Finding Text
Department of Agriculture
Federal Financial Assistance Listing #10.766
Community Facilities Loans and Grants
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Significant Deficiency 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 Medical Center excluded adjustments from the lost revenue calculation.
Cause: The Medical Center did not have an internal control process in place to ensure the lost
revenue calculation reported under the federal program was updated for all adjustments
related to cost report settlements.
Effect: Without adjusting for cost report settlements, the lost revenue calculation was
inaccurate.
Questioned Costs: There were no questioned costs related to the lost revenue calculation, as
there was still enough lost revenue to support the grant and the matching portion of the grant.
Context: The entire lost revenue calculation was tested.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Medical Center enhance internal control policies to
ensure that the lost revenue calculation properly includes and excludes all relevant information.
Views of Responsible Officials: Management agrees with the finding.