JACOBSON MEMORIAL HOSPITAL CARE CENTERNon-Profit

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 #450222079 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 Hospital claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Hospital selected Option i to calculate lost revenue. The methodology chosen utilized actual quarterly revenues from 2019, 2020, 2021, and 2022. The 2019 revenue amounts were compared to 2020, 2021, and 2022 to calculate the Hospital’s lost revenue. Condition – During our testing, the Hospital’s calculation of lost revenue claimed under the federal program as an allowable cost contained no formal review or approval by a separate individual outside of the preparer. In addition, there was no evidence retained that the Hospital’s special report submitted to the Department of Health and Human Services for Period 4 was reviewed and approved by a separate individual outside of the preparer. Cause – The Hospital did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented. Effect – The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs – None reported. Context – The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 4 Reporting were tested. No review outside of the preparer was noted on the lost revenue calculation, or the submission of the reporting to the Department of Health and Human Services outside of the preparer. Repeat Finding from Prior Years – No Recommendation – We recommend that the Hospital enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials – Management agrees with the finding.

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 #450222079 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance 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 Hospital was not able to provide sufficient support for the total net patient care revenues that were reported to the Department of Health and Human Services. As well as the Hospital’s total net patient care revenue did not agree to the amount in the report submitted to the Department of Health and Human Services. Cause – Due to high turnover in the CFO position and multiple accounting system conversions, the Hospital was unable to provide sufficient support over the total net patient care revenues that were reported to the Department of Health and Human Services. This caused the Hospital to report revenue amounts that did not accurately reflect the net patient care revenues reported on the audited financial statements. Effect – The lost revenue difference in what was accurately calculated compared to what was reported led to an incorrect filing and a claim of more support for lost revenue than was needed. Additionally, the revenue difference in what was reported on the audited financial statements compared to what was reported led to an incorrect filing of total net patient care revenues. Questioned Costs – None reported. Context – Lost revenue reported to the Department of Health and Human Services totaled $2,104,728. Due to the lack of sufficient support, actual lost revenue was not able to be calculated and the difference is not known. Additionally, revenues reported to the Department of Health and Human Services compared to the audited financial statements differed by $2,769,931. As lost revenue was not used as a qualifying expenditure in Period 4, there was no noted questioned costs due to this. Repeat Finding from Prior Years – No Recommendation – We recommend that management review their process and procedures to include monitoring over amounts reported relating to total revenues, lost revenue amounts and the related calculation. Views of Responsible Officials – Management agrees with the finding.

2022-003 Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Department of Health and Human Services Federal Assistance Listing #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Department of Health and Human Services Federal Assistance Listing #93.461 Rural Health Research Centers Preparation of Consolidated Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance - Other Criteria - Proper controls over financial reporting include the ability to prepare the consolidated schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition - The Hospital does not have an internal control system designed to provide for a complete and accurate consolidated schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause - Auditor assistance with preparation of the Schedule is not unusual, as the Schedule has unique and specialized requirements and preparation is only required with the Hospital meets a specified threshold of federal expenditures. Effect - There is a reasonable possibility that the Hospital would not be able to draft a Schedule that is correct without assistance of the auditors. Questioned Costs - None reported. Context - Sampling was not used. Repeat Finding from Prior Years ? Yes Recommendation - While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital?s schedule of expenditures of federal awards and internal controls that impact financial reporting. Views of Responsible Officials - Management agrees with the finding.

2022-004 Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance and Noncompliance 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 - During our testing, it was noted that one of the loan reserve accounts was underfunded by approximately $4,500. Cause - The Hospital did not have an adequate internal control policy in place to ensure the proper funding of the reserve accounts. Effect ? The lack of adequate policies governing proper funding of reserve accounts increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs ? None reported Context/Sampling ? Sampling was not used. The Hospital has two reserve accounts that were tested. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Hospital enhance internal control policies to ensure that there is proper funding of the reserve accounts. Views of Responsible Officials - Management agrees with the finding.

2021-003 Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #450222079 Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control Over Compliance - Other Criteria - Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition - The Hospital does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause - Auditor assistance with preparation of the Schedule is not unusual, as the Schedule has unique and specialized requirements and preparation is only required with the Hospital meets a specified threshold of federal expenditures. Effect - There is a reasonable possibility that the Hospital would not be able to draft a Schedule that is correct without assistance of the auditors. Questioned Costs - None reported. Context - Sampling was not used. Repeat Finding from Prior Years ? No. Recommendation - While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Hospital?s schedule of expenditures of federal awards and internal controls that impact financial reporting. Views of Responsible Officials - Management agrees with the finding.

2021-004 Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #450222079 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. The Hospital claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Hospital selected Option i to calculate lost revenue. The methodology chosen utilized actual quarterly revenues from 2019, 2020, and 2021. The 2019 revenue amounts were compared to 2020 and 2021 to calculate the Hospital?s lost revenue. Condition - During our testing, there was review over individual eligible expenditures, however, there was no formal review over the expenditure spreadsheet used to calculate those expenditures claimed for the federal program outside of the preparer. The Hospital?s calculation of lost revenue claimed under the federal program as an allowable cost contained no formal review or approval by a separate individual outside of the preparer. In addition, there was no evidence retained that the Hospital?s special report submitted to the Department of Health and Human Services for Period 1 was reviewed and approved by a separate individual outside of the preparer. Cause - The Hospital did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented. Effect - The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs - None reported. Context/Sampling - Detail testing was performed over eligible expenditures for activities allowed and unallowable and allowable cost/cost principles. A sample of 65 expenditures were tested which totaled $1,370,915 out of $1,643,450. The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 1 Reporting were tested. No review outside of the preparer was noted on the tracking of eligible expenditures, the lost revenue calculation, or the submission of the reporting to the Department of Health and Human Services outside of the preparer. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Hospital enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials - Management agrees with the finding.

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