FAC Explorer

Finding 498568 (2022-003)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2022
Accepted
2024-09-26
Audit: 321317
Organization: Wishek Hospital Clinic Association D/b/a South Central Health (ND)
Auditor: Brady Martz & Associates PC

AI Summary

  • Core Issue: The Association has a material weakness in internal controls, leading to inaccurate financial reporting to the Department of Agriculture.
  • Impacted Requirements: Compliance with 2 CFR 200.303(a) is compromised, as the Association failed to submit timely and accurate reports for federal awards.
  • Recommended Follow-Up: Enhance internal controls by implementing a secondary review process to ensure accuracy and completeness of financial reports.

Finding Text

2022-003: Reporting Material Weakness in Internal Control Over Compliance and noncompliance Department of Agriculture Federal Assistance Listing/CFDA #10.766 Community Facilities Loans and Grants Cluster 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 Association is required to submit an accurate report to the department of agriculture for each filing period of outstanding loan balances. Condition The Association filed the RD 442-3 and RD 442-2 with inaccurate financial information for the current and prior year balance sheets and prior year statement of income and equity. The forms due in 2022 for the December 31, 2021 year end were also not timely. Cause The Association did not have the internal controls in place to ensure the financial information submitted to the Department of Agriculture was complete and accurate. Effect The lack of adequate policies over the report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. The Association submitted inaccurate financial information and the 2021 reporting wasn’t performed timely. Context RD forms included financial information that doesn’t agree with the financial statements for the years presented and the 2021 reporting forms were not timely. Recommendation We recommend that the Association enhance internal control policies to ensure the reports are supported by supporting calculations. This would include implementing a secondary review and approval over the reporting. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding, has prepared an assessment of the root causes of this material weakness, and has developed a corrective action plan. Indication of Repeat Finding This is not a repeat finding in the current year.

Corrective Action Plan

Contact Person Megan Rath 2022-003 Corrective Action Plan The USDA was made aware that the financial statements had errors and were unaudited at the time of the submission of the RD 442-2 and RD 442-3 for 2022. The Association’s audited financial statements are now up to date. Proper checks and balances have been put into place to ensure ongoing complete and accurate financial data for USDA reporting. Completion Date The corrective action plan steps are planned to be sufficiently in place prior to the beginning of the 2023 USDA required reporting.

Categories

Reporting Material Weakness Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 498564 2022-002
    Material Weakness Repeat
  • 498565 2022-002
    Material Weakness Repeat
  • 498566 2022-002
    Material Weakness Repeat
  • 498567 2022-002
    Material Weakness Repeat
  • 1075006 2022-002
    Material Weakness Repeat
  • 1075007 2022-002
    Material Weakness Repeat
  • 1075008 2022-002
    Material Weakness Repeat
  • 1075009 2022-002
    Material Weakness Repeat
  • 1075010 2022-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.766 Community Facilities Loans and Grants $795,418
93.498 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $171,630
93.155 Rural Health Research Centers $76,691
93.301 Small Rural Hospital Improvement Grant Program $10,513