Sky Lakes Medical Center, Inc.Non-Profit

Finding 2021-001 – Preparation of the Schedule of Expenditures of Federal Awards (Material Weakness) in internal controls over compliance Federal Agency – U.S. Department of Health and Human Services AL Number - 93.498 Federal Program Title – COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Period – Period 1 Reporting (Period of Availability January 1, 2020 – June 30, 2021) Criteria: The Uniform Guidance (2 CFR 200) Section 200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]….at a minimum shall…list individual Federal programs by Federal agency…[and] provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) number or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, the Medical Center is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Context: Because the Medical Center had never received a single audit before receiving funding from the COVID-19 programs, the Medical Center did not have sufficient controls to ensure the population to draft the SEFA included the correct expenditures that qualified as expenditure of a federal award during the period. The complicated Provider Relief Fund reporting periods resulted in a timing issue only. Questioned Costs: None noted. Cause: Factors contributing to the condition included the high volume of activity related to the new COVID-19 programs. Effect: As a result of the Medical Center’s inaccurate reporting of the PRF expenditures on the population used to draft the SEFA, the Medical Center’s 2021 SEFA was adjusted and completion of compliance related testing and reported had to be updated. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Medical Center develop and implement a review process throughout the year to ensure compliance with SEFA reporting requirements as outlined in Uniform Guidance. Views of responsible officials and planned corrective action: Any funds received in the future with unusual reporting requirements similar to these COVID funds will be reviewed in detail to ensure reporting is complete and accurate.

Finding 2021-001 – Preparation of the Schedule of Expenditures of Federal Awards (Material Weakness) in internal controls over compliance Federal Agency – U.S. Department of Health and Human Services AL Number - 93.498 Federal Program Title – COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Period – Period 1 Reporting (Period of Availability January 1, 2020 – June 30, 2021) Criteria: The Uniform Guidance (2 CFR 200) Section 200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]….at a minimum shall…list individual Federal programs by Federal agency…[and] provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) number or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, the Medical Center is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Context: Because the Medical Center had never received a single audit before receiving funding from the COVID-19 programs, the Medical Center did not have sufficient controls to ensure the population to draft the SEFA included the correct expenditures that qualified as expenditure of a federal award during the period. The complicated Provider Relief Fund reporting periods resulted in a timing issue only. Questioned Costs: None noted. Cause: Factors contributing to the condition included the high volume of activity related to the new COVID-19 programs. Effect: As a result of the Medical Center’s inaccurate reporting of the PRF expenditures on the population used to draft the SEFA, the Medical Center’s 2021 SEFA was adjusted and completion of compliance related testing and reported had to be updated. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Medical Center develop and implement a review process throughout the year to ensure compliance with SEFA reporting requirements as outlined in Uniform Guidance. Views of responsible officials and planned corrective action: Any funds received in the future with unusual reporting requirements similar to these COVID funds will be reviewed in detail to ensure reporting is complete and accurate.