Buchanan County Health CenterNon-Profit

Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Preparation of the Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance - Other Criteria: A properly designed system of internal control over financial reporting includes the ability to prepare the schedule of expenditures of federal awards (the schedule) that are materially correct and include all required disclosures. Condition: The Health Center does not have an internal control system designed to provide for the preparation of the schedule of expenditures of federal awards being audited. We were also requested to draft the schedule. Cause: The Health Center has limited staff to prepare the schedule. Effect: There is a reasonable possibility that the Health 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. Eide Bailly drafted the schedule. Repeat Finding from Prior Years: Yes Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Health Center is aware of this condition for financial reporting purposes. Management and the board of directors should continually be aware of the financial accounting and reporting of the Health Center and changes in the accounting and reporting requirements. Views of Responsible Officials: Management agrees with the finding.

2021-003 Department of Health and Human Services CFDA 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #420727498 Preparation of the Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance - Other Criteria: A properly designed system of internal control over financial reporting includes the ability to prepare the schedule of expenditures of federal awards (the schedule) that are materially correct and include all required disclosures. Condition: The Health Center does not have an internal control system designed to provide for the preparation of the schedule of expenditures of federal awards being audited. We were also requested to draft the schedule. Cause: The Health Center has limited staff to prepare the schedule. Effect: There is a reasonable possibility that the Health 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. Eide Bailly drafted the schedule. Repeat Finding from Prior Years: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Health Center is aware of this condition for financial reporting purposes. Management and the board of directors should continually be aware of the financial accounting and reporting of the Health Center and changes in the accounting and reporting requirements. Views of Responsible Officials: Management agrees with the finding.

2021-004 Department of Health and Human Services CFDA 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #420727498 Activities Allowed or Unallowed and Allowable Cost/Cost Principles and Reporting Material Weakness 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. The federal award?s Terms and Conditions Section 202 Executive Pay states none of the funds appropriated under this federal program shall be used to pay the salary of an individual, through a grant or other mechanism, at a rate in excess of Executive Level II of the Federal Executive PayScale determined to be $197,300 effective January 2020 and $199,300 effective January 2021. The interpretation of the Executive Level II limitations is subjective as to whether the rate of pay is to be assessed solely on an annual basis or if it is assessed based on the rate of pay, if annualized, does not exceed an annual amount based on full-time equivalent basis. Condition: The Health Center identified one executive that may have exceeded the Executive Level II limitations if assessed based on the rate of pay being annualized. In addition, the Health Center?s expenditures identified as eligible and claimed under the Provider Relief Fund program did not retain evidence that they were reviewed and approved by a separate individual outside of the preparer, although various individuals were involved in the process. The Health Center did not retain the underlying support for the calculation relating to the percentage of benefits to salary expense on a detailed basis. The Health Center?s special report submitted to the Department of Health and Human Services for Period 1 TIN #420727498 did not have retained evidence that it was reviewed and approved by a separate individual outside of the preparer. Cause: The Health Center did not have an internal control process in place to ensure review and approval of eligible expenditures claimed under the federal program, the lost revenue calculation, and the report submitted to the Department of Health and Human Services for Period 1 was documented. The Health Center did not consider the Executive Level II salary limit when claiming salaries under the federal program. The Health Center had turnover from the time of the report submission to the time of the audit and documentation was not located relating to the percentage of benefits to salary expense on a detailed basis. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program, the lost revenue calculation and amount claimed under the program may not be calculated properly, and the report may not be accurately completed. Questioned Costs: None reported. The salary in excess of the Executive Level II limit for the identified executive that may have exceeded the Executive Level II limitation, if assessed based on the rate of pay being annualized, was less than $25,000. The percentage of benefits to salary expense was considered to be a conservative estimate. Context: Summary level testing was performed over general and administrative expenses, including mortgage and insurance expenses, and utilities expenses, for activities allowed and unallowed and allowable costs/cost principles. In addition, a nonstatistical sample of 60 ($615,541) out of 307 wage expense line items ($2,789,196) were tested for activities allowed or unallowed and allowable costs/cost principles. The lost revenue calculation for all applicable quarters was tested and reviewed. Key line items were tested on the Period 1 Department of Health and Human Services special report Repeat Finding from Prior Years: No Recommendation: We recommend the Health Center implement a control process which includes a secondary review and approval of expenditures claimed under the federal program, lost revenue calculation, and required reports to be submitted to the federal agency. We recommend the Health Center document the consideration of the Executive Level II salary limit interpretation when claiming salaries under the federal program. We recommend the Health Center retain documentation relating to the percentage of benefits to salary expense when claiming benefits under the federal program Views of Responsible Officials: Management agrees with the finding

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