Audit 30519

2022-003 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster 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. Within the amended letter of conditions dated August 20, 2014, for the USDA financing, annual audited financial statements are required to be submitted to USDA. In addition, the fiscal year operating budget must be submitted and approved by USDA. Condition: The fiscal year 2021 audit report was either not submitted to USDA or submitted to USDA with no retained documentation to support when the report was submitted. In addition, the FY2023 operating budget was not submitted to USDA in the period under audit. Cause: The Medical Center did not have an internal control process in place to ensure timely submission of the required reports to USDA and the Medical Center did not retain documentation to support when the fiscal year 2021 audit report was submitted to USDA. Effect: The required reports may not have been submitted to USDA. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend implementing a process to ensure timely submission of the annual audit report and operating budget and retain documentation to support when the report and budget are submitted to USDA. Views of Responsible Officials: Management agrees with the finding.

2022-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Tests and Provisions Material Weakness 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 May 13,2014 letter of conditions with USDA state the Medical Center must set aside a reserve fund at a rate of 10% of the annual payment until the reserve account reaches the amount of one full year?s annual payment. The intercreditor and parity agreement for Series 2021 Gross Revenue Medical Center Refunding Note subjects the USDA Series 2016 financing to the same financial covenant compliance requirements relating to days cash on hand and debt service. Condition: No secondary level of review is being performed over the reserve fund balance as compared to the reserve fund requirements, or the days cash on hand and debt service compared to the minimum requirements. Cause: The Medical Center did not have an internal control process in place to ensure a secondary level of review is being performed on the required minimums for the reserve account and financial covenants. Effect: The Medical Center could be in violation of the required minimums if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management implement a process and controls ensuring a secondary level of review is completed over the reserve account and the required financial covenant minimums. Views of Responsible Officials: Management agrees with the finding.

2022-003 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster 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. Within the amended letter of conditions dated August 20, 2014, for the USDA financing, annual audited financial statements are required to be submitted to USDA. In addition, the fiscal year operating budget must be submitted and approved by USDA. Condition: The fiscal year 2021 audit report was either not submitted to USDA or submitted to USDA with no retained documentation to support when the report was submitted. In addition, the FY2023 operating budget was not submitted to USDA in the period under audit. Cause: The Medical Center did not have an internal control process in place to ensure timely submission of the required reports to USDA and the Medical Center did not retain documentation to support when the fiscal year 2021 audit report was submitted to USDA. Effect: The required reports may not have been submitted to USDA. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend implementing a process to ensure timely submission of the annual audit report and operating budget and retain documentation to support when the report and budget are submitted to USDA. Views of Responsible Officials: Management agrees with the finding.

2022-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Tests and Provisions Material Weakness 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 May 13,2014 letter of conditions with USDA state the Medical Center must set aside a reserve fund at a rate of 10% of the annual payment until the reserve account reaches the amount of one full year?s annual payment. The intercreditor and parity agreement for Series 2021 Gross Revenue Medical Center Refunding Note subjects the USDA Series 2016 financing to the same financial covenant compliance requirements relating to days cash on hand and debt service. Condition: No secondary level of review is being performed over the reserve fund balance as compared to the reserve fund requirements, or the days cash on hand and debt service compared to the minimum requirements. Cause: The Medical Center did not have an internal control process in place to ensure a secondary level of review is being performed on the required minimums for the reserve account and financial covenants. Effect: The Medical Center could be in violation of the required minimums if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management implement a process and controls ensuring a secondary level of review is completed over the reserve account and the required financial covenant minimums. Views of Responsible Officials: Management agrees with the finding.