2023-003 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities 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
Preparation of the Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control over Compliance
Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the 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. As auditors, we were requested to assist with the preparation of 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 a complete and accurate schedule.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Year: Yes, prior year finding 2022-003
Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
2023-003 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities 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
Preparation of the Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control over Compliance
Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the 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. As auditors, we were requested to assist with the preparation of 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 a complete and accurate schedule.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Year: Yes, prior year finding 2022-003
Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
2023-003 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities 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
Preparation of the Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control over Compliance
Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the 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. As auditors, we were requested to assist with the preparation of 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 a complete and accurate schedule.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Year: Yes, prior year finding 2022-003
Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
2023-003 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities 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
Preparation of the Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control over Compliance
Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the 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. As auditors, we were requested to assist with the preparation of 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 a complete and accurate schedule.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Year: Yes, prior year finding 2022-003
Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
2023-004 United States 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 and 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. Section 4 of the loan resolution security agreements dated March 28, 2012 states the Hospital must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by state and federal government or invested in marketable securities backed by the full faith and credit of the United States.
Condition: Management maintained the reserve amount in the cash sweep general fund account which was not established as a separate bookkeeping account or as a separate bank account. The Hospital had excess cash available to cover the required reserve amount.
Cause: The Hospital was unaware the funds were required to be maintained in a separate bookkeeping account or as a separate bank account.
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: Yes, prior year finding 2022-004
Recommendation: We recommend the Hospital transfer the required reserve amount to a separate bookkeeping account in the trial balance or establish a separate bank account and ensure the funds are deposited in institutions insured by state and federal governments or invested in marketable securities backed by the full faith and credit of the United States. Controls should be established and documented to monitor compliance with the reserve fund provision.
Views of Responsible Officials: Management agrees with the finding.
2023-004 United States 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 and 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. Section 4 of the loan resolution security agreements dated March 28, 2012 states the Hospital must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by state and federal government or invested in marketable securities backed by the full faith and credit of the United States.
Condition: Management maintained the reserve amount in the cash sweep general fund account which was not established as a separate bookkeeping account or as a separate bank account. The Hospital had excess cash available to cover the required reserve amount.
Cause: The Hospital was unaware the funds were required to be maintained in a separate bookkeeping account or as a separate bank account.
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: Yes, prior year finding 2022-004
Recommendation: We recommend the Hospital transfer the required reserve amount to a separate bookkeeping account in the trial balance or establish a separate bank account and ensure the funds are deposited in institutions insured by state and federal governments or invested in marketable securities backed by the full faith and credit of the United States. Controls should be established and documented to monitor compliance with the reserve fund provision.
Views of Responsible Officials: Management agrees with the finding.
2023-004 United States 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 and 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. Section 4 of the loan resolution security agreements dated March 28, 2012 states the Hospital must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by state and federal government or invested in marketable securities backed by the full faith and credit of the United States.
Condition: Management maintained the reserve amount in the cash sweep general fund account which was not established as a separate bookkeeping account or as a separate bank account. The Hospital had excess cash available to cover the required reserve amount.
Cause: The Hospital was unaware the funds were required to be maintained in a separate bookkeeping account or as a separate bank account.
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: Yes, prior year finding 2022-004
Recommendation: We recommend the Hospital transfer the required reserve amount to a separate bookkeeping account in the trial balance or establish a separate bank account and ensure the funds are deposited in institutions insured by state and federal governments or invested in marketable securities backed by the full faith and credit of the United States. Controls should be established and documented to monitor compliance with the reserve fund provision.
Views of Responsible Officials: Management agrees with the finding.
2023-005 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities Facilities Loans and Grants Cluster
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.
Condition: The Hospital’s requests for reimbursement under the Community Facilities Grant Agreement were not reviewed and approved by a separate individual.
Cause: The Hospital had multiple individuals involved in the process for identifying and compiling the requests for reimbursement; however, the Hospital did not have a formal documented review and approval process in place.
Effect: Without a documented review and approval, there is a possibility ineligible expenditures may be claimed under the program.
Questioned Costs: None reported
Context/Sampling: A nonstatistical sample of 4 ($134,681) out of a population of 9 transactions ($221,625) relating to equipment items were tested.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Hospital implement a control process which includes a formally documented review and approval over the requests for reimbursement submitted under the Community Facilities Grant Agreement.
Views of Responsible Officials: Management agrees with the finding.
2023-006 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 #460255944
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Noncompliance
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. The Hospital selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual results to 2020, 2021, and 2022 actual results by quarter. Patient care-related revenue should be reported net of adjustments for all third-party payers, charity care adjustments, bad debt, and any other discounts or adjustments, as applicable when reporting patient carerelated revenue sources.
Condition: The Hospital’s lost revenue calculation was not reviewed and approved by a separate individual outside of the preparer. The Hospital’s lost revenue calculation was based upon actual revenue billed and reported within the Hospital’s electronic medical records (EMR) system which does not consider monthly or quarterly adjustments. The Hospital’s special report submitted to the Department of Health and Human Services for Period 4 TIN#460255944 was not reviewed and approved by a separate individual outside of the individual who inputted and submitted the report.
Cause: The Hospital did not have an internal control process in place to ensure a secondary review and approval of the lost revenue calculation. The Hospital used the EMR system to calculate lost revenue due to the categories required to be input into the Hospital’s special report as the categories could not be identified within the general ledger system. The Hospital did not have an internal control process in place to ensure review and approval of the report submitted to the Department of Health and Human Services for Period 4 was performed and documented.
Effect: The lost revenue reported within the special report submitted to the Department of Health and Human Services for Period 4 was $204,862 for 2020 and $57,757 for 2021. Had the Hospital considered monthly or quarterly adjustments in the lost revenue calculation during the period of availability, the lost revenue would have been $248,664 in 2020 and $86,392 in 2021. No lost revenue was utilized during Period 4.
Questioned Costs: Lost revenue reported would increase after consideration of monthly or quarterly adjustments. As a result, there are no questioned costs for activities allowed or unallowed and allowable costs/cost principles.
Context/Sampling: Key line items were tested on the Period 4 Department of Health and Human Services special report.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Hospital implement a control process which verifies that lost revenue is calculated correctly and includes a secondary review and approval of the calculation. We recommend Hospital implement a control process to ensure the special report is reviewed and approved prior to submission.
Views of Responsible Officials: Management agrees with the finding.
2023-007 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 #460255944
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
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 Hospital’s final expenditure listing identified as eligible and claimed under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution program (the program) was not reviewed and approved by a separate individual outside of the preparer. Additionally, the Hospital claimed mortgage reimbursements as expenditures under the program.
Cause: The Hospital did not have an internal control process in place to ensure a secondary review and approval of the final expenditure listing and to ensure the expenditures claimed on the report were for expenditures incurred. Some amounts claimed under the program were mortgage reimbursements.
Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures are claimed under the program and included within the special report. Expenses included within the special report submitted to the Department of Health and Human Services for Period 4 TIN#460255944 relating to the mortgage reimbursements were overstated by $66,094.
Questioned Costs: $66,094.
Context/Sampling: Summary level testing was performed over mortgage and insurance expenses. In addition, a nonstatistical sample of 8 ($185,866) out of a population of 31 transactions ($302,202) relating to general and administrative and healthcare related expenses, including personnel, lease payments, supplies, equipment and other healthcare expenses were tested.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Hospital implement a control process which includes a secondary review and approval of the final expenditure listing used to claim the allowable costs under the program.
Views of Responsible Officials: Management agrees with the finding.
2023-003 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities 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
Preparation of the Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control over Compliance
Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the 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. As auditors, we were requested to assist with the preparation of 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 a complete and accurate schedule.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Year: Yes, prior year finding 2022-003
Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
2023-003 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities 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
Preparation of the Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control over Compliance
Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the 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. As auditors, we were requested to assist with the preparation of 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 a complete and accurate schedule.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Year: Yes, prior year finding 2022-003
Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
2023-003 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities 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
Preparation of the Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control over Compliance
Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the 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. As auditors, we were requested to assist with the preparation of 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 a complete and accurate schedule.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Year: Yes, prior year finding 2022-003
Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
2023-003 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities 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
Preparation of the Schedule of Expenditures of Federal Awards
Material Weakness in Internal Control over Compliance
Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the 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. As auditors, we were requested to assist with the preparation of 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 a complete and accurate schedule.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Year: Yes, prior year finding 2022-003
Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting.
Views of Responsible Officials: Management agrees with the finding.
2023-004 United States 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 and 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. Section 4 of the loan resolution security agreements dated March 28, 2012 states the Hospital must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by state and federal government or invested in marketable securities backed by the full faith and credit of the United States.
Condition: Management maintained the reserve amount in the cash sweep general fund account which was not established as a separate bookkeeping account or as a separate bank account. The Hospital had excess cash available to cover the required reserve amount.
Cause: The Hospital was unaware the funds were required to be maintained in a separate bookkeeping account or as a separate bank account.
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: Yes, prior year finding 2022-004
Recommendation: We recommend the Hospital transfer the required reserve amount to a separate bookkeeping account in the trial balance or establish a separate bank account and ensure the funds are deposited in institutions insured by state and federal governments or invested in marketable securities backed by the full faith and credit of the United States. Controls should be established and documented to monitor compliance with the reserve fund provision.
Views of Responsible Officials: Management agrees with the finding.
2023-004 United States 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 and 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. Section 4 of the loan resolution security agreements dated March 28, 2012 states the Hospital must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by state and federal government or invested in marketable securities backed by the full faith and credit of the United States.
Condition: Management maintained the reserve amount in the cash sweep general fund account which was not established as a separate bookkeeping account or as a separate bank account. The Hospital had excess cash available to cover the required reserve amount.
Cause: The Hospital was unaware the funds were required to be maintained in a separate bookkeeping account or as a separate bank account.
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: Yes, prior year finding 2022-004
Recommendation: We recommend the Hospital transfer the required reserve amount to a separate bookkeeping account in the trial balance or establish a separate bank account and ensure the funds are deposited in institutions insured by state and federal governments or invested in marketable securities backed by the full faith and credit of the United States. Controls should be established and documented to monitor compliance with the reserve fund provision.
Views of Responsible Officials: Management agrees with the finding.
2023-004 United States 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 and 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. Section 4 of the loan resolution security agreements dated March 28, 2012 states the Hospital must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by state and federal government or invested in marketable securities backed by the full faith and credit of the United States.
Condition: Management maintained the reserve amount in the cash sweep general fund account which was not established as a separate bookkeeping account or as a separate bank account. The Hospital had excess cash available to cover the required reserve amount.
Cause: The Hospital was unaware the funds were required to be maintained in a separate bookkeeping account or as a separate bank account.
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: Yes, prior year finding 2022-004
Recommendation: We recommend the Hospital transfer the required reserve amount to a separate bookkeeping account in the trial balance or establish a separate bank account and ensure the funds are deposited in institutions insured by state and federal governments or invested in marketable securities backed by the full faith and credit of the United States. Controls should be established and documented to monitor compliance with the reserve fund provision.
Views of Responsible Officials: Management agrees with the finding.
2023-005 United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Communities Facilities Loans and Grants Cluster
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.
Condition: The Hospital’s requests for reimbursement under the Community Facilities Grant Agreement were not reviewed and approved by a separate individual.
Cause: The Hospital had multiple individuals involved in the process for identifying and compiling the requests for reimbursement; however, the Hospital did not have a formal documented review and approval process in place.
Effect: Without a documented review and approval, there is a possibility ineligible expenditures may be claimed under the program.
Questioned Costs: None reported
Context/Sampling: A nonstatistical sample of 4 ($134,681) out of a population of 9 transactions ($221,625) relating to equipment items were tested.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Hospital implement a control process which includes a formally documented review and approval over the requests for reimbursement submitted under the Community Facilities Grant Agreement.
Views of Responsible Officials: Management agrees with the finding.
2023-006 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 #460255944
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Noncompliance
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. The Hospital selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual results to 2020, 2021, and 2022 actual results by quarter. Patient care-related revenue should be reported net of adjustments for all third-party payers, charity care adjustments, bad debt, and any other discounts or adjustments, as applicable when reporting patient carerelated revenue sources.
Condition: The Hospital’s lost revenue calculation was not reviewed and approved by a separate individual outside of the preparer. The Hospital’s lost revenue calculation was based upon actual revenue billed and reported within the Hospital’s electronic medical records (EMR) system which does not consider monthly or quarterly adjustments. The Hospital’s special report submitted to the Department of Health and Human Services for Period 4 TIN#460255944 was not reviewed and approved by a separate individual outside of the individual who inputted and submitted the report.
Cause: The Hospital did not have an internal control process in place to ensure a secondary review and approval of the lost revenue calculation. The Hospital used the EMR system to calculate lost revenue due to the categories required to be input into the Hospital’s special report as the categories could not be identified within the general ledger system. The Hospital did not have an internal control process in place to ensure review and approval of the report submitted to the Department of Health and Human Services for Period 4 was performed and documented.
Effect: The lost revenue reported within the special report submitted to the Department of Health and Human Services for Period 4 was $204,862 for 2020 and $57,757 for 2021. Had the Hospital considered monthly or quarterly adjustments in the lost revenue calculation during the period of availability, the lost revenue would have been $248,664 in 2020 and $86,392 in 2021. No lost revenue was utilized during Period 4.
Questioned Costs: Lost revenue reported would increase after consideration of monthly or quarterly adjustments. As a result, there are no questioned costs for activities allowed or unallowed and allowable costs/cost principles.
Context/Sampling: Key line items were tested on the Period 4 Department of Health and Human Services special report.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Hospital implement a control process which verifies that lost revenue is calculated correctly and includes a secondary review and approval of the calculation. We recommend Hospital implement a control process to ensure the special report is reviewed and approved prior to submission.
Views of Responsible Officials: Management agrees with the finding.
2023-007 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 #460255944
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
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 Hospital’s final expenditure listing identified as eligible and claimed under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution program (the program) was not reviewed and approved by a separate individual outside of the preparer. Additionally, the Hospital claimed mortgage reimbursements as expenditures under the program.
Cause: The Hospital did not have an internal control process in place to ensure a secondary review and approval of the final expenditure listing and to ensure the expenditures claimed on the report were for expenditures incurred. Some amounts claimed under the program were mortgage reimbursements.
Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures are claimed under the program and included within the special report. Expenses included within the special report submitted to the Department of Health and Human Services for Period 4 TIN#460255944 relating to the mortgage reimbursements were overstated by $66,094.
Questioned Costs: $66,094.
Context/Sampling: Summary level testing was performed over mortgage and insurance expenses. In addition, a nonstatistical sample of 8 ($185,866) out of a population of 31 transactions ($302,202) relating to general and administrative and healthcare related expenses, including personnel, lease payments, supplies, equipment and other healthcare expenses were tested.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Hospital implement a control process which includes a secondary review and approval of the final expenditure listing used to claim the allowable costs under the program.
Views of Responsible Officials: Management agrees with the finding.