Sioux Center HealthNon-Profit

Finding 2023-004 Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #420796764 Activities Allowed or Unallowed and Allowable Costs/Cost Principles 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. Condition: The Health Center’s final expenditure listing identified as eligible and claimed under the federal program were not reviewed and approved by a separate individual outside of the preparer. Cause: The Health Center had multiple individuals identifying and compiling eligible costs, however, the Health Center did not have an internal control process in place to ensure a secondary review and approval of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing was documented. The summary spreadsheet was used to claim allowable costs under the federal program. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program that may not be accurately completed. Questioned Costs: None reported. Context/Sampling: Summary level testing was performed over general and administrative expenses including payroll. Repeat Finding from Prior Year: No Recommendation: We recommend Health Center implement a control process which includes a secondary review and approval of the summarized final expenditure listing used to claim the allowable costs under the federal program. Response: Management agrees with the finding.

Finding 2022-003 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Reporting 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 federal awards that provides reasonable assurance that the Health Center is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Section VI ? Conditions Required After Loan Closing in the Letter of Conditions dated November 1, 2019, for the USDA loan states that the audited financial statements must be provided to USDA within 150 days of year-end. In addition, the operating budget must be submitted to USDA within 30 days prior to the fiscal year-end. Condition: The Health Center?s FY2023 operating budget and prior year audited financial statements were not submitted to USDA within the submission timeframe. Cause: The Health Center?s FY2023 operating budget was not approved prior to the June 1, 2023, deadline and the prior year audited financial statements were not submitted timely. The audited financial statements were approved at the November 2021 board meeting, but not submitted until February 2022. Effect: The required reports are submitted outside of the time frame contained in the Letter of Conditions. Questioned Costs: None reported Context/Sampling: Sampling was not used Repeat Finding from Prior Year: No Recommendation: Management should implement processes and controls relating to the reporting requirements to comply with the Letter of Conditions Response: Management agrees with the finding.

Finding 2021-003 Department of Agriculture CFDA #10.766 Community Facilities Loans and Grants Preparation of the Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance - Other Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards and the accompanying notes to the schedule of expenditures of federal awards. Condition: Sioux Center Health does not have an internal control system designed to provide for the preparation of the schedule of expenditures of federal awards. As auditors, we were requested to assist with the preparation of the schedule of expenditures of federal awards. Cause: Auditor assistance with preparation of the schedule of expenditures of federal awards is not unusual in an organization the size of Sioux Center Health. Effect: There is a reasonable possibility that Sioux Center Health would not be able to draft a complete and accurate schedule of expenditures of federal awards. Recommendation: We recommend management continually be aware of the financial reporting requirements relating to Sioux Center Health?s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Finding 2021-004 Department of Health and Human Services CFDA #93.498 COVID-19 Provider Relief Fund Applicable Federal Award Number and Year ? Period 1 TIN #420796764 Activities Allowed or Unallowed and Allowable Costs/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. Condition: Sioux Center Health?s final expenditure listing identified as eligible and claimed under the Provider Relief Fund program were not reviewed and approved by a separate individual outside of the preparer. In addition, Sioux Center Health?s special report submitted to the Department of Health and Human Services for Period 1 TIN #420796764 was not reviewed and approved by a separate individual outside of the preparer. Cause: Sioux Center Health had multiple individuals identifying and compiling eligible costs, however, Sioux Center Health did not have an internal control process in place to ensure a secondary review and approval of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing was documented. The summary spreadsheet was used to claim allowable costs under the federal program. In addition, the review and approval of the report submitted to the Department of Health and Human Services for Period 1 was not performed by someone other than the preparer of the report. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program and the report may not be accurately completed. Questioned Costs: None reported Context/Sampling: Summary level testing was performed over general and administrative expenses and healthcare related expenses, including mortgage and insurance expenses, payroll and fringe benefits, lease payments, utilities / operational expenses, repairs and maintenance expenses, supplies, equipment, information technology, and other healthcare identified expenses, for activities allowed and unallowed and allowable costs/cost principles. In addition, a nonstatistical sample of 6 ($468,435) out of 28 capitalized assets ($946,273) were tested for activities allowed or unallowed and allowable costs/cost principles. Key line items were tested on the Period 1 Department of Health and Human Services special report. Repeat Finding from Prior Year(s): No Recommendation: We recommend Sioux Center Health implement a control process which includes a secondary review and approval of the summarized final expenditure listing used to claim the allowable costs under the federal program and a secondary review and approval of required reports to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.