YUMA DISTRICT HOSPITALNon-Profit

2023‐005 Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions 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 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 awards. Condition – During our testing, there was no formal review separate from the preparer over the reserve fund reconciliations for the federal program. Cause – The Hospital did not have an adequate internal control policy in place to ensure review and approval over the reserve funds. 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 was not used. Repeat Finding from Prior Years – Yes, 2022‐005 Recommendation – We recommend 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 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 #840420041 Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Preparation of Schedule of Expenditure of Federal Awards Material Weakness in Internal Control Over Compliance ‐ Other Criteria – Title 2 Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires the Hospital to prepare a schedule of expenditures of federal awards (schedule). 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 does not have an internal control system designed to allow for a complete and accurate Schedule 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 when the Hospital meets a specified threshold of federal expenditures. Effect – There is a reasonable possibility that the Hospital would not be able to draft the schedule and the accompanying notes to the schedule that is correct without the assistance of the auditors. Questioned Costs – None reported. Context – Sampling was not used. Repeat Finding from Prior Years – Yes, 2021‐004 Recommendation – While we recognize that this condition is not unusual for an organization with limited staffing, we recommend that management be aware of the reporting requirements relating to the Hospital’s schedule and internal controls that impact reporting. Views of Responsible Officials – Management agrees with the finding.

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions 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 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 awards. Condition – During our testing, there was no formal review separate from the preparer over the reserve fund reconciliations for the federal program. In addition, there was lack of review of the quarterly internal monitoring of the Hospital’s debt covenants. Cause – The Hospital did not have an adequate internal control policy in place to ensure review and approval over the reserve funds and quarterly internal monitoring of the debt covenants. 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 was not used. Repeat Finding from Prior Years – No Recommendation – We recommend the Hospital enhance internal control policies to ensure that formal documentation of reviews is present. 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 (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #840420041 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Preparation of Schedule of Expenditure of Federal Awards Material Weakness in Internal Control Over Compliance - Other Criteria: Title 2 Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires the Hospital to prepare a Schedule of Expenditures of Federal Awards (Schedule). 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 does not have an internal control system designed to allow for a complete and accurate Schedule 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 when the Hospital meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Hospital would not be able to draft the Schedule and the accompanying notes to the Schedule that is correct without the 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 that management be aware of the reporting requirements relating to the Hospital?s Schedule and internal controls that impact reporting. Views of Responsible Officials: Management agrees with the finding.

2021-005 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #840420041 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 Hospital had various invoices and employee timecards identified as COVID-19 eligible that did not follow the Hospital?s review and approval process for COVID-19 funding. In addition, the Hospital?s final expenditure listing and lost revenue calculation identified as eligible and claimed under the PRF program did not have evidence of being 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 the review and approval over the specific invoices, employee timecards, the final expenditure listing, and the lost revenue calculation was documented. Effect: The lack of adequate policies governing review and approval of the specific invoices, employee timecards, expenditure listing, and lost revenue calculation increase the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program. Questioned Costs: None reported. Context: Detail testing was completed over expenses along with the calculation for lost revenue for activities allowed or unallowed and allowable costs/cost principles. A nonstatistical sample of 65 expenditures were selected for detail testing and 5 of the expenditures did not follow the internal control process for the COVID-19 funding. The overall expense worksheet and lost revenue calculation did not have evidence of a review by someone other than the preparer (i.e. population of two). Repeat Finding from Prior Years: No Recommendation: We recommend that the Hospital enhance internal control policies to ensure all invoices and employee timecards follow the internal control policies implemented by the Hospital as it relates to the COVID-19 funding. This will ensure that all expenses claimed under the federal program are necessary, reasonable, and meet the requirements of the federal program. We also recommend the Hospital implement a control process which includes a secondary review and approval of the final expenditure listing and lost revenue calculation used to claim the allowable costs under the federal program and that there is documented evidence of the review and approval. Views of Responsible Officials: Management agrees with the finding.

2021-006 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #840420041 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 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 selected lost revenue calculation option iii, which is the alternative method of calculating lost revenues attributable to coronavirus. Under this methodology, the Hospital was required to submit a narrative that described the methodology used, why the methodology is reasonable, and a description of how lost revenues were attributable to coronavirus. Cause: The Hospital did not have a narrative that adequately described the option iii methodology utilized in the lost revenue calculation due to lack of internal controls in place to monitor the requirements. Effect: The Hospital?s narrative did not adequately describe the option iii methodology utilized in the lost revenue calculation as required under the guidance. This did not allow the auditor to audit based on the narrative, but rather, the auditor had to discuss the option iii methodology to obtain additional information to fully understand the alternative methodology used. Questioned Costs: None reported. Context: The option iii narrative for lost revenue did not include specific details identifying that budget to actual numbers for 2020 were used to calculate lost revenue. The auditors were able to understand the methodology after having discussions with the Hospital. Repeat Finding from Prior Years: No Recommendation: We recommend that the Hospital enhance the option iii narrative for the lost revenue calculation by including the specific methodology utilized in the calculation. Views of Responsible Officials: Management agrees with the finding.

2021-007 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #840420041 Reporting Material Weakness 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. The Hospital is required to submit an accurate report to HHS for each filing period funds were received. Condition: The Hospital claimed detailed expenditures attributable to coronavirus in which the final expenditure listing did not tie to the HHS Report. Cause: The Hospital had a formula error of $34,860 on the final expenditure listing causing a difference in the amount reported on the HHS Report (i.e. there were more expenses reported on the HHS report). Effect: While this formula error provided a difference between the expenditures on the HHS Report and detailed expenditure listing, the Hospital has unreimbursed lost revenues available to be applied to future reporting periods of $1,911,537. This formula error also indicates there is a lack of policies governing the review and approval of the detailed expenditure listing to the HHS Report. Questioned Costs: None reported. Context: The HHS Report included a formula error of $34,860 (more expenses where keyed in than was supported by the detailed expenditure listing once the formula error was corrected). The Hospital has excess lost revenue that can be utilized for the difference. Repeat Finding from Prior Years: No Recommendation: We recommend that the Hospital enhance internal control policies to ensure the HHS Report is supported by the detailed expenditure listing. This would include implementing a secondary review of the expenditure listing (Finding 2021-005) and a secondary review of the HHS Report to that expenditure listing. Views of Responsible Officials: Management agrees with the finding.