NORTH DAKOTA HOSPITAL FOUNDATION

2021-003: Material Weakness ? Reporting: Federal Financial Assistance Listing #93.889 Criteria 2 CFR Part 170 establishes requirements for recipients? reporting of information on subawards as required by the Federal Funding Accountability and Transparency Act of 2006 (FFATA). 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 the terms and conditions of the federal award. Conditions 1) North Dakota Hospital Foundation reported they had made an error and they had not made any of the required FFATA reporting for any of the subawards made during the year ending September 30, 2021 nor subsequent to year-end. 2) No documentation to support a formal review of the federal financial reports and cash transaction reports by an individual other than the preparer prior to submission to the federal agency (tested 2 reports). Questioned costs None Context During our testing, it was noted North Dakota Hospital Foundation did not have proper procedures in place specifically for completing this FFATA reporting of subawardee executive compensation as required in the federal fund notice of awards and for a review of the financial reporting prior to submission. Cause Management had an informal, undocumented review process in place over reports and management was unaware of the reporting requirements of subawards under FFATA. Effect Ineffective controls over this area of compliance could result in a reasonable possibility that reports that are inaccurate or incomplete could be submitted to the federal agency. In addition, with incomplete reporting under FFATA, the Association may be noncompliant with the compliance requirements outlined in the Notice of Award. Recommendation We recommend that management document their procedures and control processes to comply with the federal requirements above and complete the required reporting of subawards under FFATA as soon as practical. Views of Responsible Officials and Planned Corrective Actions There is no disagreement with this audit finding. Indication of Repeat Finding No

2021-004: Material Weakness ? Subrecipient Monitoring: Federal Financial Assistance Listing #93.889 Criteria Under 2 CFR 200.331 and 2 CFR 200.332, the foundation is required to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition No identified controls over subrecipient monitoring to ensure that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written communication from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. Questioned costs None Context During our testing, it was noted North Dakota Hospital Foundation did not have proper procedures in place to monitor subrecipients. Cause Management was not aware of all the compliance requirements for subrecipient monitoring. Effect Inadequate documentation of controls over this area of compliance resulted in a reasonable possibility that the Association would not be able to detect and correct noncompliance in a timely manner. Recommendation We recommend that regulations regarding subrecipient monitoring be reviewed to ensure that processes are properly designed, and adequate monitoring controls are implemented. Views of Responsible Officials and Planned Corrective Actions There is no disagreement with this audit finding. Indication of Repeat Finding No