Finding Text
Federal Agency: U.S. Department of Agriculture
Program Title: Community Facilities Loans and Grants
Assistance Listing Number: 10.766
Award Period: January 1, 2024 to December 31, 2024
Type of Finding: Compliance and Significant Deficiency in Internal Control over Compliance
Criteria or specific requirement: Under the terms and conditions of the agreements with the USDA
the Medical Center is required to meet minimum requirements of Historical Debt Service Coverage
Ratio of 1.25 and fund certain Debt Service, Reserve and Replacement accounts.
Condition: The Medical Center failed to meet the minimum Historical Debt Service Coverage Ratio
and has not funded the required reserve accounts for the year ended December 31, 2024.
Questioned costs: None
Cause: The Medical Center has experienced financial challenges since the inflationary pressures
associated with the COVID-19 pandemic which has negatively impacted operating results. The Medical
Center understood that the USDA did not require them to fund the required accounts under the
agreement given the historical level of investments maintained by the Medical Center.
Effect: The Medical Center is not in compliance with the terms and conditions of the agreement.
Recommendation: Management should continue to focus on making operational improvements to
achieve the minimum level of Historical Debt Service Coverage of 1.25, as required, and work with the
USDA to determine what reserve accounts are required, or to the extent they are not required, properly
document that understanding in writing with the USDA.