Audit 295863

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Periods 4 & 5 TIN #420733472 Preparation of Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the Schedule is not unusual as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft the Schedule that is correct without the assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Periods 4 & 5 TIN #420733472 Preparation of Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the Schedule is not unusual as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft the Schedule that is correct without the assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Periods 4 & 5 TIN #420733472 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Significant Deficiency in Internal Control Over Compliance and Noncompliance that is not Material for Reporting 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 have evidence of formal review and approval over tracking of expenditures and lost revenue calculation that were claimed for the program. The Hospital’s lost revenue calculation for Period 4 was also reported under Option II when it should have been reported under Option III. In addition, there was no evidence retained that the Hospital’s special report submitted to the Department of Health and Human Services for Period 4 TIN #420733472 was reviewed or approved by an individual separate from the preparer prior to submission. These errors were not noted during testing of the Phase 5 report. Cause: The Hospital did not have an internal control process in place to ensure documentation of review and approval of the expenditures claimed, lost revenues calculated under the federal program, and the report submitted to the Department of Health and Human Services for Period 4 were retained. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: A nonstatistical sample of 65 items ($200,769) from a total population exceeding 250 items ($904,350) were tested for activities allowed or unallowed and allowable costs/cost principles. All lost revenue calculations were tested. Key line items were tested on the Periods 4 and 5 Department of Health and Human Services special reports. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital enhance internal control policies to ensure that formal documentation of review and approval is obtained and retained. Views of Responsible Officials: Management agrees with the finding.

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Material Noncompliance for Special Tests and Provisions 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 maintain a reserve account or request the Department of Agriculture’s (USDA) permission prior to entering into new debt in compliance with their debt agreements. As of June 30, 2023, the Hospital should have USDA debt reserves at least equal to $417,954. Cause: The lack of adequate policies governing the understanding and execution of loan agreement requirements. Effect: The Hospital was not in compliance with their provisions of the USDA debt agreements. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital enhance internal control policies to ensure that loan requirements are met. In additional we recommend the Hospital reach out to USDA to inform them of the situation and request clarification on how to best remedy the situation including establishing and funding the USDA debt reserves. Views of Responsible Officials: Management agrees with the finding.

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Periods 4 & 5 TIN #420733472 Preparation of Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the Schedule is not unusual as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft the Schedule that is correct without the assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Periods 4 & 5 TIN #420733472 Preparation of Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the Schedule is not unusual as the Schedule has unique and specialized requirements and preparation is only required when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft the Schedule that is correct without the assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Periods 4 & 5 TIN #420733472 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Significant Deficiency in Internal Control Over Compliance and Noncompliance that is not Material for Reporting 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 have evidence of formal review and approval over tracking of expenditures and lost revenue calculation that were claimed for the program. The Hospital’s lost revenue calculation for Period 4 was also reported under Option II when it should have been reported under Option III. In addition, there was no evidence retained that the Hospital’s special report submitted to the Department of Health and Human Services for Period 4 TIN #420733472 was reviewed or approved by an individual separate from the preparer prior to submission. These errors were not noted during testing of the Phase 5 report. Cause: The Hospital did not have an internal control process in place to ensure documentation of review and approval of the expenditures claimed, lost revenues calculated under the federal program, and the report submitted to the Department of Health and Human Services for Period 4 were retained. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: A nonstatistical sample of 65 items ($200,769) from a total population exceeding 250 items ($904,350) were tested for activities allowed or unallowed and allowable costs/cost principles. All lost revenue calculations were tested. Key line items were tested on the Periods 4 and 5 Department of Health and Human Services special reports. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital enhance internal control policies to ensure that formal documentation of review and approval is obtained and retained. Views of Responsible Officials: Management agrees with the finding.

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Material Noncompliance for Special Tests and Provisions 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 maintain a reserve account or request the Department of Agriculture’s (USDA) permission prior to entering into new debt in compliance with their debt agreements. As of June 30, 2023, the Hospital should have USDA debt reserves at least equal to $417,954. Cause: The lack of adequate policies governing the understanding and execution of loan agreement requirements. Effect: The Hospital was not in compliance with their provisions of the USDA debt agreements. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital enhance internal control policies to ensure that loan requirements are met. In additional we recommend the Hospital reach out to USDA to inform them of the situation and request clarification on how to best remedy the situation including establishing and funding the USDA debt reserves. Views of Responsible Officials: Management agrees with the finding.