Audit 327501

FY End

2024-06-30

Total Expended

$25.24M

Findings

2

Programs

3

Organization: Madison Community Hospital (SD)

Year: 2024 Accepted: 2024-11-06

Auditor: Eide Bailly LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
504815	2024-004	Significant Deficiency	-	N
1081257	2024-004	Significant Deficiency	-	N

ALN	Program	Spent	Major
10.766	Community Facilities Loans and Grants	$6.87M	Yes
93.301	Small Rural Hospital Improvement Grant Program	$13,312	-
93.889	National Bioterrorism Hospital Preparedness Program	$10,443	-

Contacts

Name	Title	Type
RUWKTR4ZN935	Teresa Mallett	Auditee
6052566551	Judon Mettler	Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on 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 financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The System 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 Madison Community Hospital d/b/a Madison Regional Health System (the System) under programs of the federal government for the year ended June 30, 2024. The information 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 the System, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the System.

Title: Community Facilities Loans Accounting Policies: Expenditures reported on 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 financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The System does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. Expenditures reported in this schedule consist of the beginning of the year outstanding balance for the direct loans and a guaranteed bond. There were no loan advances during the year ended June 30, 2024. Amounts reported on the schedule include three direct loans and a guaranteed bond. The guaranteed bond is guaranteed by the U.S. Department of Agriculture for up to 90% of the bond, and specifically identified as the Series 2013A Secured Rural America Bond. The outstanding balance at June 30, 2024 was $18,009,226 for the 2016 direct USDA loans and $6,391,255 for the Series 2013A Secured America Bond guaranteed by USDA.

Finding Details

Finding 2024-004

Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants – 2016 Direct Loans Special Tests and Provisions Significant Deficiency in Internal Control over Compliance Criteria: The System must establish and maintain effective internal control over the reserve fund account that is maintained in accordance with the loan resolution. The Loan Resolution Security Agreement requires a monthly amount to be set aside in a reserve fund until the specified account balance is reached. Condition: There was no documented independent review of the monthly reserve fund account reconciliations as compared to the required minimum balance. Cause: The System did not have a formal process in place to compare the required balance per the Loan Resolution Security Agreement to the monthly reserve fund account balance. Effect: With no formal review or approval in place, the risk increases for employees participating in the federal award administration to not detect and correct noncompliance in a timely manner. Questioned Costs: None reported. The required reserve balance was appropriately funded as of June 30, 2024. Context: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management implement procedures to perform an independent review of the monthly account reconciliation of the reserve account to ensure the minimum reserve balance requirement is being met. Views of Responsible Officials: Management agrees with the finding.

Finding 2024-004

Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants – 2016 Direct Loans Special Tests and Provisions Significant Deficiency in Internal Control over Compliance Criteria: The System must establish and maintain effective internal control over the reserve fund account that is maintained in accordance with the loan resolution. The Loan Resolution Security Agreement requires a monthly amount to be set aside in a reserve fund until the specified account balance is reached. Condition: There was no documented independent review of the monthly reserve fund account reconciliations as compared to the required minimum balance. Cause: The System did not have a formal process in place to compare the required balance per the Loan Resolution Security Agreement to the monthly reserve fund account balance. Effect: With no formal review or approval in place, the risk increases for employees participating in the federal award administration to not detect and correct noncompliance in a timely manner. Questioned Costs: None reported. The required reserve balance was appropriately funded as of June 30, 2024. Context: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management implement procedures to perform an independent review of the monthly account reconciliation of the reserve account to ensure the minimum reserve balance requirement is being met. Views of Responsible Officials: Management agrees with the finding.