Audit 329595

FY End

2024-04-30

Total Expended

$808,012

Findings

2

Programs

5

Organization: Phillips County Hospital Association (MT)

Year: 2024 Accepted: 2024-11-22

Auditor: Eide Bailly LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
510794	2024-004	Material Weakness	Yes	N
1087236	2024-004	Material Weakness	Yes	N

ALN	Program	Spent	Major	Findings
10.766	Community Facilities Loans and Grants	$758,928	Yes	1
93.301	Covid-19 Health Equity Grant	$19,950	-	0
93.301	Covid-19 Coronavirus State Hospital Improvement Grant Program	$12,200	-	0
93.323	Epidemiology and Laboratory Capacity for Infectious Diseases (elc)	$8,670	-	0
93.301	Small Rural Hospital Improvement Grant Program	$8,264	-	0

Contacts

Name	Title	Type
D4BCV22GCZQ4	Josephine Tharp	Auditee
4066545004	Steven Wimmler	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, 2024. 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 2 - Summary of Significant Accounting Policies 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 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.

Title: Note 3 - Indirect Cost Rate 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 does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate.

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, 2024, totaled $736,853.

Finding Details

Finding 2024-004

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: Yes. 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 2024-004

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: Yes. 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.