Finding Text
Federal Agency: United States Department of Agriculture Federal Program Title: Community Facilities Loans and Grants Federal Assistance Listing Number: 10.766 Type of Finding: Significant Deficiency in Internal Control over Compliance Period: October 1, 2021 ? September 30, 2022 Condition: The management did not have proper internal controls in place to ensure all investments are backed by the full faith and credit of the United States. Additionally, management did not have internal controls in place to ensure investment valuation is monitored to ascertain debt service reserve fund is at least 90% of the debt service reserve requirement. Criteria or specific requirement: The USDA Debt agreement requires that investment valuation be made by management twice a year to ensure debt service reserve fund is at least 90% of the debt service reserve requirement. Additionally, compliance requirement requires funds to be deposited in institutions insured by the state or federal government or invested in readily marketable securities backed by the full faith and credit of the United States. Effect: A lack of internal controls over these requirements cause the reserve balance to be potentially underfunded as well as the funds to be invested in securities that are not backed by the full faith and credit of the United States. Questioned costs: None Cause: The Cumberland County Hospital System did not have internal controls in place to ensure all investments are backed by the full faith and credit of the United States. Additionally, management did not have proper internal controls in place to ensure investment valuation is monitored to ascertain adequate debt reserve balance is maintained. Recommendation: We recommend management ensure that they have a process in place to ensure all investments are backed by the full faith and credit of the United States. Additionally, management should have proper internal controls in place to ensure investment valuation is monitored to ascertain adequate debt reserve balance is maintained in accordance with related USDA debt agreement. Views of responsible officials: The management will have all mutual funds sold and will deposit $290,000 into the debt reserve account to fully fund the balance to equal one payment.