Whidbey Island Public Hospital District

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 1 TIN# 910843135 Other – Preparation of Schedule of Expenditures of Federal Awards Material Weakness 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 District 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 District meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the District 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 District’s schedule 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 #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN# 910843135 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: The District must establish and maintain effective internal control over federal awards that provides reasonable assurance that the District is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: The amounts reported for lost revenue did not agree to the supporting documentation provided. Cause: The District did not have an internal control process in place to ensure the accuracy of the reporting key line items. Effect: There was no effect on the amount of lost revenue applied against the funding received in the current period, however there were errors in the key line items reported. Lost revenue for the reporting period was $7,462,254, which exceeds the amount claimed of $5,874,597. Questioned Costs: None reported. Context: Key line items were tested on the Period 1 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend that management review the calculation for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Views of Responsible Officials: Management agrees with the finding.