Buffalo Lake Healthcare Center, Inc.Non-Profit

FINDING: 2020-001 ANNUAL FINANCIAL REPORTING UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) Condition: The Healthcare Center?s personnel have not monitored recent accounting developments to the extent necessary to enable them to prepare the Healthcare Center?s financial statements and related disclosures, to provide a high level of assurance that potential omissions or other errors that are material would be identified and corrected on a timely basis. Criteria: The board of directors and management share the ultimate responsibility for the Healthcare Center?s internal control system. While it is acceptable to outsource various accounting functions, the responsibility for internal control cannot be outsourced. The Healthcare Center must be able to prevent or detect a material misstatement in the annual financial statements including footnote disclosures. Effect: The Healthcare Center?s financial statements and related disclosures could potentially have omissions or other errors that are material that would not be identified and corrected on a timely basis. Cause: The Healthcare Center engages CliftonLarsonAllen LLP (CLA) to assist in preparing its financial statements and accompanying disclosures. However, as independent auditors, CLA cannot be considered part of the Healthcare Center?s internal control system. As part of its internal control over the preparation of its financial statements, including disclosures, the Healthcare Center has implemented a comprehensive review procedure to ensure that the financial statements, including disclosures, are complete and accurate. Such review procedures should be performed by an individual possessing a thorough understanding of accounting principles generally accepted in the United States of America and knowledge of the Healthcare Center?s activities and operations. Recommendation: We recommend that the Healthcare Center continue to evaluate their internal staff, expertise, and assigned duties to determine if an internal control policy over the annual financial reporting is beneficial. Management?s Response: The Healthcare Center will continue to rely upon the audit firm to prepare the financial statements and related footnote disclosures and will review and approve

FINDING: 2020-002 LIMITED SEGREGATION OF DUTIES ? ACCOUNTS RECEIVABLE, INFORMATION TECHNOLOGY, AND CASH RECEIPTS Condition: Substantially all duties related to accounts receivable and cash receipts are performed by one individual. Criteria: Generally, a system of internal control contemplates separation of duties such that no individual has responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transaction. Context: Substantially all duties related to IT security and transactional processes are performed by one individual. Effect: It is reasonably possible that a misstatement would not be prevented or detected in a timely manner by employees in the ordinary course of business. Cause: The Healthcare Center is not large enough to employ additional persons for the purpose of segregating duties. Recommendation: We recommend the Healthcare Center implement procedures to segregate duties if possible. This could be done by having a second employee open the mail and record receipts prior to the deposit and posting of payments. Management?s Response: Management has determined that it is not economically feasible for them to employ the additional personnel needed to adequately segregate duties; however, the Healthcare Center will review and make improvements to its internal controls when opportunities arise.