WESTERN MISSOURI MEDICAL CENTER

Identification: 10.766 United States Department of Agriculture (USDA), Community Facilities Loans and Grants; Noncompliance Finding; Special Tests and Provisions Compliance Requirement Criteria: The USDA direct loan and guaranteed loan were entered into in 2010 for renovation of the Medical Center's healthcare facility. One direct loan and one guaranteed loan were received. In connection with the loans, the Medical Center entered into the 2010 bond trust indenture and agreed to the letter of conditions dated November 30, 2009, set forth by the USDA which the Medical Center is required to follow. Section 506 of the 2010 bond trust indenture states the facility shall maintain a balance of days cash on hand of not less than 75 days. Condition: The Medical Center did not meet the days cash on hand ratio for the year ended December 31, 2025. Cause: The Medical Center did not obtain operational results such that the financial liquidity and cash generation was sufficient to meet the days cash on hand ratio. Effect: The Medical Center is not complying with Section 506 of the 2010 bond indenture. Questioned Costs: None Perspective Information: We performed an independent computation of the Medical Center's days cash on hand ratio. The results of our independent computations indicate the covenant was not met. Repeat Finding: Yes, 2024‐001 Recommendations: We recommend that the Medical Center review Section 506 of the 2010 bond trust indenture which outlines the required steps and notify the bond trustee that the days cash on hand ratio was not met. Views from Responsible Officials: The Medical Center notified the bond trustee in May 2026 that the days cash on hand ratio was not met for the year ended December 31, 2025, and will follow up with the bond trustee following completion of the audit regarding the necessary steps to take as outlined in the bond trust indenture.

Identification: 10.766 United States Department of Agriculture (USDA), Community Facilities Loans and Grants; Noncompliance Finding; Special Tests and Provisions Compliance Requirement Criteria: The USDA direct loan and guaranteed loan were entered into in 2010 for renovation of the Medical Center's healthcare facility. One direct loan and one guaranteed loan were received. In connection with the loans, the Medical Center entered into the 2010 bond trust indenture and agreed to the letter of conditions dated November 30, 2009, set forth by the USDA which the Medical Center is required to follow. Section 506 of the 2010 bond trust indenture states the facility shall maintain a Debt Service Coverage Ratio that is not less than 1.25, and maintain a balance of days cash on hand of not less than 75 days. Condition: The Medical Center did meet either the debt service coverage ratio nor the days cash on hand ratio for the year ended December 31, 2024. Cause: The Medical Center did not obtain operational results such that the financial liquidity and cash generation was sufficient to meet the debt service coverage ratio or the days cash on hand ratio. Effect: The Medical Center is not complying with Section 506 of the 2010 bond indenture. Questioned Costs: None Perspective Information: We performed an independent computation of the Medical Center's debt service coverage ratio and days cash on hand ratio. The results of our independent computations indicate the covenants were not met. Repeat Finding: No Recommendations: We recommend that the Medical Center review Section 506 of the 2010 bond trust indenture which outlines the required steps and notify the bond trustee that the debt service coverage ratio and days cash on hand ratio were not met. Views from Responsible Officials: The Medical Center notified the bond trustee in May 2025 that the debt service coverage ratio and days cash on hand ratio were not met for the year ended December 31, 2024, and will follow up with the bond trustee following completion of the audit regarding the necessary steps to take as outlined in the bond trust indenture.

Identification: 10.766 United States Department of Agriculture (USDA), Community Facilities Loans and Grants; Significant Deficiency/Noncompliance Finding; Special Tests and Provisions Compliance Requirement Criteria: The USDA direct loan and guaranteed loan were entered into in 2010 for renovation of the Medical Center's healthcare facility. One direct loan and one guaranteed loan were received. In connection with the loans, the Medical Center entered into the 2010 bond trust indenture and agreed to the letter of conditions dated November 30, 2009, set forth by the USDA which the Medical Center is required to follow. Section 510 of the 2010 bond trust indenture states the insurance coverages that the Medical Center is required to obtain which includes retaining an insurance consultant to provide a written report to the Board of Trustees on a biannual basis. Condition 34 of the letter of conditions further states the Medical Center will have fidelity bond coverage in an amount not less than the annual principal and interest becoming due on the bonds. Condition: The Medical Center did not retain an insurance consultant to provide a written report to the Board of Trustees on a biannual basis in accordance with Section 510 of the 2010 bond trust indenture and the Medical Center is not carrying a sufficient amount of fidelity bond coverage as set forth in the letter of conditions dated November 30, 2009. Cause: The Medical Center did not have adequate procedures in place to ensure it was complying with Section 510 of the 2010 bond trust indenture or the November 30, 2009, letter of conditions as it pertains to the amount of fidelity bond coverage and retaining an insurance consultant to provide a written report to the Board of Trustees on a biannual basis. Effect: The Medical Center is not complying with Section 510 of the 2010 bond indenture or Condition 34 of the letter of conditions dated November 30, 2009. Questioned Costs: None Perspective Information: We reviewed the Medical Center's insurance policies and determined the amount of fidelity bond coverage was insufficient based on annual debt service payments. Repeat Finding: Yes, 2023-001 Recommendations: We recommend that the Medical Center review Section 510 of the 2010 bond trust indenture and Condition 34 of the letter of conditions and establish procedures so that on a biannual basis the Medical Center's insurance consultant is providing a written report in accordance with Section 510 and that the Medical Center work with its insurance consultant to ensure that it is carrying a sufficient amount of fidelity bond coverage to comply with Condition 34 of the letter of conditions.

Identification: 10.766 United States Department of Agriculture (USDA), Community Facilities Loans and Grants Cluster; Noncompliance Finding; Special Tests and Provisions Compliance Requirement Criteria: The USDA direct loan and guaranteed loan were entered into in 2010 for renovation of the Medical Center's healthcare facility. One direct loan and one guaranteed loan were received. In connection with the loans, the Medical Center entered into the 2010 bond trust indenture and agreed to the letter of conditions dated November 30, 2009, set forth by the USDA which the Medical Center isrequired to follow. Section 510 of the 2010 bond trust indenture states the insurance coverages that the Medical Center is required to obtain which includes retaining an insurance consultant to provide a written report to the Board of Trustees on a biannual basis. Condition 34 of the letter of conditions further states the Medical Center will have fidelity bond coverage in an amount not less than the annual principal and interest becoming due on the bonds. Condition: The Medical Center did not retain an insurance consultant to provide a written report to the Board of Trustees on a biannual basis in accordance with Section 510 of the 2010 bond trust indenture and the Medical Center is not carrying a sufficient amount of fidelity bond coverage as set forth in the letter of conditions dated November 30, 2009. Cause: The Medical Center did not have adequate procedures in place to ensure it was complying with Section 510 of the 2010 bond trust indenture or the November 30, 2009, letter of conditions as it pertains to the amount of fidelity bond coverage. Effect: The Medical Center is not complying with Section 510 of the 2010 bond indenture or Condition 34 of the letter of conditions dated November 30, 2009. Questioned Costs: None Perspective Information: We reviewed the Medical Center's insurance policies and determined the amount of fidelity bond coverage was insufficient based on annual debt service payments. Repeat Finding: Not applicable Recommendations: We recommend that the Medical Center review Section 510 of the 2010 bond trust indenture and Condition 34 of the letter of conditions and establish procedures so that on a biannual basis the Medical Center's insurance consultant is providing a written report in accordance with Section 510 and that the Medical Center work with its insurance consultant to ensure that it is carrying a sufficient amount of fidelity bond coverage to comply with Condition 34 of the letter of conditions. Views from Responsible Officials: The Medical Center was not aware of the insurance consultant's report on a biannual basis or the fidelity bond coverage requirement until 2023 and the USDA has never questioned us on either of these matters. We will communicate with our USDA representative for guidance on these matters.

Identification: 10.766 United States Department of Agriculture (USDA), Community Facilities Loans and Grants Cluster; Noncompliance Finding/Significant Deficiency; Reporting Compliance Requirement Criteria: The USDA direct loan and guaranteed loan were entered into in 2010 for renovation of the Medical Center's healthcare facility. One direct loan and one guaranteed loan were received. Management is responsible for submitting an annual reporting checklist to the USDA throughout the duration of the loans. The annual reporting checklist contains reporting for income statement, projected budget/cash flow, balance sheet, reporting of balances in reserve accounts, certificates regarding insurance coverage, Association project information (CP Guide 28), and verification of records (CP Guide 42). Condition: While the Medical Center submitted the annual reporting checklist to the USDA, the Medical Center did not complete the annual reporting checklist in its entirety. The Medical Center did not report any fidelity bond coverage on CP Guide 28 nor did the Medical Center complete the verification of records on CP Guide 42 which indicates that the records verification be completed by a board member. Cause: The Medical Center did not have adequate procedures in place to ensure the annual reporting checklist was completed in its entirety. Effect: The Medical Center did not follow the terms and conditions per the USDA loan agreements pertaining to reporting requirements. Questioned Costs: None Perspective Information: We reviewed the annual reporting checklist noting that it was not completed in its entirety. Repeat Finding: Not applicable Recommendations: We recommend that policies and procedures over USDA reporting be strengthened to ensure that the annual reporting checklist is completed in its entirety. Views from Responsible Officials: We would note that we were unaware of the Fidelity bond requirement in the loan documents and that our USDA representative has never questioned us for the lack of reporting this information. We would also note that the Chief Financial Officer has taken the responsibility of reviewing and signing the CP Guide 42 Form as a representative of the Medical Center. We will communicate with our USDA representative for guidance on these two matters and make changes as required based on their guidance.

2021-002 Identification: Significant deficiency in the organization of supporting documentation related to Provider Relief Fund (PRF) reporting. Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116-260). Eligible healthcare providers received PRF appropriations for health-care related expenses or lost revenues attributable to coronavirus. Recipients who received one or more payments exceeding $10,000 are required to report in each applicable reporting period. Condition: It was noted in performing the audit that there were several differences in accumulating the detail support that was tracked on the PRF spreadsheet which was used to report the data in the PRF reporting portal. In total, the Medical Center underreported eligible expenses. Cause: Due to the nature of the program and inconsistency in reporting guidance, the controls related to the information tracked on the spreadsheet for reporting purposes did not prevent the correction of the differences noted. Effect: There is a possibility that future data reported under the PRF program could contain misstatements that will not be detected and corrected on a timely basis. Questioned costs: None Perspective information: For the items sampled, we noted that the Medical Center underreported eligible expenses by approximately $59,000. Repeat finding: N/A Recommendations: We recommend that the spreadsheet and all support organized prior to reporting be reviewed by someone other than the preparer in an effort to identify potential errors in the accumulating of data. Views of Responsible Officials: The Medical Center's Chief Financial Officer reviewed the supporting spreadsheet prior to submission and will review the supporting details prior to any future reporting in an effort to identify potential corrections in the data.