FAC Explorer

Audit 306230

FY End
2023-04-30
Total Expended
$1.40M
Findings
4
Programs
4
Organization: Phillips County Hospital Association (MT)
Year: 2023 Accepted: 2024-05-14
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
396603 2023-004 Material Weakness - N
396604 2023-005 Material Weakness - L
973045 2023-004 Material Weakness - N
973046 2023-005 Material Weakness - L

Programs

ALN Program Spent Major Findings
10.766 Community Facilities Loans and Grants $780,248 Yes 2
93.498 Provider Relief Fund $506,454 - 0
93.697 Covid-19 Testing for Rural Health Clinics $100,000 - 0
93.301 Small Rural Hospital Improvement Grant Program $11,100 - 0

Contacts

Name Title Type
D4BCV22GCZQ4 Jo Tharp Auditee
4066541800 Scott Nelson Auditor
No contacts on file

Notes to SEFA

Title: Note 1 Basis of Presentation Accounting Policies: Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: Phillips County Hospital Association does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Phillips County Hospital Association under programs of the federal government for the year ended April 30, 2023. 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 Phillips County Hospital Association, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Phillips County Hospital Association.
Title: Note 4 Community Facilities Loan Program Accounting Policies: Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: Phillips County Hospital Association does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. Expenditures reported in this Schedule under the Rural Development Program Community Facilities Loans and Grants consist of the beginning of the year outstanding loan balances plus advances during the year. During the year, there were no advances. The outstanding balances at April 30, 2023 totaled $758,928.
Title: Note 4 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Accounting Policies: Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: Phillips County Hospital Association does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. Phillips County Hospital Association received amounts from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) program (Federal Financial Assistance Listing #93.498) in the amount of $3,425,374 as of April 30, 2023, exclusive of interest earned. The Hospital returned $950,752 of unspent funds. The PRF expenditures are not recognized on the Schedule until the expenditures are included in the reporting to HHS as required under the PRF program. In accordance with the 2022 compliance supplement, the PRF expenditures recognized on the Schedule are based on the reporting to HHS for Period 4, defined as payments received during July 1, 2021 to December 31, 2021 of $506,359, plus interest of $95, and Period 5, defined as payments received during January 1, 2022 to June 30, 2022 as required under the PRF program. The Hospital did not receive funding during Period 5.

Finding Details

Finding 2023-004
Special Tests and Provisions 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, terms and conditions of the federal award. Section 4 of the Loan Resolution Security Agreements dated April 24, 2001, November 26, 2002 and June 1, 2004, state that the Hospital must establish a segregated reserve account or a bookkeeping account. The funds in this account can only be used with USDA Rural Development concurrence. Condition – The Hospital did not fund reserves in a federally insured bank for debt service payments. The Hospital had cash balances on hand exceeding the required reserve amount; as well as board designated investment balances for debt repayment, however, the reserve funds were not segregated in a separate bank account or bookkeeping account in the trial balance. Cause – The Hospital did not have an internal control process in place to ensure that the required debt service reserve fund was established and maintained. Effect – The Hospital could be in violation of the reserve amount requirements if management is not monitoring compliance. Questioned Costs – None reported. Context/Sampling – Sampling was not used. Repeat Finding from Prior Years: No. Recommendation – We recommend management transfer the required reserve amount to a separate bank account or establish a bookkeeping account in the trial balance. Controls should be established and documented to monitor compliance with the reserve fund provisions. Views of Responsible Officials – Management agrees with the finding.
Finding 2023-005
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, terms and conditions of the federal award. Section 5 of the Loan Resolution Security Agreement requires annual audited financial statements to be submitted. Condition – The Hospital did not provide audited financial statements as required to the Department of Agriculture within the required timeframe. The fiscal years 2020, 2021 and 2022 audit report have not been submitted to the federal agency. Cause – The Hospital did not have an internal control process in place to ensure the audited financial statements were submitted to the Department of Agriculture within the timeframe established in the Letter(s) of Conditions. Effect – The required audited financial statements were not submitted by the requested date. Questioned Costs – None reported. Context/Sampling – Sampling was not used. Repeat Finding from Prior Years: No. Recommendation – We recommend the Hospital implement procedures to ensure the required reporting is submitted to the Department of Agriculture within the timeframe established in the Letter(s) of Conditions and in accordance with the requirements of the Loan Resolution Security Agreement. Views of Responsible Officials – Management agrees with the finding.
Finding 2023-004
Special Tests and Provisions 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, terms and conditions of the federal award. Section 4 of the Loan Resolution Security Agreements dated April 24, 2001, November 26, 2002 and June 1, 2004, state that the Hospital must establish a segregated reserve account or a bookkeeping account. The funds in this account can only be used with USDA Rural Development concurrence. Condition – The Hospital did not fund reserves in a federally insured bank for debt service payments. The Hospital had cash balances on hand exceeding the required reserve amount; as well as board designated investment balances for debt repayment, however, the reserve funds were not segregated in a separate bank account or bookkeeping account in the trial balance. Cause – The Hospital did not have an internal control process in place to ensure that the required debt service reserve fund was established and maintained. Effect – The Hospital could be in violation of the reserve amount requirements if management is not monitoring compliance. Questioned Costs – None reported. Context/Sampling – Sampling was not used. Repeat Finding from Prior Years: No. Recommendation – We recommend management transfer the required reserve amount to a separate bank account or establish a bookkeeping account in the trial balance. Controls should be established and documented to monitor compliance with the reserve fund provisions. Views of Responsible Officials – Management agrees with the finding.
Finding 2023-005
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, terms and conditions of the federal award. Section 5 of the Loan Resolution Security Agreement requires annual audited financial statements to be submitted. Condition – The Hospital did not provide audited financial statements as required to the Department of Agriculture within the required timeframe. The fiscal years 2020, 2021 and 2022 audit report have not been submitted to the federal agency. Cause – The Hospital did not have an internal control process in place to ensure the audited financial statements were submitted to the Department of Agriculture within the timeframe established in the Letter(s) of Conditions. Effect – The required audited financial statements were not submitted by the requested date. Questioned Costs – None reported. Context/Sampling – Sampling was not used. Repeat Finding from Prior Years: No. Recommendation – We recommend the Hospital implement procedures to ensure the required reporting is submitted to the Department of Agriculture within the timeframe established in the Letter(s) of Conditions and in accordance with the requirements of the Loan Resolution Security Agreement. Views of Responsible Officials – Management agrees with the finding.