Finding Text
2023-003 U.S. Department of Agriculture
Federal Financial Assistance Listing #10.766
Community Facilities Loans and Grants Cluster
Special Tests and Provisions
Material Weakness in Internal Control Over Compliance and Material 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. The Loan Resolution Security Agreement requires a monthly amount to be set aside in a reserve fund until the specific account balance is reached.
Condition – The Hospital did not sufficiently fund their reserve account. As of December 31, 2023, the Hospital should have USDA debt reserves at least equal to $389,998. The USDA debt reserves equaled $141,821 as of December 31, 2023.
Cause – Management has not funded the USDA debt reserves adequately.
Effect – The Hospital was not in compliance with their provisions of the USDA debt agreements.
Questioned Costs - None reported.
Context – Sampling was not used.
Repeat Finding from Prior Years - Yes
Recommendation - We recommend the Hospital fund the reserve account adequately at each measurement date.
Views of Responsible Officials - Management agrees with the finding.