Audit 38994

Identification: 10.766 United States Department of Agriculture (USDA), Community Facilities Loans and Grants Cluster; Noncompliance Finding/Significant Deficiency; Reporting Compliance Requirement Criteria: The USDA direct loan and guaranteed loan were entered into in 2010 for renovation of the Medical Center's healthcare facility. One direct loan and one guaranteed loan were received. Management is responsible for submitting an annual reporting checklist to the USDA throughout the duration of the loans. The annual reporting checklist contains reporting for income statement, projected budget/cash flow, balance sheet, reporting of balances in reserve accounts, certificates regarding insurance coverage, Association project information (CP Guide 28), and verification of records (CP Guide 42). Condition: While the Medical Center submitted the annual reporting checklist to the USDA, the Medical Center did not complete the annual reporting checklist in its entirety. The Medical Center did not report any fidelity bond coverage on CP Guide 28 nor did the Medical Center complete the verification of records on CP Guide 42 which indicates that the records verification be completed by a board member. Cause: The Medical Center did not have adequate procedures in place to ensure the annual reporting checklist was completed in its entirety. Effect: The Medical Center did not follow the terms and conditions per the USDA loan agreements pertaining to reporting requirements. Questioned Costs: None Perspective Information: We reviewed the annual reporting checklist noting that it was not completed in its entirety. Repeat Finding: Not applicable Recommendations: We recommend that policies and procedures over USDA reporting be strengthened to ensure that the annual reporting checklist is completed in its entirety. Views from Responsible Officials: We would note that we were unaware of the Fidelity bond requirement in the loan documents and that our USDA representative has never questioned us for the lack of reporting this information. We would also note that the Chief Financial Officer has taken the responsibility of reviewing and signing the CP Guide 42 Form as a representative of the Medical Center. We will communicate with our USDA representative for guidance on these two matters and make changes as required based on their guidance.

Identification: 10.766 United States Department of Agriculture (USDA), Community Facilities Loans and Grants Cluster; Noncompliance Finding/Significant Deficiency; Reporting Compliance Requirement Criteria: The USDA direct loan and guaranteed loan were entered into in 2010 for renovation of the Medical Center's healthcare facility. One direct loan and one guaranteed loan were received. Management is responsible for submitting an annual reporting checklist to the USDA throughout the duration of the loans. The annual reporting checklist contains reporting for income statement, projected budget/cash flow, balance sheet, reporting of balances in reserve accounts, certificates regarding insurance coverage, Association project information (CP Guide 28), and verification of records (CP Guide 42). Condition: While the Medical Center submitted the annual reporting checklist to the USDA, the Medical Center did not complete the annual reporting checklist in its entirety. The Medical Center did not report any fidelity bond coverage on CP Guide 28 nor did the Medical Center complete the verification of records on CP Guide 42 which indicates that the records verification be completed by a board member. Cause: The Medical Center did not have adequate procedures in place to ensure the annual reporting checklist was completed in its entirety. Effect: The Medical Center did not follow the terms and conditions per the USDA loan agreements pertaining to reporting requirements. Questioned Costs: None Perspective Information: We reviewed the annual reporting checklist noting that it was not completed in its entirety. Repeat Finding: Not applicable Recommendations: We recommend that policies and procedures over USDA reporting be strengthened to ensure that the annual reporting checklist is completed in its entirety. Views from Responsible Officials: We would note that we were unaware of the Fidelity bond requirement in the loan documents and that our USDA representative has never questioned us for the lack of reporting this information. We would also note that the Chief Financial Officer has taken the responsibility of reviewing and signing the CP Guide 42 Form as a representative of the Medical Center. We will communicate with our USDA representative for guidance on these two matters and make changes as required based on their guidance.