Recommendation: The Auditor recommends that the Entity implement controls for documenting and retaining information on expenditures charged to federal awards to follow the requirements over 2 CFR Section 200.430(g)(i) and in addition the Entity is properly paying employees at the approved pay rate.
Action Taken:
1. Policy Revision and Development:
o Develop or revise existing policies to clearly define the processes for documenting and retaining expenditure information related to federal awards. These policies should explicitly follow the requirements over 2 CFR Section 200.430(g)(i), ensuring that all expenditures are properly documented and justified as per federal award conditions. Specifically, approval of differential rates will be added to those policies.
o Ensure that the policy includes guidelines for regularly reviewing employee pay rates against approved rates for compliance with federal award conditions.
2. Training and Awareness Programs:
o Implement comprehensive training programs for all staff involved in charging costs to federal awards. This training should cover the importance of compliance with federal regulations, specifically focusing on the documentation and retention of expenditure information and adherence to approved pay rates.
o Schedule regular refresher training sessions to ensure ongoing compliance and awareness.
3. Enhanced Monitoring and Audit Trails:
o Introduce monitoring mechanisms to regularly review expenditures charged to federal awards for compliance with documented policies and federal requirements.
o Develop an audit trail system that allows for the easy retrieval of documentation supporting expenditures and payroll compliance. This system should enable auditors to trace the documentation back to the federal award and the approved budget items.
4. Internal Control Improvements:
o Review and strengthen internal controls related to the processing of expenditures and payroll to ensure that all transactions are authorized, recorded accurately, and in compliance with federal award requirements.
o Implement segregation of duties where possible, to reduce the risk of errors or fraud in the charging of costs to federal awards.
5. Regular Compliance Reviews and Updates:
o Conduct periodic internal reviews to assess compliance with federal award requirements and the effectiveness of the implemented corrective actions.
o Ensure that any changes in federal regulations or award-specific requirements are promptly incorporated into the hospital's policies and training programs.
6. Documentation and Communication:
o Maintain comprehensive records of all actions taken to address the audit findings, including policy revisions, training sessions, and internal review outcomes. Specifically, records for those these expenditures will remain onsite and not sent to long-term storage if the employee or vendor no longer has a relationship with the facilities.
o Communicate regularly with federal awarding agencies to update them on the corrective actions taken and to seek guidance on compliance matters as needed.
Implementation Timeline and Responsibility Assignment:
• Management positions including the CEO, CFO and CNO for the 2021 fiscal year are no longer employed by Terry Memorial Hospital District. Administration employed in 2023 acknowledges these deficiencies and accepts responsibility for developing, applying and maintaining this corrective action plan going forward.
• Assign specific responsibilities to designated staff members or departments for each component of the corrective action plan.
• Set clear deadlines for the completion of each action item, with an initial goal to address all significant deficiencies within one to three months from the date of the audit report.
Monitoring and Reporting:
• Establish a mechanism for ongoing monitoring of the effectiveness of the corrective action plan, with periodic reports to senior management and the board of directors.
Feedback Loop:
• Create a feedback loop with employees and management to continuously improve internal controls and compliance processes based on practical experiences and challenges encountered during implementation.
Responsible Person: Whitney Wilson, CFO