MT. GRAHAM REGIONAL MEDICAL CENTER, INC.

Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 4 TIN #237094247 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?s eligible expenses listing had errors when agreed to underlying supporting documentation. Cause: The Medical Center?s internal controls in place to review the listing of eligible expenditures did not identify the errors. Effect: The expenses reported were understated compared to the listing of eligible expenses attributed to COVID. There is potential that expenses identified related to federal awards may not be accurate. Questioned Costs: None. Context: A sample of 10 expenditures totaling $1,087,193 out of a total population of 37 expenditures totaling $1,417,999 were tested and 2 selections contained errors. The result of the error was an understatement of eligible expenses based on the supporting documentation. Repeat Finding from Prior Years: Yes, finding 2021-003 Recommendation: We recommend the Medical Center implement new control process which ensures amounts identified as eligible are compared to supporting documentation for accuracy. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #237094247 Preparation of Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition: The Medical Center does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause: Auditor assistance with preparation of the Schedule is not unusual as the Schedule has unique and specialized requirements and preparation is only required when the Medical Center meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Medical Center would not be able to draft the Schedule that is correct without the assistance of the auditors. Questioned Costs: None reported Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Medical Center?s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #237094247 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?s eligible expenses claimed and reported under the Provider Relief Fund program were understated. Cause: The Medical Center?s internal controls in place to review the report before submission did not identify the error in the report. Effect: The expenses reported were understated compared to the listing of eligible expenses attributed to COVID. Questioned Costs: None. Context: A sample of 9 expenditures out of a total population of 28 were tested and 2 selections contained errors. The errors both resulted in excess costs able to be claimed based upon the support. Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center implement new control process which ensures amounts reported are reviewed and accurately reported. Views of Responsible Officials: Management agrees with the finding.