Finding 972302 (2022-005)

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Material Noncompliance 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. The Loan Resolution Security Agreement requires a monthly amount to be set aside in a reserve fund until the specific account balance is reached. Condition ‐ The Hospital did not sufficiently fund their reserve account. As of December 31, 2022, the Hospital should have USDA debt reserves at least equal to $320,669. Cause ‐ There was a lack of adequate policies governing the understanding and execution of loan agreement requirements. Effect ‐ The Hospital was not in compliance with their provisions of the USDA debt agreements. Questioned Costs ‐ None reported. Context ‐ Sampling was not used. Repeat Finding from Prior Years ‐ No Recommendation ‐ We recommend the Hospital enhance internal control policies to ensure that loan requirements are monitored and met. Views of Responsible Officials ‐ Management agrees with the finding.