Finding 1131586 (2024-004)

Department of Agriculture Federal Financial Assistance Listing #10.766 Special Tests and Provisions Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 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 agreements state 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 state and federal government or invested in marketable securities backed by the full faith and credit of the United States. Condition: The funds that represented the debt service reserve fund were commingled with an existing operating cash account. Cause: The Hospital did not maintain a separate bank account or general ledger account for the debt service reserve fund. Effect: The debt service reserve funds were commingled with other operating funds within an operating cash account. Questioned Costs: None reported. Context: Sampling was not used. Recommendation: We recommend that management maintain a separate bank account or general ledger account for the debt service reserve fund. Views of Responsible Officials: Management agrees with the finding.