Audit 21564

2022-005 Department of Agriculture Federal Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Direct Loans Reporting Significant Deficiency in Internal Control Over Compliance Criteria: 30 days prior to the end of each fiscal year, a proposed operating budget and rate schedule for the coming fiscal year will be submitted to the Rural Development Area Office for approval. Condition: Management was unaware of the requirement to submit the annual proposed budget to the Rural Development Area Office within 30 days of each year end. The Hospital approves the budget annually. However, the budget is not submitted to USDA. Cause: Management was unaware of the budget reporting requirement. Effect: The Organization could be in violation of the reporting requirements if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used. Reporting Finding from Prior Year: No Recommendation: We recommend management develop a process to ensure the annual approved budget is submitted to USDA prior to 30 days of year end to ensure compliance with the reporting requirements. Views of Responsible Officials: Management agrees with the finding.

2022-005 Department of Agriculture Federal Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Direct Loans Reporting Significant Deficiency in Internal Control Over Compliance Criteria: 30 days prior to the end of each fiscal year, a proposed operating budget and rate schedule for the coming fiscal year will be submitted to the Rural Development Area Office for approval. Condition: Management was unaware of the requirement to submit the annual proposed budget to the Rural Development Area Office within 30 days of each year end. The Hospital approves the budget annually. However, the budget is not submitted to USDA. Cause: Management was unaware of the budget reporting requirement. Effect: The Organization could be in violation of the reporting requirements if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used. Reporting Finding from Prior Year: No Recommendation: We recommend management develop a process to ensure the annual approved budget is submitted to USDA prior to 30 days of year end to ensure compliance with the reporting requirements. Views of Responsible Officials: Management agrees with the finding.

2022-006 Department of Agriculture Federal Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster American Rescue Plan (ARP) Economic Development Grant for Rural Health Care Facilities Allowable Costs Significant Deficiency in Internal Control Over Compliance and Noncompliance Criteria: The Letter of Conditions indicates that the applicant?s contribution of funds towards the project costs, which totals 25% of the total project costs, shall be considered the first funds expended. Condition: Management calculated the applicant?s contribution as 25% of the funds requested for reimbursements instead of applying the full contribution to the requested reimbursement. Cause: Management was unaware the full contribution was required to be expended first. Effect: The Organization requested reimbursement for costs which were not allowable, totaling $57,500. Questioned Costs: $57,500 Context/Sampling: The entire population of allowable costs was tested consisting of one transaction. Reporting Finding from Prior Year: No Recommendation: We recommend management develop a process to ensure all conditions of grant agreements are met and costs are allowable. Views of Responsible Officials: Management agrees with the finding.

2022-004 Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 4 TIN #860096775 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: The Hospital did not properly include 340B revenues and audit adjustments in net patient service revenue. In addition, the Hospital did not properly report payor categories for quarters in which the net patient service revenues were negative. Cause: Due to limited reporting guidance available, specific to negative net patient service revenue, the established internal controls did not consider all revenue streams included in net patient service revenue or the impact of the negative payor revenue amounts on the lost revenue calculation and ensure accurate quarterly reporting of net patient revenue. 340B revenues and final audit adjustments were excluded in error. Effect: Lost revenue on the report submitted to the Department of Health and Human Services for Period 4 was understated by $920,201. The lack of adequate policies to calculate allowable costs caused the report to be filed incorrectly. Total corrected lost revenues for 2020 are $5,550,661 compared to the $5,356,295 that was reported. The corrected lost revenues for 2021 are $1,073,776 compared to the $534,414 reported. The corrected lost revenues for 2022 are $2,982,013 compared to the $2,795,540 reported. Questioned Costs: None reported relating to Period 4 as eligible expenses identified exceeded Period 4 funds received. Context: There are 96 key line items related to lost revenue which were tested on the Period 4 Department of Health and Human Services special report. 21 of the 96 key line items did not actually agree to net patient service revenue on the general ledger. Repeat Finding from Prior Years: Yes, 2021-004. Recommendation: We recommend the Hospital implement a control process which verified that net patient revenue included in the lost revenue calculation is reconciled with the audited financial statements. In addition, a formal review and approval process should be implemented to ensure calculations are in accordance with applicable requirements. The Hospital should modify the lost revenue reported on future reports, if any, to reflect the total lost revenue amount. Views of Responsible Officials: Management agrees with the finding.

2022-005 Department of Agriculture Federal Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Direct Loans Reporting Significant Deficiency in Internal Control Over Compliance Criteria: 30 days prior to the end of each fiscal year, a proposed operating budget and rate schedule for the coming fiscal year will be submitted to the Rural Development Area Office for approval. Condition: Management was unaware of the requirement to submit the annual proposed budget to the Rural Development Area Office within 30 days of each year end. The Hospital approves the budget annually. However, the budget is not submitted to USDA. Cause: Management was unaware of the budget reporting requirement. Effect: The Organization could be in violation of the reporting requirements if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used. Reporting Finding from Prior Year: No Recommendation: We recommend management develop a process to ensure the annual approved budget is submitted to USDA prior to 30 days of year end to ensure compliance with the reporting requirements. Views of Responsible Officials: Management agrees with the finding.

2022-005 Department of Agriculture Federal Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Direct Loans Reporting Significant Deficiency in Internal Control Over Compliance Criteria: 30 days prior to the end of each fiscal year, a proposed operating budget and rate schedule for the coming fiscal year will be submitted to the Rural Development Area Office for approval. Condition: Management was unaware of the requirement to submit the annual proposed budget to the Rural Development Area Office within 30 days of each year end. The Hospital approves the budget annually. However, the budget is not submitted to USDA. Cause: Management was unaware of the budget reporting requirement. Effect: The Organization could be in violation of the reporting requirements if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used. Reporting Finding from Prior Year: No Recommendation: We recommend management develop a process to ensure the annual approved budget is submitted to USDA prior to 30 days of year end to ensure compliance with the reporting requirements. Views of Responsible Officials: Management agrees with the finding.

2022-006 Department of Agriculture Federal Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster American Rescue Plan (ARP) Economic Development Grant for Rural Health Care Facilities Allowable Costs Significant Deficiency in Internal Control Over Compliance and Noncompliance Criteria: The Letter of Conditions indicates that the applicant?s contribution of funds towards the project costs, which totals 25% of the total project costs, shall be considered the first funds expended. Condition: Management calculated the applicant?s contribution as 25% of the funds requested for reimbursements instead of applying the full contribution to the requested reimbursement. Cause: Management was unaware the full contribution was required to be expended first. Effect: The Organization requested reimbursement for costs which were not allowable, totaling $57,500. Questioned Costs: $57,500 Context/Sampling: The entire population of allowable costs was tested consisting of one transaction. Reporting Finding from Prior Year: No Recommendation: We recommend management develop a process to ensure all conditions of grant agreements are met and costs are allowable. Views of Responsible Officials: Management agrees with the finding.

2022-004 Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 4 TIN #860096775 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: The Hospital did not properly include 340B revenues and audit adjustments in net patient service revenue. In addition, the Hospital did not properly report payor categories for quarters in which the net patient service revenues were negative. Cause: Due to limited reporting guidance available, specific to negative net patient service revenue, the established internal controls did not consider all revenue streams included in net patient service revenue or the impact of the negative payor revenue amounts on the lost revenue calculation and ensure accurate quarterly reporting of net patient revenue. 340B revenues and final audit adjustments were excluded in error. Effect: Lost revenue on the report submitted to the Department of Health and Human Services for Period 4 was understated by $920,201. The lack of adequate policies to calculate allowable costs caused the report to be filed incorrectly. Total corrected lost revenues for 2020 are $5,550,661 compared to the $5,356,295 that was reported. The corrected lost revenues for 2021 are $1,073,776 compared to the $534,414 reported. The corrected lost revenues for 2022 are $2,982,013 compared to the $2,795,540 reported. Questioned Costs: None reported relating to Period 4 as eligible expenses identified exceeded Period 4 funds received. Context: There are 96 key line items related to lost revenue which were tested on the Period 4 Department of Health and Human Services special report. 21 of the 96 key line items did not actually agree to net patient service revenue on the general ledger. Repeat Finding from Prior Years: Yes, 2021-004. Recommendation: We recommend the Hospital implement a control process which verified that net patient revenue included in the lost revenue calculation is reconciled with the audited financial statements. In addition, a formal review and approval process should be implemented to ensure calculations are in accordance with applicable requirements. The Hospital should modify the lost revenue reported on future reports, if any, to reflect the total lost revenue amount. Views of Responsible Officials: Management agrees with the finding.