Finding Text
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
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.
Condition – During our testing, there were two debt covenants, net worth and the amount of capital
expenditures, that were not included in the monthly covenant report included in the financial
packet for monitoring.
Cause – PioneerCare does not have an adequate internal control policy in place to ensure monitoring
of all required debt covenants. In addition, there was no control in place to seek approval prior
to reaching the capital expenditure threshold of $100,000.
Effect – The lack of adequate monitoring of the debt covenants increases the risk that PioneerCare
could be out of compliance with the related financial debt covenants.
Questioned Costs – None reported.
Context – Sampling was not used. PioneerCare has four financial debt covenants that were tested.
Repeat Finding from Prior Year – No
Recommendation – We recommend PioneerCare enhance their monitoring of the financial debt covenants
and include the net worth and amount of capital expenditures in their monthly financial package to
ensure these are reviewed by management. We also recommend PioneerCare implement controls to obtain
approval prior to reaching the capital expenditure threshold of $100,000.
Views of Responsible Officials ‐ Management agrees with the finding.