Audit 415103

Criteria: Under the Uniform Guidance (2 CFR 200), entities are required to maintain effective internal controls to ensure the proper stewardship of federal awards, including the appropriate internal controls over financial reporting for all executed agreements to assure the agreements are timely and accurately reported. Condition:In preparation for the 2025 audit, the Organization identified that a related party lease was not properly accounted for which resulted in an overstatement of investment in Ironton Medical Campus Partners LLC by $999,625; an overstatement of operating lease right of use asset by $2,099,381; an overstatement of operating lease liability by $3,436,284; and understatement of net assets without donor restrictions of $337,278 as of December 31, 2024. Cause: Ironton Medical Campus Partners LLC amended the lease for the medical office building, which the Organization is a member and lessee, effective January 1, 2024 and the lease amendment was not recorded during 2024. Procedures were not in place so that the complete information for all executed agreements are timely recorded. Effect: As of December 31, 2024, investment in Ironton Medical Campus Partners LLC was overstated by $999,625; operating lease right of use asset was overstated by $2,099,381; operating lease liability was overstated by $3,436,284; and net assets without donor restrictions was understated by $337,278. Questioned Costs: None. Recommendation: Procedures should be implemented to assure that all executed agreements are properly recorded in the trial balance/general ledger during the monthly financial close and year-end procedures. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. The Director of Accounting has implemented a new process to assure that all executed agreements are received by the finance group to assure accurate and timely recording of all agreements.

Criteria: Under Uniform Guidance (2 CFR 200), entities are required to maintain effective internal control to ensure the proper stewardship of federal awards, including appropriate internal controls over financial reporting for all general partner interests in real estate partnerships and determine the proper accounting under the equity method of accounting. Condition: In preparation for the 2025 audit, the Organization identified that their general partner interests in investment in tax credit real estate partnerships were not properly accounted for which resulted in investment in tax credit real estate partnerships and net assets without donor restrictions were understated by $1,133,583 as of December 31, 2024. Cause: Procedures were not in place so that the complete information for all of the Organization's general partner interests in tax credit real estate partnerships be reviewed to determine accounting for these interest in accordance with the equity method of accounting. Effect: As of December 31, 2024, investment in tax credit real estate partnership and net assets without donor restrictions were understated by $1,133,583. Questioned Costs: None: Recommendation: Procedures should be implemented to assure that all general partner interest in real estate partnerships are properly recorded in the trial balance/general ledger during the monthly financial close and year-end procedures. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. The Director of Accounting has implemented a new process to track all new investments in tax credit real estate partnerships allowing finance to assess the proper accounting for these using the equity method of accounting.

Criteria: Per 2 CFR § 200.512(a)(1), the single audit, data collection form (DCF), and reporting package must be submitted to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after receipt of the auditor's report(s) or nine months after the end of the audit period. Condition: The Organization’s single audit reporting package and Data Collection Form (DCF) for the fiscal year ended December 31, 2025, were due by September 30, 2026. However, the filings were not submitted to the FAC by the deadline. Cause: The Organization experienced delays in closing its books and records and completing the 2025 financial statements due to the material weakness for the lease amendment as summarized in finding 2025-001 Effect: The Organization failed to comply with federal reporting deadlines for its submission of the its reporting package under 2 CFR § 200.512. Questioned Costs: None. Recommendation: Management should establish a strict year-end close and audit preparation calendar, including pre-audit reconciliations of the SEFA and early engagement with the audit firm to ensure the DCF and reporting package are certified and submitted before the statutory deadline. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. The Director of Accounting has implemented a revised closing timeline and automated tracking for future FAC submissions.