Marshall Browning HospitalNon-Profit

2023-001: Segregation of Duties and Information Systems Access Condition: The size of the Hospital’s office staff precludes a proper segregation of functions to ensure adequate internal control. The basic premise is that no one employee should have access to both physical assets and the related accounting records or to all phases of a transaction. This is not unusual in entities this size, but the Board of Directors should continue to be aware of this condition and to realize the concentration of duties and responsibilities in a limited number of individuals is not desirable for an effective system of internal control. Under those conditions, the most effective controls lie in the Board of Directors' knowledge of matters relating to Hospital operations; however, a significant deficiency exists in the Hospital’s internal controls. This is a repeat finding from 2022-001. Criteria: The lack of proper segregation of duties is considered an internal control weakness. Effect: As a result of not having a sufficient number of individuals in the accounting and business office department to segregate duties, the Hospital has an internal control weakness. Recommendation: We recommend that management and those charged with governance continue to evaluate whether to accept the degree of risk associated with this condition because of cost or other considerations. Corrective Action Plan: The Hospital does not have the resources available to increase staff size and address this internal control deficiency; however, in the past year several positions have turned over and this has created an opportunity to review assignments of work and job duties while trying to maintain relatively the same size staff in the future. The Board of Directors and management are aware of the incompatible duties and will continue to provide oversight and monitor the Hospital's operations, as well as review recommendations from the Chief Financial Officer of the Hospital on proposed changes in job assignments for potential future segregation of duties concerns.

Finding 2021-002 Program Name/CFDA Title: Provider Relief Fund Federal Assistance Listing Number: 93.498 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs Condition: The Hospital did not meet its requirements to use the funds to prevent, prepare for, and respond to coronavirus and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. Criteria: The Provider Relief Funds were provided under the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and are to be used to prevent, prepare for, and respond to coronavirus and that the funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. Context: During the audit, it was determined that there were a number of expenditures claimed as allowable COVID-19 expenses on the submission of expenses to the Health Resources and Services Agency (HRSA) without deducting for cost-reimbursement received from the Medicare program for the same items. The full amount of these expenditures are not an allowable COVID-19 expense under the Department of Health and Human Services guidelines for the use of Provider Relief Funds until after other applicable payor sources, such as Medicare program cost-reimbursement for being a Critical Access Hospital and Rural Health Clinic are accounted for. In addition, there majority of the original submission of expenses to HRSA for use of the U.S. Department of Health and Human Services Provider Relief Funds relied on utilizing losses in addition to lost revenue which may have been duplicative in nature. Lastly, in review of the submission to HRSA, it was noted that the lost revenue calculation needed updating in order to capture the proper amounts which may have increased the allowable lost revenues in the submission. In final review of all of these findings of questionned and allowable costs, and after receiving updated information with itemized COVID-19 related expenses, in the aggregate, the net of all of these items would have resulted in no recoupment by HRSA related to allowable COVID-19 expenses, but the reporting categories and tracking by management should be updated. Cause: Management oversight. Effect: The Hospital is not in compliance with federal regulations and guidelines surrounding the use of the Provider Relief Funds. Recommendation: We recommend that management review all the submitted expenses and lost revenue amounts for allowability under the criteria provided by the U.S. Department of Health and Human Services, and update its internal HRSA reporting as this may impact the ability to claim future expenses and/or lost revenues related to future Provider Relief Fund amounts received.

Finding 2021-003 Program Name/CFDA Title: Provider Relief Fund Federal Assistance Listing Number: 93.498 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Required Reporting Condition: The Hospital did not properly report its allowable and unreimbursed expenses for reporting of funds in the HRSA portal for how it used the funds only for health care related expenses or lost revenues that are attributable to coronavirus. Criteria: The Provider Relief Funds were provided under the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and are to be used to prevent, prepare for, and respond to coronavirus and that the funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. There is also required reporting which is required to HRSA that management of each receiving entity must attest to their expenditures or lost revenues only being related to coronavirus under the terms and conditions of the program. Context: During the audit, it was determined that there were a number of expenses, as noted in Finding 2021-002, which should have been recategorized, had another amounts reported, or additional lost revenue to be reported to arrive at the same or a similar total to the funds received by the organization for Provider Relief Funds. It was also noted during the audit that the unreimbursed expenses related to the coronavirus as reported in the required reporting to HRSA included all other operating expenses of the organization and this should be only expenses which were newly attributable or required because of the coronavirus. Although the unreimbursed expenses do not have an impact on the Provider Relief Funds received, it is still considered to not be properly reported in line with the terms and conditions of the Provider Relief Funds. Cause: Management oversight. Effect: The Hospital is not in compliance with federal regulations and guidelines surrounding the use of the Provider Relief Funds. Recommendation: We recommend that management review all the submitted expenses and lost revenue amounts for allowability under the criteria provided by the Department of Health and Human Services, and work with HRSA to potentially reopen its reporting portal as this could impact the ability to claim future expenses and/or lost revenues related to future Provider Relief Fund amounts received similar to the recommendation in Finding 2021-002.

2020-001 Segregation of Duties and Information Systems Access - Condition - The size of the Hospital's office staff precludes a proper segregation of functions to ensure adequate internal control. The basic premise is that no one employee should have access to both physical assets and related accounting records or to all phases of a transaction. This is not unusual in entities this size, but the Board of Directors should continue to be aware of this condition and to realize the concentration of duties and responsibilities in a limited number of individuals is not desirable for an effective system of internal control. Under those conditions, the most effective controls lie in the Board of Director's knowledge of matters relating to Hospital operations; however, a significant deficiency exists in the Hospital's internal controls. Criteria - The lack of proper segregation of duties is considered an internal control weakness. Effect - As a result of not having a sufficient number of individuals in the accounting and business office department to segregate duties, the Hospital has an internal control weakness. Recommendation - We recommend that management and those charged with governance continue to evaluate whether to accept the degree of risk associated with this condition because of the cost or other considerations.

2019-001 Financial Accounting and Reporting - Condition ? The Hospital?s internal control over financial reporting does not end at the general ledger, but extends to the financial statements and notes. As part of our professional services for the year ended June 30, 2019, we were requested to draft the financial statements and accompanying notes to the financial statements. It is the responsibility of management and those charged with governance to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Because the Hospital relies on Wipfli LLP to provide the necessary understanding of current accounting and disclosure principles in the preparation of the financial statements and notes, a significant deficiency exists in the Hospital?s internal controls.Criteria ? Government Auditing Standards considers the inability to report financial data reliably in accordance with GAAP to be an internal control deficiency.Effect ? The As a result of not having an individual trained in the preparation of GAAP basis financial statements, the Hospital has an internal control weaknessRecommendation ? We recommend that management and those charged with governance continue to evaluate whether to accept the degree of risk associated with this condition because of cost or other considerations.

2019-002 Segregation of Duties and Information Systems Access - Condition ? The size of the Hospital?s office staff precludes a proper segregation of functions to ensure adequate internal control. The basic premise is that no one employee should have access to both physical assets and the related accounting records or to all phases of a transaction. This is not unusual in entities this size, but the Board of Directors should continue to be aware of this condition and to realize the concentration of duties and responsibilities in a limited number of individuals is not desirable for an effective system of internal control. Under those conditions, the most effective controls lie in the Board of Directors' knowledge of matters relating to Hospital operations; however, a significant deficiency exists in the Hospital?s internal controls.Criteria ? The lack of proper segregation of duties is considered an internal control weakness.Effect ? As a result of not having a sufficient number of individuals in the accounting and business office department to segregate duties, the Hospital has an internal control weakness. Recommendation ? We recommend that management and those charged with governance continue to evaluate whether to accept the degree of risk associated with this condition because of cost or other considerations.

2019-003 Account Reconciliations and Audit Adjustments - Condition ? During the audit, it was noted that account reconciliations were not performed on a routine basis for a number of general ledger accounts, which resulted in a significant number of audit adjustments. Many of these adjustments related to the absence of the controller position at year ended June 30, 2019.Criteria ? The presence of accounts in an organization's general ledger that are reconciled only annually or not routinely throughout the year and the significant inconsistent reporting between the monthly financial statements and annual audited financial statements are considered an internal control weakness. Up to date account reconciliations also provide the basis for sound financial reporting which the Hospital's Board of Directors and management can use for decision making purposes on a routine basis.Effect ? Account reconciliations help to ensure that amounts recorded on the general ledger are accurately stated. A lack of account reconciliations can cause numerous audit adjustments and significant differences in financial reporting. Accurate financial reporting is essential for business planning and review of financial information throughout the year.Recommendation ? All balance sheet accounts should be reconciled to supporting documentation on a monthly basis.

2019-004 Patient Accounts Receivable Collection and Management - Condition ? Throughout the audit it was noted that the Hospital has had significant collectability issues with a number of patient accounts receivable. Several of these issues related to set up issues within the information system and staff processes which made it difficult for staff to properly follow up on the outstanding balance with patients and third-party payors. It was also noted that management did not routinely review the entire aged trial balance of accounts receivable on a routine basis. This control weakness also led to a significant amount of bad debt write-offs during the past several years, which may have been collectible if a timely review had been completed or information systems were properly set up.Criteria ? A lack of follow-up on patient accounts receivable, inability to produce accurate patient accounts receivable reports, and significant bad debt write-offs as a result of these weaknesses in processes and procedures can produce significant negative effects on the financial results of an organization.Effect ? Proper follow-up on patient accounts receivable helps identify issues on specific patient accounts and may lead to a more proactive collection process and ultimately reduce bad debt write-offs due to billing issues. These write-offs led to a significant negative impact to the financial statements in the past year.Recommendation ? A detail review of the aged trial balance of patient accounts receivable should be conducted routinely throughout the year to identify potential collection issues.