Finding 1106533 (2022-004)

2022-004 Program Name/CFDA Title: Community Facilities Loans and Grants Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions Condition: During our testing we noted the Hospital's debt reserve account was withdrawn to a level below the required minimum balance without proper authroization from the USDA. Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the fedreal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Cause: The Hospital did not have an adequate interal control policy in place to ensure review and approval over activity related to the reserve fund. Effect: The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported Prior Year Finding: No Recommendation: We recommend the Hospital enhance internal control policies to ensure a formal review over the reserve fund in comparison to the required minimum reserve balance be completed by an indvidiaual separate from the preparer. Views of Responsible Official: Management agrees with the finding and has committed the resources giving rise to the finding.