Finding Text
2022-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance and Noncompliance Not Considered Material 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 and conditions of the award. Condition - During our testing, it was noted that one of the loan reserve accounts was underfunded by approximately $45,000. Cause - The Hospital did not have an adequate internal control policy in place to ensure the proper funding of the reserve account. Effect - Although management obtained a waiver for the noncompliance, the lack of adequate policies governing proper funding of reserve 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 was not used. The Hospital has two reserve accounts that were tested. Repeat Finding from Prior Years - No Recommendation - We recommend that the Hospital enhance internal control policies to ensure that there is proper funding of the reserve accounts. Views of Responsible Officials - Management agrees with the finding.