Finding 58865 (2022-005)

2022-005 Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Activities Allowed or Unallowed and Allowable Costs/Costs Principles 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 ? The Hospital?s calculation of lost revenue claimed under the federal program as an allowable cost contained no formal review or approval by a separate individual outside of the preparer. Cause ? The Hospital did not have an adequate internal control policy in place to ensure review and approval of the calculation of lost revenue that was utilized during the USDA application process. Effect ? The lack of adequate policies governing review and approval increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs ? None reported. Context/Sampling ? The lost revenue calculation for all applicable quarters was tested. Repeat Finding from Prior Year - No Recommendation ? We recommend that the Hospital enhance internal control policies to ensure that formal documentation of review and approval is present. Views of Responsible Officials ? Management agrees with the finding.