FAC Explorer

Audit 9917

FY End
2023-06-30
Total Expended
$7.54M
Findings
8
Programs
2
Organization: Bethany Lutheran Home for the Aged, Inc. (SD)
Year: 2023 Accepted: 2024-01-05
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
7575 2023-003 Material Weakness Yes P
7576 2023-003 Significant Deficiency - N
7577 2023-004 Material Weakness Yes P
7578 2023-004 Significant Deficiency - N
584017 2023-003 Material Weakness Yes P
584018 2023-003 Significant Deficiency - N
584019 2023-004 Material Weakness Yes P
584020 2023-004 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
10.766 Community Facilities Loans and Grants $5.11M Yes 2
93.498 Covid-19 Provider Relief Fund $251,311 - 0

Contacts

Name Title Type
P8E5L9F58NS1 Dalton Huber Auditee
6052757167 Joy Feige Auditor
No contacts on file

Notes to SEFA

Title: Community Facilities Loan Accounting Policies: The accompanying consolidated schedule of expenditures of federal awards (the schedule) includes the federal award activity of Bethany Lutheran Home for the Aged, Inc. (the Organization) under programs of the federal government for the year ended June 30, 2023. 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 Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. 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 Organization 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 loan balance for the direct loan and the guaranteed Senior Secured Rural America Bonds Series 2011A. There were no loan advances during the year ended June 30, 2023. The outstanding balance at June 30, 2023, was $2,134,047 for the direct USDA loan and $5,475,722 for the guaranteed Series 2011A bonds.
Title: Provider Relief Funds and American Rescue Plan (ARP) Rural Distribution Accounting Policies: The accompanying consolidated schedule of expenditures of federal awards (the schedule) includes the federal award activity of Bethany Lutheran Home for the Aged, Inc. (the Organization) under programs of the federal government for the year ended June 30, 2023. 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 Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. 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 Organization does not draw for indirect administrative expenses and has not elected to use the 10% de minimis cost rate. The Organization received amounts from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) program (Federal Financial Assistance Listing #93.498) in the amount of $1,328,803, excluding interest income. In accordance with the 2023 compliance supplement, the PRF expenditures recognized on the schedule are based on the reporting to HHS for Period 4, defined as payments received during July 1, 2021 to December 31, 2021 plus interest income of $4,056 and Period 5, defined as payments received during January 1, 2022 to June 30, 2022, as required under the PRF program. The Organization did not receive funding during Period 5. The PRF expenditures are not recognized on the schedule until the expenditures are included in the reporting to HHS as required under the PRF program. The following summarizes the Provider Relief Funds and the timing of when the amounts were recognized in the consolidated financial statements. (See table in Report)

Finding Details

Finding 2023-003
2023-003 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Preparation of Consolidated Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance - Other Criteria: Proper controls over financial reporting include the ability to prepare the consolidated schedule of expenditures of federal awards (the schedule) and accompanying notes to the schedule. Condition: The Organization does not have an internal control system designed to provide for the preparation of the schedule and notes to the schedule. As auditors, we were requested to assist with the preparation of the schedule and notes to the schedule. Cause: Auditor assistance with the preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Organizationl meets a specific threshold of federal expenditures. Effect: There is a reasonable possibility that the Organization would not be able to draft the schedule and notes to the schedule that are correct without the assistance of the auditors. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: Yes, combined with preparation of financial statements. Prior year finding 2022- 001. 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 Organization’s schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-003
2023-003 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Preparation of Consolidated Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance - Other Criteria: Proper controls over financial reporting include the ability to prepare the consolidated schedule of expenditures of federal awards (the schedule) and accompanying notes to the schedule. Condition: The Organization does not have an internal control system designed to provide for the preparation of the schedule and notes to the schedule. As auditors, we were requested to assist with the preparation of the schedule and notes to the schedule. Cause: Auditor assistance with the preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Organizationl meets a specific threshold of federal expenditures. Effect: There is a reasonable possibility that the Organization would not be able to draft the schedule and notes to the schedule that are correct without the assistance of the auditors. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: Yes, combined with preparation of financial statements. Prior year finding 2022- 001. 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 Organization’s schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-004
2023-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Tests & Provisions Significant Deficiency in Internal Control over Compliance and 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, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreement dated October 18, 2012, states the Organization must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. When approved by the federal agency, funds may be withdrawn for certain specified Facility purposes. Condition: Management created the reserve account of $114,600 in December 2022 which was established as a separate bookkeeping and bank account. However, management transposed the $116,400 amount that was required to be in the reserve account according to the Letter of Conditions. The Organization underfunded the actual reserve balance after interest earnings by $521 as of June 30, 2023. Additionally, the Organization withdrew $100,000 in May 2023 from the reserve account to deposit into the operating account and subsequently replenished the reserve account within 14 days without obtaining proper federal agency approval. Cause: Due to a clerical error, the amount required to be included in the reserve account was underfunded in December 2022. Also, management did not have a control process in place to obtain federal agency approval over the disbursement from the reserve account. Effect: The Organization could be in violation of the reserve amount requirements if the federal agency does not approve of any short-term disbursements of the reserve account. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management have a formal review and approval process in place which monitors any disbursements or replenishments of the reserve account and obtains federal agency approval, as required. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-004
2023-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Tests & Provisions Significant Deficiency in Internal Control over Compliance and 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, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreement dated October 18, 2012, states the Organization must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. When approved by the federal agency, funds may be withdrawn for certain specified Facility purposes. Condition: Management created the reserve account of $114,600 in December 2022 which was established as a separate bookkeeping and bank account. However, management transposed the $116,400 amount that was required to be in the reserve account according to the Letter of Conditions. The Organization underfunded the actual reserve balance after interest earnings by $521 as of June 30, 2023. Additionally, the Organization withdrew $100,000 in May 2023 from the reserve account to deposit into the operating account and subsequently replenished the reserve account within 14 days without obtaining proper federal agency approval. Cause: Due to a clerical error, the amount required to be included in the reserve account was underfunded in December 2022. Also, management did not have a control process in place to obtain federal agency approval over the disbursement from the reserve account. Effect: The Organization could be in violation of the reserve amount requirements if the federal agency does not approve of any short-term disbursements of the reserve account. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management have a formal review and approval process in place which monitors any disbursements or replenishments of the reserve account and obtains federal agency approval, as required. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-003
2023-003 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Preparation of Consolidated Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance - Other Criteria: Proper controls over financial reporting include the ability to prepare the consolidated schedule of expenditures of federal awards (the schedule) and accompanying notes to the schedule. Condition: The Organization does not have an internal control system designed to provide for the preparation of the schedule and notes to the schedule. As auditors, we were requested to assist with the preparation of the schedule and notes to the schedule. Cause: Auditor assistance with the preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Organizationl meets a specific threshold of federal expenditures. Effect: There is a reasonable possibility that the Organization would not be able to draft the schedule and notes to the schedule that are correct without the assistance of the auditors. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: Yes, combined with preparation of financial statements. Prior year finding 2022- 001. 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 Organization’s schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-003
2023-003 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Preparation of Consolidated Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance - Other Criteria: Proper controls over financial reporting include the ability to prepare the consolidated schedule of expenditures of federal awards (the schedule) and accompanying notes to the schedule. Condition: The Organization does not have an internal control system designed to provide for the preparation of the schedule and notes to the schedule. As auditors, we were requested to assist with the preparation of the schedule and notes to the schedule. Cause: Auditor assistance with the preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Organizationl meets a specific threshold of federal expenditures. Effect: There is a reasonable possibility that the Organization would not be able to draft the schedule and notes to the schedule that are correct without the assistance of the auditors. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: Yes, combined with preparation of financial statements. Prior year finding 2022- 001. 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 Organization’s schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-004
2023-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Tests & Provisions Significant Deficiency in Internal Control over Compliance and 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, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreement dated October 18, 2012, states the Organization must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. When approved by the federal agency, funds may be withdrawn for certain specified Facility purposes. Condition: Management created the reserve account of $114,600 in December 2022 which was established as a separate bookkeeping and bank account. However, management transposed the $116,400 amount that was required to be in the reserve account according to the Letter of Conditions. The Organization underfunded the actual reserve balance after interest earnings by $521 as of June 30, 2023. Additionally, the Organization withdrew $100,000 in May 2023 from the reserve account to deposit into the operating account and subsequently replenished the reserve account within 14 days without obtaining proper federal agency approval. Cause: Due to a clerical error, the amount required to be included in the reserve account was underfunded in December 2022. Also, management did not have a control process in place to obtain federal agency approval over the disbursement from the reserve account. Effect: The Organization could be in violation of the reserve amount requirements if the federal agency does not approve of any short-term disbursements of the reserve account. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management have a formal review and approval process in place which monitors any disbursements or replenishments of the reserve account and obtains federal agency approval, as required. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-004
2023-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Tests & Provisions Significant Deficiency in Internal Control over Compliance and 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, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreement dated October 18, 2012, states the Organization must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. When approved by the federal agency, funds may be withdrawn for certain specified Facility purposes. Condition: Management created the reserve account of $114,600 in December 2022 which was established as a separate bookkeeping and bank account. However, management transposed the $116,400 amount that was required to be in the reserve account according to the Letter of Conditions. The Organization underfunded the actual reserve balance after interest earnings by $521 as of June 30, 2023. Additionally, the Organization withdrew $100,000 in May 2023 from the reserve account to deposit into the operating account and subsequently replenished the reserve account within 14 days without obtaining proper federal agency approval. Cause: Due to a clerical error, the amount required to be included in the reserve account was underfunded in December 2022. Also, management did not have a control process in place to obtain federal agency approval over the disbursement from the reserve account. Effect: The Organization could be in violation of the reserve amount requirements if the federal agency does not approve of any short-term disbursements of the reserve account. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management have a formal review and approval process in place which monitors any disbursements or replenishments of the reserve account and obtains federal agency approval, as required. Views of Responsible Officials: Management agrees with the finding.