: We recommend that the Authority review and strengthen their internal control policies and procedures related to cash disbursements including monitoring activities to ensure that the policies and procedures are being followed. Views of Responsible Officials: During the year ended June 30, 2020, the Authority implemented procedures
requiring a payment request form approval form be included with all cash disbursements documenting the
levels of approval required for each invoice, which must be attached and kept with the invoice and check
stub. No payments should be processed by Accounts Payable without the properly completed payment
request form. A written policy will be created by accounting department and communicated to both
leadership team and accounting department. 2021‐003 Identification: Significant deficiency in internal control over financial reporting. Criteria: SAS 115 requires significant deficiencies in internal control over financial reporting identified in an audit to be communicated in writing to management and those charged with governance. Management is responsible for establishing and maintaining effective internal controls over financial statement reporting. Ideal segregation of duties involves segregation of responsibilities for the authorization of transactions, recording of transactions, and maintaining custody of the related assets. Condition: We noted that the Authority has limited staff completing incompatible accounting functions
pertaining to cash disbursements due to the size of the entity and employee turnover. The Controller has
access to assets, posting access, reconciling responsibilities, and prepares journal entries. There is no review
of journal entries prepared by the Controller. Cause: A limited number of accounting personnel prevent a proper segregation of functions necessary to assure optimal internal control. This is not an unusual condition in similar sized organizations. Effect: Limited segregation of duties could result in misstatements not being prevented or detected on a timely basis in the normal course of operations. Repeat Finding: N/A Recommendations: We realize that with a limited number of office employees, segregation of duties is difficult or it may not be cost effective to employ additional personnel for the purpose of segregating duties. However, we recommend that the Authority continually review its internal control procedures, other compensating controls, and monitoring procedures to obtain the maximum internal control possible under the circumstances. Views of Responsible Officials: It is not cost effective for the Authority to justify staffing the number of positions necessary to have proper segregation of duties over cash disbursements. The Authority is aware of the lack of segregation of duties. The Board of Trustees and management will keep close supervision and review of accounting information as best means of preventing and detecting errors and irregularities.
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Compliance Requirements. Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. Recipients who received one or more payments exceeding $10,000 are required to report in each applicable reporting period. Condition: The Authority did not meet the requirement that the PRFs are to be used to prevent, prepare for,
and respond to coronavirus. Cause: The Authority used the initial PRF reporting guidelines that indicated the PRFs could be used to maintain health care service delivery. The Authority identified general ledger account balances that contained expenditures to maintain hospital operations. The expenditures in these accounts were included in the Excel tracking spreadsheet that was used to complete the reporting submission. The expenditures in each account were not reviewed to determine if the amount was directly attributable to preventing, preparing, or responding to coronavirus based on revised reporting guidelines issued by the Department of Health and Human Services. Effect: The Authority's Period 1 submission contained errors in reporting other PRF expenses. Questioned costs: Unknown Perspective Information: In the sample of 60 and 1 individually significant, there were 7 instances, totaling $7,161, noted from the sample that the Authority identified as not being directly attributable to preventing, protecting, and responding to coronavirus. In addition, there were 27 instances, totaling $50,787, in which the Authority identified the items as being related to preventing, protecting, and responding to coronavirus but from the supporting documentation, these items appeared to be for maintaining health care delivery. Repeat Finding: N/A Recommendations: We recommend policies and procedures over PRF reporting be strengthened to ensure that only amounts that are directly attributable to preventing, protecting, and responding to coronavirus be included. These procedures should include processes to ensure that all guidance pertaining to the PRF is reviewed to ensure accuracy and completeness. Views of Responsible Officials: The Authority used the initial PRF reporting guidelines that indicated that the PRFs could be used to maintain health care service delivery. Due to limited staff, including staff turnover, and the need to focus their efforts on maintaining health care delivery including caring for COVID‐19 patients, the Authority was not able to keep up with the continuously changing guidance pertaining to the use of the PRF. For future federal funding, the Authority plans to more closely monitor the guidelines surrounding the funding and work with outside consultants for new federal programs or those programs that have constantly changing guidance.
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Compliance Requirements. Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. PRF funds received during Period 1, April 10, 2020 through June 30, 2020, have a period of availability of January 1, 2020 through June 30, 2021. For purchases of tangible items made using PRF payments, the purchase does not need to be in the provider's possession (i.e., back ordered PPE, ambulance, etc.) to be considered an eligible expense but the costs must be incurred by the end of the period of availability. Providers must follow their basis of accounting (e.g., cash, accrual, or modified accrual) to determine expenses. Recipients who received one or more payments exceeding
$10,000 are required to report in each applicable reporting period. Condition: The Authority did not meet the requirement that the PRFs be used for expenditures within the period of availability. The Authority included $340,950 in expenditures that were outside the period of availability. Cause: The Authority used budgeted amounts for equipment and minor equipment for identifying expenditures on the Excel tracking spreadsheet that was used to complete the Period 1 reporting submission. The listing was not reviewed prior to submission to determine if the equipment and/or minor equipment was purchased and to update the cost of the items purchased. Effect: Overstatement of PRF expenditures reported on Period 1. Questioned costs: $340,950. Perspective Information: In the sample of 60 and 1 individually significant, the individually significant item
tested totaling $250,469, was noted to have never been purchased by the Authority. The Authority’s
tracking spreadsheet had a separate listing for equipment and minor equipment purchases. Based on the
error noted, we reviewed the complete listing and identified additional items that were not purchased or in
which the cost was overstated from the actual invoice amount. No extrapolation was deemed necessary. Repeat Finding: N/A Recommendations: We recommend policies and procedures over PRF reporting be strengthened to ensure expenditures are for amounts that were purchased within the period of availability and accurately report the expenditure amount. Views of Responsible Officials: In the future, the Authority will only use actual amounts for items that have been purchased. In addition, amounts will be reviewed against the funding guidance to make sure they are within the period of availability.
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Activities Allowed or Unallowed, Allowable Costs/Cost Principles/Reporting Compliance Requirements Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. The PRF funds may not be used to reimburse expenses or losses that have been reimbursed by other sources or that other sources are obligated to reimburse. Condition: The Authority is a critical access hospital and reimbursed from Medicare based on allowable expenses incurred to provide services to Medicare beneficiaries. The Authority claimed expenses
attributable to coronavirus, but did not reduce such expense by the amounts Medicare reimbursed or was
obligated to reimburse the Authority. Cause: The Authority's spreadsheet for tracking federal grant expenditures had multiple sheets for tracking the expenditures that were allowable uses for PRFs. When the expenditures were compiled for reporting, procedures were not in place to reduce the expenditures for Medicare reimbursement. Effect: The Authority claimed and reported PRF expenditures that were reimbursed by Medicare or Medicare was obligated to reimburse. Questioned costs: $1,119,149 Perspective Information: The estimate of the reimbursement from Medicare for PRF expenditures was based on the annual Medicare cost report for the year ended June 30, 2020 and June 30, 2021, as applicable. The PRF expenditures less the questioned costs noted in finding 2021‐005 and costs noted in finding 2021‐006 were removed from the annual Medicare cost report and allocation statistics adjusted accordingly to arrive at the total amount of $1,119,149 as being considered reimbursed by another source or as Medicare being obligated to reimburse. Repeat Finding: N/A Recommendations: We recommend policies and procedures over federal grant reporting be modified to
include procedures to ensure that only amounts not reimbursed by other sources or obligated to be
reimbursed by other sources are included. Views of Responsible Officials: The Authority will develop an appropriate estimate of Medicare reimbursement to reduce expenditures by for future federal award reporting as necessary.
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Material Weakness; Reporting Compliance Requirement Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. Recipients who received one or more payments exceeding $10,000 are required to report in each applicable reporting period. Condition: The Authority did not have policies and procedures in place to calculate lost revenues under options i, ii, or iii and include as applicable in the reporting submission. Cause: The Authority's spreadsheet for tracking PRF expenditures included a lost revenue calculation. However, it was incomplete and was not considered for updating and inclusion when the reporting submission was completed. Effect: Potential understatement of lost revenues to be used as eligible expenditures for the PRFs. Questioned costs: N/A Perspective Information: No audit procedures were performed for lost revenues as the calculation was incomplete and not included in the reporting submission. Repeat Finding: N/A Recommendations: We recommend policies and procedures over PRF reporting be strengthened to ensure that lost revenues are calculated and if applicable reported in accordance with PRF reporting guidance. Views of Responsible Officials: In the future, the Authority will develop a spreadsheet to calculate lost revenues as necessary based on applicable guidance. The Authority will be sure to include this calculation in the reporting submission even if they feel expenditures are adequate to cover the federal award received.
Identification: Significant deficiencies in internal control over compliance. There was inadequate internal controls in place over cash disbursements for financial statement reporting
which causes inadequate internal controls over compliance related to federal programs. See Financial
Statement Findings 2021‐002 and 2021‐003 for a description of these deficiencies, including the views of
responsible officials. 2021-002: Identification: Significant deficiency in internal control over financial reporting. Criteria: SAS 115 requires significant deficiencies in internal control over financial reporting identified in an
audit to be communicated in writing to management and those charged with governance. Management is
responsible for establishing and maintaining effective internal controls over financial statement reporting. Condition: During our audit, we identified 19 out of 66 expenditures selected for testing that lacked
approval of the invoice. In addition, two of the expenditures selected for testing were credit card
transactions in which the credit card statement was approved, but was missing supporting documentation
for the specific credit card transaction and, therefore, individual approval of those transactions. Cause: The Authority has policies and procedures in place for maintaining supporting documentation and
approval of invoices, however, we found that the Authority did not consistently implement the policies and
procedures. Effect: Without adequate internal controls in place, there is increased risk of improper payments and financial statement misstatements. Repeat Finding: N/A. Recommendations: We recommend that the Authority review and strengthen their internal control policies and procedures related to cash disbursements including monitoring activities to ensure that the policies and procedures are being followed. Views of Responsible Officials: During the year ended June 30, 2020, the Authority implemented procedures
requiring a payment request form approval form be included with all cash disbursements documenting the
levels of approval required for each invoice, which must be attached and kept with the invoice and check
stub. No payments should be processed by Accounts Payable without the properly completed payment
request form. A written policy will be created by accounting department and communicated to both
leadership team and accounting department. 2021‐003 Identification: Significant deficiency in internal control over financial reporting. Criteria: SAS 115 requires significant deficiencies in internal control over financial reporting identified in an audit to be communicated in writing to management and those charged with governance. Management is responsible for establishing and maintaining effective internal controls over financial statement reporting. Ideal segregation of duties involves segregation of responsibilities for the authorization of transactions, recording of transactions, and maintaining custody of the related assets. Condition: We noted that the Authority has limited staff completing incompatible accounting functions
pertaining to cash disbursements due to the size of the entity and employee turnover. The Controller has
access to assets, posting access, reconciling responsibilities, and prepares journal entries. There is no review
of journal entries prepared by the Controller. Cause: A limited number of accounting personnel prevent a proper segregation of functions necessary to assure optimal internal control. This is not an unusual condition in similar sized organizations. Effect: Limited segregation of duties could result in misstatements not being prevented or detected on a timely basis in the normal course of operations. Repeat Finding: N/A Recommendations: We realize that with a limited number of office employees, segregation of duties is difficult or it may not be cost effective to employ additional personnel for the purpose of segregating duties. However, we recommend that the Authority continually review its internal control procedures, other compensating controls, and monitoring procedures to obtain the maximum internal control possible under the circumstances. Views of Responsible Officials: It is not cost effective for the Authority to justify staffing the number of positions necessary to have proper segregation of duties over cash disbursements. The Authority is aware of the lack of segregation of duties. The Board of Trustees and management will keep close supervision and review of accounting information as best means of preventing and detecting errors and irregularities.
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Compliance Requirements. Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. Recipients who received one or more payments exceeding $10,000 are required to report in each applicable reporting period. Condition: The Authority did not meet the requirement that the PRFs are to be used to prevent, prepare for,
and respond to coronavirus. Cause: The Authority used the initial PRF reporting guidelines that indicated the PRFs could be used to maintain health care service delivery. The Authority identified general ledger account balances that contained expenditures to maintain hospital operations. The expenditures in these accounts were included in the Excel tracking spreadsheet that was used to complete the reporting submission. The expenditures in each account were not reviewed to determine if the amount was directly attributable to preventing, preparing, or responding to coronavirus based on revised reporting guidelines issued by the Department of Health and Human Services. Effect: The Authority's Period 1 submission contained errors in reporting other PRF expenses. Questioned costs: Unknown Perspective Information: In the sample of 60 and 1 individually significant, there were 7 instances, totaling $7,161, noted from the sample that the Authority identified as not being directly attributable to preventing, protecting, and responding to coronavirus. In addition, there were 27 instances, totaling $50,787, in which the Authority identified the items as being related to preventing, protecting, and responding to coronavirus but from the supporting documentation, these items appeared to be for maintaining health care delivery. Repeat Finding: N/A Recommendations: We recommend policies and procedures over PRF reporting be strengthened to ensure that only amounts that are directly attributable to preventing, protecting, and responding to coronavirus be included. These procedures should include processes to ensure that all guidance pertaining to the PRF is reviewed to ensure accuracy and completeness. Views of Responsible Officials: The Authority used the initial PRF reporting guidelines that indicated that the PRFs could be used to maintain health care service delivery. Due to limited staff, including staff turnover, and the need to focus their efforts on maintaining health care delivery including caring for COVID‐19 patients, the Authority was not able to keep up with the continuously changing guidance pertaining to the use of the PRF. For future federal funding, the Authority plans to more closely monitor the guidelines surrounding the funding and work with outside consultants for new federal programs or those programs that have constantly changing guidance.
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Compliance Requirements. Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. PRF funds received during Period 1, April 10, 2020 through June 30, 2020, have a period of availability of January 1, 2020 through June 30, 2021. For purchases of tangible items made using PRF payments, the purchase does not need to be in the provider's possession (i.e., back ordered PPE, ambulance, etc.) to be considered an eligible expense but the costs must be incurred by the end of the period of availability. Providers must follow their basis of accounting (e.g., cash, accrual, or modified accrual) to determine expenses. Recipients who received one or more payments exceeding
$10,000 are required to report in each applicable reporting period. Condition: The Authority did not meet the requirement that the PRFs be used for expenditures within the period of availability. The Authority included $340,950 in expenditures that were outside the period of availability. Cause: The Authority used budgeted amounts for equipment and minor equipment for identifying expenditures on the Excel tracking spreadsheet that was used to complete the Period 1 reporting submission. The listing was not reviewed prior to submission to determine if the equipment and/or minor equipment was purchased and to update the cost of the items purchased. Effect: Overstatement of PRF expenditures reported on Period 1. Questioned costs: $340,950. Perspective Information: In the sample of 60 and 1 individually significant, the individually significant item
tested totaling $250,469, was noted to have never been purchased by the Authority. The Authority’s
tracking spreadsheet had a separate listing for equipment and minor equipment purchases. Based on the
error noted, we reviewed the complete listing and identified additional items that were not purchased or in
which the cost was overstated from the actual invoice amount. No extrapolation was deemed necessary. Repeat Finding: N/A Recommendations: We recommend policies and procedures over PRF reporting be strengthened to ensure expenditures are for amounts that were purchased within the period of availability and accurately report the expenditure amount. Views of Responsible Officials: In the future, the Authority will only use actual amounts for items that have been purchased. In addition, amounts will be reviewed against the funding guidance to make sure they are within the period of availability.
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Activities Allowed or Unallowed, Allowable Costs/Cost Principles/Reporting Compliance Requirements Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. The PRF funds may not be used to reimburse expenses or losses that have been reimbursed by other sources or that other sources are obligated to reimburse. Condition: The Authority is a critical access hospital and reimbursed from Medicare based on allowable expenses incurred to provide services to Medicare beneficiaries. The Authority claimed expenses
attributable to coronavirus, but did not reduce such expense by the amounts Medicare reimbursed or was
obligated to reimburse the Authority. Cause: The Authority's spreadsheet for tracking federal grant expenditures had multiple sheets for tracking the expenditures that were allowable uses for PRFs. When the expenditures were compiled for reporting, procedures were not in place to reduce the expenditures for Medicare reimbursement. Effect: The Authority claimed and reported PRF expenditures that were reimbursed by Medicare or Medicare was obligated to reimburse. Questioned costs: $1,119,149 Perspective Information: The estimate of the reimbursement from Medicare for PRF expenditures was based on the annual Medicare cost report for the year ended June 30, 2020 and June 30, 2021, as applicable. The PRF expenditures less the questioned costs noted in finding 2021‐005 and costs noted in finding 2021‐006 were removed from the annual Medicare cost report and allocation statistics adjusted accordingly to arrive at the total amount of $1,119,149 as being considered reimbursed by another source or as Medicare being obligated to reimburse. Repeat Finding: N/A Recommendations: We recommend policies and procedures over federal grant reporting be modified to
include procedures to ensure that only amounts not reimbursed by other sources or obligated to be
reimbursed by other sources are included. Views of Responsible Officials: The Authority will develop an appropriate estimate of Medicare reimbursement to reduce expenditures by for future federal award reporting as necessary.
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Material Weakness; Reporting Compliance Requirement Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. Recipients who received one or more payments exceeding $10,000 are required to report in each applicable reporting period. Condition: The Authority did not have policies and procedures in place to calculate lost revenues under options i, ii, or iii and include as applicable in the reporting submission. Cause: The Authority's spreadsheet for tracking PRF expenditures included a lost revenue calculation. However, it was incomplete and was not considered for updating and inclusion when the reporting submission was completed. Effect: Potential understatement of lost revenues to be used as eligible expenditures for the PRFs. Questioned costs: N/A Perspective Information: No audit procedures were performed for lost revenues as the calculation was incomplete and not included in the reporting submission. Repeat Finding: N/A Recommendations: We recommend policies and procedures over PRF reporting be strengthened to ensure that lost revenues are calculated and if applicable reported in accordance with PRF reporting guidance. Views of Responsible Officials: In the future, the Authority will develop a spreadsheet to calculate lost revenues as necessary based on applicable guidance. The Authority will be sure to include this calculation in the reporting submission even if they feel expenditures are adequate to cover the federal award received.