Department of Housing and Urban Development
Federal Financial Assistance Listing #14.128
Section 242 – Mortgage Insurance – Hospitals
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 – Period 4 TIN #370645239
Preparation of Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control Over Compliance ‐ Other
Criteria: Proper controls over financial reporting include the ability to prepare the consolidated Schedule of Expenditures of Federal Awards (Schedule) and accompanying notes to the Schedule.
Condition: The Organization 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 Organization meets a specified threshold of federal expenditures.
Effect: There is a reasonable possibility that the Organization 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: Yes, Finding 2022‐003.
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 Organization’s Schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
Department of Housing and Urban Development
Federal Financial Assistance Listing #14.128
Section 242 – Mortgage Insurance – Hospitals
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 – Period 4 TIN #370645239
Preparation of Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control Over Compliance ‐ Other
Criteria: Proper controls over financial reporting include the ability to prepare the consolidated Schedule of Expenditures of Federal Awards (Schedule) and accompanying notes to the Schedule.
Condition: The Organization 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 Organization meets a specified threshold of federal expenditures.
Effect: There is a reasonable possibility that the Organization 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: Yes, Finding 2022‐003.
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 Organization’s Schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
Department of Housing and Urban Development
Federal Financial Assistance Listing #14.128
Section 242 – Mortgage Insurance ‐ Hospitals
Reporting
Material Weakness in Internal Control Over Compliance and Noncompliance
Criteria: The OMB Compliance Supplement requires that non‐federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements.
Condition: The Section 242 – Mortgage Insurance ‐ Hospitals Program requires quarterly reports and certain annual reports. For the year ended July 31, 2023, the Organization failed to file the annual budget prior to the start of the year.
Cause: The Organization did not follow their internal control policy to ensure the required report was filed.
Effect: The required report was not submitted in accordance with loan requirements.
Questioned Costs: None reported.
Context: There were a total of eight reports required to be submitted for the year ended July 31, 2023. Three were selected for testing. Of the three selected, one was not submitted as required. Through additional inquiry, there were no other reports identified as not being submitted.
Repeat Finding from Prior Years: Yes, Finding 2022‐004.
Recommendation: We recommend the Organization enhance internal control policies to ensure required reports are filed timely and accurately.
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 – Period 4 TIN #370645239
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 Organization included a lost revenues in the Department of Health and Human Services (HHS) special report for Period 4 that were incorrectly calculated which caused the report to be inaccurate.
Cause: The Organization did not have an adequate internal control policy in place to ensure the lost revenue calculation that was reported on the HHS report was complete and accurate.
Effect: The lack of adequate policies governing report preparation and submission increases the risk that the report could be filed incorrectly.
Questioned Costs: None reported. Had the lost revenue calculation been reported correctly, lost revenue would have decreased by $512,211. However, the Organization did not claim any lost revenue in Period 4, so there would be no funds to return.
Context: There was one lost revenue calculation required for the HHS Period 4 special report, and it was selected for testing.
Repeat Finding from Prior Years: Yes, Finding 2021‐009.
Recommendation: We recommend that the Organization implement procedures to ensure the lost revenue calculation reported on the HHS special report meet the requirements of the federal program.
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 – Period 4 TIN #370645239
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Significant Deficiency in Internal Control Over Compliance
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. The Organization claimed expenses based on specifically identified COVID related expenses and general and administrative expenses.
Condition: During our testing, there was no documentation of review and approval of the expenditure listing or lost revenue calculation. The Organization also miscalculated the portion of an expense that was reimbursed by another source.
Cause: The Organization did not have an adequate internal control policy in place to ensure review and approval of expenditures and lost revenue claimed under the federal programs was documented and that all claimed expenditures were accurately calculated and claimed.
Effect: The lack of adequate policies governing review and approval over the expenditure listing and lost revenue calculation increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance and miscalculation of reimbursement by other sources in a timely manner.
Question Costs: None reported.
Context/Sampling: A nonstatistical sample of 65 expenditures were selected for testing, which accounted for $172,298 of $940,628 direct program expenditures. Of these 65, the Medicare reimbursement was miscalculated for one selected item. There was one lost revenue calculation and one expenditure detail and both were tested.
Repeat Finding from Prior Year: Yes, Finding 2021‐008.
Recommendation: We recommend that the Organization enhance internal control policies to ensure the expenditure listing and lost revenue calculation are reviewed and approved to ensure that all payments are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency.
Views of Responsible Officials: Management agrees with the finding.
Department of Housing and Urban Development
Federal Financial Assistance Listing #14.128
Section 242 – Mortgage Insurance – Hospitals
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 – Period 4 TIN #370645239
Preparation of Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control Over Compliance ‐ Other
Criteria: Proper controls over financial reporting include the ability to prepare the consolidated Schedule of Expenditures of Federal Awards (Schedule) and accompanying notes to the Schedule.
Condition: The Organization 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 Organization meets a specified threshold of federal expenditures.
Effect: There is a reasonable possibility that the Organization 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: Yes, Finding 2022‐003.
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 Organization’s Schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
Department of Housing and Urban Development
Federal Financial Assistance Listing #14.128
Section 242 – Mortgage Insurance – Hospitals
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 – Period 4 TIN #370645239
Preparation of Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control Over Compliance ‐ Other
Criteria: Proper controls over financial reporting include the ability to prepare the consolidated Schedule of Expenditures of Federal Awards (Schedule) and accompanying notes to the Schedule.
Condition: The Organization 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 Organization meets a specified threshold of federal expenditures.
Effect: There is a reasonable possibility that the Organization 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: Yes, Finding 2022‐003.
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 Organization’s Schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
Department of Housing and Urban Development
Federal Financial Assistance Listing #14.128
Section 242 – Mortgage Insurance ‐ Hospitals
Reporting
Material Weakness in Internal Control Over Compliance and Noncompliance
Criteria: The OMB Compliance Supplement requires that non‐federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements.
Condition: The Section 242 – Mortgage Insurance ‐ Hospitals Program requires quarterly reports and certain annual reports. For the year ended July 31, 2023, the Organization failed to file the annual budget prior to the start of the year.
Cause: The Organization did not follow their internal control policy to ensure the required report was filed.
Effect: The required report was not submitted in accordance with loan requirements.
Questioned Costs: None reported.
Context: There were a total of eight reports required to be submitted for the year ended July 31, 2023. Three were selected for testing. Of the three selected, one was not submitted as required. Through additional inquiry, there were no other reports identified as not being submitted.
Repeat Finding from Prior Years: Yes, Finding 2022‐004.
Recommendation: We recommend the Organization enhance internal control policies to ensure required reports are filed timely and accurately.
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 – Period 4 TIN #370645239
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 Organization included a lost revenues in the Department of Health and Human Services (HHS) special report for Period 4 that were incorrectly calculated which caused the report to be inaccurate.
Cause: The Organization did not have an adequate internal control policy in place to ensure the lost revenue calculation that was reported on the HHS report was complete and accurate.
Effect: The lack of adequate policies governing report preparation and submission increases the risk that the report could be filed incorrectly.
Questioned Costs: None reported. Had the lost revenue calculation been reported correctly, lost revenue would have decreased by $512,211. However, the Organization did not claim any lost revenue in Period 4, so there would be no funds to return.
Context: There was one lost revenue calculation required for the HHS Period 4 special report, and it was selected for testing.
Repeat Finding from Prior Years: Yes, Finding 2021‐009.
Recommendation: We recommend that the Organization implement procedures to ensure the lost revenue calculation reported on the HHS special report meet the requirements of the federal program.
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 – Period 4 TIN #370645239
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Significant Deficiency in Internal Control Over Compliance
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. The Organization claimed expenses based on specifically identified COVID related expenses and general and administrative expenses.
Condition: During our testing, there was no documentation of review and approval of the expenditure listing or lost revenue calculation. The Organization also miscalculated the portion of an expense that was reimbursed by another source.
Cause: The Organization did not have an adequate internal control policy in place to ensure review and approval of expenditures and lost revenue claimed under the federal programs was documented and that all claimed expenditures were accurately calculated and claimed.
Effect: The lack of adequate policies governing review and approval over the expenditure listing and lost revenue calculation increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance and miscalculation of reimbursement by other sources in a timely manner.
Question Costs: None reported.
Context/Sampling: A nonstatistical sample of 65 expenditures were selected for testing, which accounted for $172,298 of $940,628 direct program expenditures. Of these 65, the Medicare reimbursement was miscalculated for one selected item. There was one lost revenue calculation and one expenditure detail and both were tested.
Repeat Finding from Prior Year: Yes, Finding 2021‐008.
Recommendation: We recommend that the Organization enhance internal control policies to ensure the expenditure listing and lost revenue calculation are reviewed and approved to ensure that all payments are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency.
Views of Responsible Officials: Management agrees with the finding.