Rio Grande Hospital

2022‐004 Department of Health and Human Services Federal Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan Rural (ARP) Distribution Applicable Federal Award Number and Year ‐ Period 4 TIN #841276376 Activities Allowed or Unallowed and Allowable Costs/Costs Principles 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. Condition ‐ The Organization had various invoices and employee timecards identified as COVID‐19 eligible that did not follow the Organization’s review and approval process for COVID‐19 funding. Cause ‐ The Organization did not have an adequate internal control policy in place to ensure documented review and approval over specific invoices and employee timecards as it relates to COVID‐19. Effect ‐ The lack of adequate policies governing review and approval of the specific invoices and employee timecards 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 this documentation, ineligible expenditures may be claimed under the program. Questioned Costs ‐ None. $6,686 of improper expenses were noted due to use of incorrect pay rates or invoice amounts. However, the Organization has excess lost revenue of $157,250 and excess expenses of $345,951 that can be substituted for these expenses. Context ‐ Detail testing was completed over expenses. A nonstatistical sample of 60 expenditures were selected for detail testing and 11 of the expenditures did not follow the internal control process for the COVID‐19 funding. In addition, incorrect pay rates were utilized on the wages tracking sheet for four selections along with one incorrect invoice amount on the tracking sheet. Repeat Finding from Prior Years ‐ Yes, Finding 2021‐004. Recommendation ‐ We recommend that the Organization enhance internal control policies to ensure all invoices and employee timecards follow the internal control policies implemented by the Organization as it relates to the COVID‐19 funding. We recommend that the Organization also ensure proper reviews are completed to ensure invoices and pay rates are recorded correctly on the expense tracking sheet. This will ensure that all expenses claimed under the federal program are necessary, reasonable, and meet the requirements of the federal program. Views of Responsible Officials ‐ Management agrees with the finding.

2022‐005 Department of Agriculture Federal Assistance Listing #10.766 Community 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 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, we noted a lack of documentation of a secondary review on the RD442‐2 forms submitted to the USDA. Cause ‐ The Organization did not have an adequate internal control policy in place to ensure the review and approval of the report was documented. Effect ‐ The lack of adequate policies governing review and approval increase 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. Context ‐ A selection of four quarterly reports out of total population of eight were tested. Documentation of a secondary review was missing from two quarterly reports. Repeat Finding from Prior Years ‐ No Recommendation ‐ We recommend that the Organization enhance internal control policies to ensure that formal documentation of the reviews are 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 and American Rescue Plan Rural (ARP) Distribution Applicable Federal Award Number and Year ? Period 1 TIN #841276376 Activities Allowed or Unallowed, Allowable Costs/Costs Principles, and 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. The Organization claimed expenses based on specifically identified COVID related expenses. Condition - The Organization claimed expenses that were reimbursed by other funding sources. These expenses were improperly included within the HHS Special Report ? Period 1 (Report) which caused the Report to be inaccurate. In addition, there was no evidence of formal review and approval over some of the expenditures that were claimed for the program. Also, there was no evidence retained that the Organization?s special report submitted to the Department of Health and Human Services for Period 1 was reviewed and approved by an individual outside of the preparer prior to submission. Cause - The Organization did not have an adequate internal control policy in place to ensure documented review and approval of the tracking of expenditures claimed or the special report submitted to the Department of Health and Human Services for Period 1. Effect - The lack of adequate policies governing review of the terms and conditions of the program, and lack of review over Report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. The Organization submitted expenses over their actual allowable expenses. Questioned Costs - There are questioned costs of $75,633 (actual) that were reimbursed or will be reimbursed by other funding sources. Context - A nonstatistical sample of 65 expenditures were selected for testing, which accounted for $377,148 of $1,461,245 direct program expenditures. Within the $377,148 sample, $75,633 of costs were reimbursed by a different funding source (i.e., Medicare cost reimbursed percentages estimated using the filed cost report for fiscal year 2021). The Report section, Other PRF Expenses, included expenses that were reimbursed or would be reimbursed by other funding sources. In addition, 21 of the 65 expenditures selected did not include evidence of formal review and approval. Repeat Finding from Prior Years ? No Recommendation - We recommend that the Organization enhance internal control policies to ensure all amounts reimbursed by other funding sources are adequately documented and reduced from the eligible expenditure listing and are properly recorded in the reports required to be submitted to the federal agency. We also recommend that the Organization enhance internal control policies to ensure that all invoices are reviewed and that the required reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. Views of Responsible Officials - Management agrees with the finding.

2021-005 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 #841276376 Activities Allowed or Unallowed, Allowable Costs/Costs Principles, and 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. The Organization selected option i to calculate lost revenue, which consists of comparing actual patient care revenue during the period of availability by quarter with the 2019 actual calendar year patient care revenue by quarter. Condition - The Organization used an alternate methodology for calculating lost revenue (cash basis instead of accrual basis) in the special report submitted to the Department of Health and Human Services for Period 1 but reported using option i instead of option iii. Also, the Organization did not have an adequate internal control policy in place to ensure the lost revenue calculation followed applicable guidance. Cause - The Organization did not have an adequate internal control policy in place to ensure the lost revenue calculation followed applicable guidance. Effect - The Organization used an alternate methodology for calculating lost revenue (cash basis instead of accrual basis) in the special report submitted to the Department of Health and Human Services for Period 1 but reported using option i instead of option iii. Questioned Costs - Calculating lost revenue using option i results in questioned costs of $1,063,538. Cash basis lost revenue of $2,621,314 was reported but only $2,464,064 was utilized. Calculating cost revenue using option i results in lost revenue of $1,400,526. Context - There was one lost revenue calculation required for the year ended December 31, 2021, and it was selected for testing. Repeat Finding from Prior Years ? No Recommendation - We recommend that management implement procedures to ensure the lost revenue calculation claimed meets the requirements of the federal program. Views of Responsible Officials - Management agrees with the finding.

2019-004 U.S. Department of Agriculture CFDA #10.766 Community Facilities Loans and Grants Reporting Material Weakness in Internal Control over Compliance Criteria ? A good system of internal control over compliance related to a program?s reporting should require a review of the report by a second individual prior to submission. Condition ? During the audit process, we noted the Organization does not have a formal review process for applicable reports being submitted. Cause ? The Organization did not have adequate internal controls to ensure a formal review was taking place. Effect ? Without proper review of reports required to be submitted, errors could occur and result in the Organization?s failure to meet reporting requirements. Questioned Costs ? None Reported. Context/Sampling ? The entire population of three reports was selected for testing. The lack of formal review was noted for all of the reports tested. Repeat Finding From Prior Year ? No Recommendation ? We recommend that a member of the Organization?s staff that does not prepare the required report review the completed report prior to submission and document their review. View of Responsible Officials ? Management agrees with the finding.

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