WHITE MOUNTAIN REGIONAL MEDICAL CENTERNon-Profit

U.S Department of Health and Human Services Federal Financial Assistance Listing #93.493 Congressional Directives Procurement, Suspension & Debarment 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 the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards to Uniform Guidance standards in sections 2 CFR 200.317 through 200.327. Additionally, 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Condition: Testing of the federal program identified the following: 􀁸 The Hospital’s formally documented procurement policy was missing the required elements detailed under Uniform Guidance. 􀁸 Instances where the Hospital did not follow the procurement process, and/or retain documentation for reasoning of selection of vendor. Cause: The Hospital was not aware of the federal procurement requirements and did not have an established policy. Contract provisions were not evaluated compared to Uniform Guidance contract requirements and documentation was not retained to support procurement and selection of vendors. Effect: The Hospital was not in compliance with the procurement standards for their purchases and are not in compliance with the requirement to have a written policy in accordance with Uniform Guidance. Questioned Costs: None reported. Context: A nonstatistical sample of 4 out of 14 vendors were selected for testing. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital update their procurement policy to ensure it includes all the required elements in accordance with Uniform Guidance. In addition, we suggest that management implement procedures and control processes related to the review of procurement to ensure the procurement methods are being followed and documentation is retained to support compliance. Views of Responsible Officials: Management agrees with the finding.

U.S Department of Health and Human Services Federal Financial Assistance Listing #93.493 Congressional Directives Procurement, Suspension & Debarment 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 the terms and conditions of the federal award. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contracts with certain parties that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: The Hospital does not have an internal control policy in place to ensure covered transactions are with vendors that are not suspended or debarred, and no evidence was retained regarding ensuring the vendor was not suspended or debarred. Cause: The Hospital does not have an internal control policy or procedures to ensure compliance and was not aware of options available for monitoring to ensure compliance. Effect: The Hospital may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context: A nonstatistical sample of 3 out of 13 covered transactions were selected for testing. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital update their procurement policy to ensure it includes suspension and debarment requirements. Additionally, we recommend management complete a review to ensure vendors are not suspended or debarred from doing business with the federal government prior to entering into a procurement transaction and retain documentation to support that these procedures are being performed. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Preparation of Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance 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: Management has requested that the auditor assist with the preparation of the Schedule. 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 that is correct without the assistance of the auditors. Questioned Costs: None reported. White Mountain Regional Medical Center Schedule of Findings and Questioned Costs Year Ended December 31, 2022 Context: No sampling was utilized. 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 the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

U.S Department of Agriculture Federal Financial Assistance Listing #10.766, Grant #02-001-916646223 Community Facilities Loans and Grants Cluster 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?s Federal Financial Report for grant number 02-001-916646223 through the period ending June 7, 2022, was marked as final and indicated the Hospital expended the full $435,625 federal award which was not accurate. Cause: This deficiency is due to a misunderstanding of what was intended to be included on the report submission. Effect: The report to the federal agency contained a material error. There is the potential risk that a federal agency relies on the report in analyzing uses of the federal grant. Questioned Costs: None. Context: No sampling was utilized. All reports were tested. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital develop internal controls to review and approve proper reporting being claimed for federal award programs and ensure those controls are being performed. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Agriculture Federal Financial Assistance Listing #10.766, Community Facilities Loan Community Facilities Loans and Grants Cluster Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance and Noncompliance Not Considered Material 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 required to establish a Reserve Account with monthly deposits of $620 until a total balance of $74,342 was obtained. The Hospital did not establish this account or make any required deposits during 2022. Cause: This deficiency is due to a misunderstanding of establishing a Reserve Account. Effect: The Hospital was not in compliance with the terms of the loan agreement related to the Reserve Fund. Questioned Costs: None. Context: No sampling was utilized Repeat Finding from Prior Years: No Recommendation: We understand the Hospital paid off the loan subsequent to year-end, thus removing this requirement. We recommend the Hospital develop policies and procedures to ensure all compliance requirements included in federal contracts are being complied with. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Agriculture Federal Financial Assistance Listing #10.766, Grant #02-001-860171900 Community Facilities Loan and Grants Cluster Period of Performance 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: Included in the population of the Hospital?s program expenditures included amounts prior to the period of performance. Cause: This deficiency is due to including all project costs in the listing compared to specifically identifying amounts that are federal government related. Effect: There is a potential that expenses claimed under the major federal program are not during the period of performance. Questioned Costs: The Hospital paid for certain costs prior to the start of the program. Ultimately, it was determined that the expenditures were not paid with federal funds. Context: Sampling was first utilized to identify and accumulate the errors. Subsequently, all expenses related to periods prior to the period of performance were identified. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital develop internal controls to review and approve expenses being claimed for federal programs to ensure they are within the period of performance as established by the federal agency. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #860171900 Preparation of Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance 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 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 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 management be aware of the financial reporting requirements relating to the Hospital?s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #860171900 Activities Allowed or Unallowed, Allowable Costs/Cost Principles and 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 claimed expenses that are not considered attributable to coronavirus. In addition, there were errors in the calculation of eligible expenses. Cause: There was turnover of key financial personnel during 2020 and 2021. The Hospital also did not have a control to ensure the reporting was reviewed and approved by someone other than the preparer (see finding 2021-005). Effect: There is a potential that expenses claimed under the PRF and ARP Rural Distribution program as attributable to coronavirus may be incorrect. Questioned Costs: None. While there were $50,312 of expenses considered to be ineligible, there was $26,068 in additional expenses due to an error in the reduction of amounts reimbursed by other sources. Finally, the Hospital had excess lost revenues of $53,884, which more than covers the error. Context: No sampling was utilized to identify and accumulate the errors. All expenses related to periods prior to coronavirus impacting the Hospital could be identified. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital develop internal controls to review and approve expenses being claimed for the PRF and ARP Rural Distribution program and ensure those controls are being performed. Views of Responsible Officials: Management agrees with the finding.