Finding 569143 (2024-003)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2024

Accepted

2025-06-30

Audit: 360727

Organization: Mobridge Regional Hospital (SD)

Auditor: Eide Bailly LLP

AI Summary

Core Issue: The Hospital lacks a robust internal control system for preparing the Schedule of Expenditures of Federal Awards, leading to potential inaccuracies.
Impacted Requirements: Compliance with financial reporting standards is compromised due to inadequate controls over the schedule preparation.
Recommended Follow-Up: Management should enhance internal controls and consider developing staff capabilities to ensure accurate financial reporting, rather than relying solely on external auditors.

Finding Text

United States Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Preparation of the Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the accompanying notes to the schedule. Condition: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. As auditors, we were requested to assist with the preparation of the schedule. Cause: The Hospital has limited staff and auditor assistance with the preparation of the schedule is not unusual in an organization the size of the Hospital. Management has elected to have the schedule and notes to the schedule prepared by the external audit firm as part of the audit. Effect: There is a reasonable possibility that the Hospital would not be able to draft a complete and accurate schedule without the assistance of the auditors. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Year: Yes, prior year finding 2023‐003. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Hospital is aware of this condition for financial reporting requirements relating to the Hospital’s schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Corrective Action Plan

Federal Agency Name: Department of Agriculture Program Name: Communities Facilities Loans and Grants Federal Financial Assistance Listing Number: 10.766 Finding Summary: The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of federal expenditures of federal awards being audited. Management requested the auditors, Eide Bailly LLP, to assist with the preparation of the schedule of expenditures of federal awards. Responsible Individuals: Renae Karst, Chief Financial Officer Corrective Action Plan: It is not cost effective to have an internal control system designed to prepare the schedule of expenditures of federal awards. We requested that our auditors, Eide Bailly LLP, to assist with the preparation of the schedule of expenditures of federal awards. We have designated a member of management to review the drafted schedule of expenditures of federal awards, and we have reviewed with and agree with the final Schedule of Expenditures of Federal Awards. A Grant Award Policy and Procedure Manual was implemented defining tracking and reporting of awards to ensure accurate and up-to-date communication of award requirements. This communication will include implementing additional processes to improve our internal controls over identifying and reporting of expenditures in compliance with the Schedule of Expenditures of Federal Awards (SEFA) if applicable. We will provide staff training annually for any updates or adjustments to the policy. Anticipated Completion Date: Ongoing

Other Findings in this Audit

569144 2024-003

Material Weakness Repeat
569145 2024-003

Material Weakness Repeat
569146 2024-004

Material Weakness Repeat
1145585 2024-003

Material Weakness Repeat
1145586 2024-003

Material Weakness Repeat
1145587 2024-003

Material Weakness Repeat
1145588 2024-004

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
10.766	Community Facilities Loans and Grants	$94,307
10.557	Wic Special Supplemental Nutrition Program for Women, Infants, and Children	$45,792
93.323	Epidemiology and Laboratory Capacity for Infectious Diseases (elc)	$20,000
93.301	Small Rural Hospital Improvement Grant Program	$13,312