Audit 22832

Identification of the Federal Program: U.S. Department of Agriculture ? Community Facilities Loans and Grants Cluster, Community Facilities Loans and Grants ? 10.766 Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Noncompliance Criteria: The Hospital must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Hospital is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with program requirements. Terms and conditions of the federal award require the Hospital to maintain a reserve fund at specified balance levels. Condition: During 2022, the accounts that represented the reserve fund had a balance below that required by the loan resolution agreements and required deposits were not being made to restore the balances to required levels. Cause: The Hospital did not have an effective internal control process in place to ensure the reserve fund had an adequate balance. Effect: The required reserve fund balance at June 30, 2022 is $245,553 and the balance of the Hospital?s reserve funds at year end is $240,166, a shortage of $5,387. Questioned Costs: None reported. Context: Sampling was not used. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance and establish a process to review the reserve balance on a recurring basis to determine if additional reserves are needed. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Identification of the Federal Program: U.S. Department of Agriculture ? Community Facilities Loans and Grants Cluster, Community Facilities Loans and Grants ? 10.766 Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Noncompliance Criteria: The Hospital must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Hospital is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with program requirements. Terms and conditions of the federal award require the Hospital to maintain a reserve fund at specified balance levels. Condition: During 2022, the accounts that represented the reserve fund had a balance below that required by the loan resolution agreements and required deposits were not being made to restore the balances to required levels. Cause: The Hospital did not have an effective internal control process in place to ensure the reserve fund had an adequate balance. Effect: The required reserve fund balance at June 30, 2022 is $245,553 and the balance of the Hospital?s reserve funds at year end is $240,166, a shortage of $5,387. Questioned Costs: None reported. Context: Sampling was not used. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance and establish a process to review the reserve balance on a recurring basis to determine if additional reserves are needed. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.