FAC Explorer

Audit 25654

FY End
2022-09-30
Total Expended
$24.59M
Findings
2
Programs
7
Organization: Hospital Development Company D/b/a Roane General Hospital (WV)
Year: 2022 Accepted: 2023-04-23
Auditor: Baker Tilly US LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
31380 2022-002 Significant Deficiency - N
607822 2022-002 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
10.766 Community Facilities Loans and Grants $23.96M Yes 1
93.155 Rural Health Research Centers $232,540 - 0
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $198,116 - 0
93.498 Covid-19 -Provider Relief Fund $141,150 - 0
93.461 Covid-19 Testing for the Uninsured $47,805 - 0
93.301 Small Rural Hospital Improvement Grant Program $2,000 - 0
93.889 National Bioterrorism Hospital Preparedness Program $1,500 - 0

Contacts

Name Title Type
FNEBNUE2D7V8 Amy Downey Auditee
3049276201 James Raley Auditor
No contacts on file

Notes to SEFA

Title: US Department of Agriculture Loan and Loan Guarantee Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting, with theexception of expenditures associated with the U.S. Department of Health and Human Services (HHS)Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution. Such expenditures arerecognized following the cost principles contained in the Uniform Guidance wherein certain types ofexpenditures are not allowable or are limited as to reimbursement. For the awards related to the ProviderRelief Fund and American Rescue Plan Rural Distribution program, the HHS has indicated the amountson the Schedule be reported corresponding to reporting requirements of the Health Resources andServices Administration (HRSA) PRF Reporting Portal. Payments from the HHS for PRF are assigned toPayment Received Periods (each, a Period) based upon the date each payment from the PRF wasreceived. Each Period as a specified Period of Availability and timing of reporting requirements. Entitiesreport into the HRSA PRF Reporting Portal after each Periods deadline to use the funds(i.e., after the end of the Period of Availability). De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Schedule includes loans and loan guarantees totaling $23,964,400 received or guaranteed by the U.S. Department of Agriculture (USDA) during the year. There were no interest subsidies, cash or administrative cost allowances received during the year ended September 30, 2022. The balance of the loans and loan guarantees as of September 30, 2022, amounted to $23,447,324.
Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting, with theexception of expenditures associated with the U.S. Department of Health and Human Services (HHS)Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution. Such expenditures arerecognized following the cost principles contained in the Uniform Guidance wherein certain types ofexpenditures are not allowable or are limited as to reimbursement. For the awards related to the ProviderRelief Fund and American Rescue Plan Rural Distribution program, the HHS has indicated the amountson the Schedule be reported corresponding to reporting requirements of the Health Resources andServices Administration (HRSA) PRF Reporting Portal. Payments from the HHS for PRF are assigned toPayment Received Periods (each, a Period) based upon the date each payment from the PRF wasreceived. Each Period as a specified Period of Availability and timing of reporting requirements. Entitiesreport into the HRSA PRF Reporting Portal after each Periods deadline to use the funds(i.e., after the end of the Period of Availability). De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Hospital Development Company (d/b/a Roane General Hospital) (the Hospital) under programs of the federal government for the year ended September 30, 2022. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Hospital, it is not intended to and does not present the balance sheets, statements of operations and changes in net assets or cash flows of the Hospital.

Finding Details

Finding 2022-002
2022-002: Debt Covenant Compliance Federal Program: Community Facilities Loans and Grants Cluster: Community Facilities Loans and Grants Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Pass-through Agency: N/A Award Number: N/A Award Year: 2022 Compliance Requirement: Special Tests and Provisions Questioned Costs: None Criteria: Section 4.6 of the USDA's Community Facilities Loan Agreement stipulates that the borrower must maintain a debt service coverage ratio of at least 1.25. Additionally, Section 5(j) of the Community Facilities Loan Resolution Agreement stipulates that the Hospital will not modify or amend its organizational documents, including any articles of incorporation or bylaws without the written consent of the government. Section 4.3 of the USDA's Loan Guarantee Agreement stipulates that the borrower must maintain certain financial reporting covenants, such as debt service coverage ratio of at least 1.25 days cash on hand in excess of 65 days, and obtaining an audited fiscal year-end financial statement audited by independent certified public accountants withing one hundred, ten days subsequent to year end. Condition and Context: The Hospital did not maintain a debt service coverage ratio of at least 1.25 or days cash on hand in excess of 65 days, as of September 30, 2022. Additionally, the Hospital amended its bylaws in September 2022 without written consent of the government. The Hospital?s audited financial statements as of September 30, 2022, were issued subsequent to one hundred, ten days following September 30, 2022. Effect: The Hospital has failed to comply with the debt covenants and subsequently received waivers from the financial institution and federal grantor. Cause: The Hospital did not have sufficient internal controls in place to monitor ongoing compliance with the loan agreement. Recommendation: We recommend that management implement procedures to ensure that all grant and loan agreements are reviewed on an ongoing basis and that compliance requirements are recorded and tracked to ensure ongoing compliance. View of Responsible Officials: Management agrees with this finding and has implemented controls to monitor ongoing compliance with both financial and non-financial covenants. Additionally, when management became aware of the non-compliance, it notified the financial institution and federal grantor and received waivers.
Finding 2022-002
2022-002: Debt Covenant Compliance Federal Program: Community Facilities Loans and Grants Cluster: Community Facilities Loans and Grants Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Pass-through Agency: N/A Award Number: N/A Award Year: 2022 Compliance Requirement: Special Tests and Provisions Questioned Costs: None Criteria: Section 4.6 of the USDA's Community Facilities Loan Agreement stipulates that the borrower must maintain a debt service coverage ratio of at least 1.25. Additionally, Section 5(j) of the Community Facilities Loan Resolution Agreement stipulates that the Hospital will not modify or amend its organizational documents, including any articles of incorporation or bylaws without the written consent of the government. Section 4.3 of the USDA's Loan Guarantee Agreement stipulates that the borrower must maintain certain financial reporting covenants, such as debt service coverage ratio of at least 1.25 days cash on hand in excess of 65 days, and obtaining an audited fiscal year-end financial statement audited by independent certified public accountants withing one hundred, ten days subsequent to year end. Condition and Context: The Hospital did not maintain a debt service coverage ratio of at least 1.25 or days cash on hand in excess of 65 days, as of September 30, 2022. Additionally, the Hospital amended its bylaws in September 2022 without written consent of the government. The Hospital?s audited financial statements as of September 30, 2022, were issued subsequent to one hundred, ten days following September 30, 2022. Effect: The Hospital has failed to comply with the debt covenants and subsequently received waivers from the financial institution and federal grantor. Cause: The Hospital did not have sufficient internal controls in place to monitor ongoing compliance with the loan agreement. Recommendation: We recommend that management implement procedures to ensure that all grant and loan agreements are reviewed on an ongoing basis and that compliance requirements are recorded and tracked to ensure ongoing compliance. View of Responsible Officials: Management agrees with this finding and has implemented controls to monitor ongoing compliance with both financial and non-financial covenants. Additionally, when management became aware of the non-compliance, it notified the financial institution and federal grantor and received waivers.