Finding 1081883 (2023-003)

2023-003 – Material Weakness - Noncompliance Federal agency: U.S. Department of Agriculture (USDA): Rural Development Federal program title: Community Facilities Loans and Grants Assistance Listing No.: 10.766 Condition: The Hospital did not have a separate USDA reserve bank account in place. Criteria: The Hospital is responsible for creating a separate USDA reserve bank account and required to submit an annual deposit equivalent to ten percent of the amount needed to pay the annual installment of principal and interest on the note. Cause: These deposits are required to be submitted, as specified in the applicable loan agreement, however, management did not make the annual deposits nor was there a process in place to ensure timely deposits. Context: The bank statement was never specifically requested throughout the year by the Hospital’s USDA representative, nor was the Hospital notified of its tardy submission at any point during the fiscal year. Effect and questioned costs: The Hospital did not create a loan reserve account of approximately $76,059 as laid out in the respective loan agreement for its reporting requirements. Recommendation: We recommend the Hospital should continue to improve its understanding of the reporting requirements as specified in the applicable loan document and create a process to ensure all USDA requirements are met. Views of Responsible Officials and Planned Corrective Actions: The Hospital agrees with this finding. See management’s corrective action plan.