Audit 362800

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #870212456 Activities Allowed or Unallowed and Allowable Cost/Cost Principles Significant Deficiency in Internal Control Over Compliance and Noncompliance Not Considered Material Criteria: 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 District claimed and reported expenditures that contained errors based upon the underlying documentation. Additionally, the District did not have internal controls in place to review and approve allowable expenditures separate from the preparer. Cause: The District had multiple individuals identifying and compiling eligible costs, however, the District did not have an internal control process in place to ensure a secondary review and approval of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing. The summary spreadsheet was used to claim allowable costs under the federal program. Additionally, not all supporting documentation was retained. Effect: There is a potential that costs may be claimed and reported are not allowable or amounts claimed may not be supported during a subsequent examination. Questioned Costs: None reported. Context: A nonstatistical sample of 60 supplies, services, and payroll transactions out of a population of approximately 1,476 totaling $3,100,530 were selected for testing. The sample contained errors in two transactions in which the amounts claimed on the Period 1 report were not supported by invoices. The amounts claimed not supported by invoices totaled $2,097 out of a total sample value of $2,021,539. Repeat Finding from Prior Years: No Recommendation: We recommend the District modify internal control policies to ensure amounts claimed for this program agree to underlying documentation and to ensure the records are retained to support the amounts. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #870212456 Reporting Material Weakness in Internal Control Over Compliance and Noncompliance Not Considered Material Criteria: The District must establish and maintain effective internal control over federal awards that provides reasonable assurance that the District is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: Amounts reported for lost revenue did not agree to the supporting documentation provided. Additionally, the District did not have internal controls in place to review and approve reporting prior to submission. Cause: The District did not have an internal control process in place to ensure the accuracy of the reporting of key line items. Additionally, there was no internal control process in place to review and approve the reporting prior to submission. Effect: Four of the eight key line items on the reporting submitted to the Department of Health and Human Services (HHS) for Period 1 contained errors. Ultimately, lost revenue report was considered potentially understated. Questioned Costs: None reported. Context: All key line items were tested on the report to HHS for Period 1. Repeat Finding from Prior Years: No Recommendation: We recommend that management review the calculation for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Additionally, we recommend management develop a control that involves review and approval of information to be reported separate from the preparer prior to submission Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #870212456 Other – Preparation of Schedule of Expenditures and Federal Awards Significant Deficiency in Internal Control Over Compliance Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the schedule. Condition: The District does not have an internal control system designed to provide for a complete and accurate Schedule being audited. We were requested to draft 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 District meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the District would not be able to draft the Schedule that is correct without the assistance from the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the District’s Schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #870212456 Activities Allowed or Unallowed and Allowable Cost/Cost Principles Significant Deficiency in Internal Control Over Compliance and Noncompliance Not Considered Material Criteria: 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 District claimed and reported expenditures that contained errors based upon the underlying documentation. Additionally, the District did not have internal controls in place to review and approve allowable expenditures separate from the preparer. Cause: The District had multiple individuals identifying and compiling eligible costs, however, the District did not have an internal control process in place to ensure a secondary review and approval of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing. The summary spreadsheet was used to claim allowable costs under the federal program. Additionally, not all supporting documentation was retained. Effect: There is a potential that costs may be claimed and reported are not allowable or amounts claimed may not be supported during a subsequent examination. Questioned Costs: None reported. Context: A nonstatistical sample of 60 supplies, services, and payroll transactions out of a population of approximately 1,476 totaling $3,100,530 were selected for testing. The sample contained errors in two transactions in which the amounts claimed on the Period 1 report were not supported by invoices. The amounts claimed not supported by invoices totaled $2,097 out of a total sample value of $2,021,539. Repeat Finding from Prior Years: No Recommendation: We recommend the District modify internal control policies to ensure amounts claimed for this program agree to underlying documentation and to ensure the records are retained to support the amounts. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #870212456 Reporting Material Weakness in Internal Control Over Compliance and Noncompliance Not Considered Material Criteria: The District must establish and maintain effective internal control over federal awards that provides reasonable assurance that the District is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: Amounts reported for lost revenue did not agree to the supporting documentation provided. Additionally, the District did not have internal controls in place to review and approve reporting prior to submission. Cause: The District did not have an internal control process in place to ensure the accuracy of the reporting of key line items. Additionally, there was no internal control process in place to review and approve the reporting prior to submission. Effect: Four of the eight key line items on the reporting submitted to the Department of Health and Human Services (HHS) for Period 1 contained errors. Ultimately, lost revenue report was considered potentially understated. Questioned Costs: None reported. Context: All key line items were tested on the report to HHS for Period 1. Repeat Finding from Prior Years: No Recommendation: We recommend that management review the calculation for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Additionally, we recommend management develop a control that involves review and approval of information to be reported separate from the preparer prior to submission Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #870212456 Other – Preparation of Schedule of Expenditures and Federal Awards Significant Deficiency in Internal Control Over Compliance Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the schedule. Condition: The District does not have an internal control system designed to provide for a complete and accurate Schedule being audited. We were requested to draft 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 District meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the District would not be able to draft the Schedule that is correct without the assistance from the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the District’s Schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.