Lake Health District

Finding 2024-003 Program Name: Community Facilities Loans and Grants Cluster Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Questioned Costs: None Criteria: 2 CFR Part 200.512 requires that, for non-federal entities, “The audit must be completed, and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period.” Condition: The federal reporting deadline for the Single Audit reporting package was March 31, 2025; however, Lake Health District did not submit its Single Audit Reporting Package by that date. Cause: Lake Health District was unable to complete the single audit by the deadline due to the documentation not being reconciled and ready for the audit. This resulted in the late submission of the Single Audit reporting package. Effect: Without accurate and timely reporting, the funding agencies are unable to properly oversee the expenditure of Federal awards. Recommendation: We recommend that management implement processes and procedures to identify the required deadlines and related controls to ensure compliance with the deadlines. View of Responsible Management agrees with the finding above. Management will review the existing Officials: accounting policies and procedures and implement additional controls to validate timely submission of reports.

Program Name: Community Facilities Loans and Grants Cluster Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Questioned Costs: None Criteria: 2 CFR Part 200.512 requires that, for non-federal entities, “The audit must be completed, and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period.” Condition: The federal reporting deadline for the Single Audit reporting package was March 31, 2024; however, Lake Health District did not submit its Single Audit Reporting Package by that date. Cause: Lake Health District was unable to complete the single audit by the deadline due to the documentation not being reconciled and ready for the audit. This resulted in the late submission of the Single Audit reporting package. Effect: Without accurate and timely reporting, the funding agencies are unable to properly oversee the expenditure of Federal awards. Recommendation: We recommend that management implement processes and procedures to identify the required deadlines and related controls to ensure compliance with the deadlines. View of Responsible Management agrees with the finding above. Management will review the existing Officials: accounting policies and procedures and implement additional controls to validate timely submission of reports.

Program Name: Community Facilities Loans and Grants Cluster Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions Questioned Costs: None 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 District did not establish a debt reserve fund as required by the federal award agreement. Cause: The District lacked a system of internal controls necessary to ensure the reserve fund balance was in compliance with the federal award agreement. Effect: The lack of adequate policies governing the monitoring of the required debt covenants and the establishment and funding reserves increases the risk that employees may not be able to detect and correct noncompliance in a timely manner. Recommendation: We recommend that management establish the required reserve fund. View of Responsible Management agrees with this finding and has committed the resources necessary to Officials: maintaining an adequate reserve fund.

Program Name: Community Facilities Loans and Grants Cluster Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Questioned Costs: None Criteria: 2 CFR Part 200.512 requires that, for non-federal entities, “The audit must be completed, and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period.” Condition: The federal reporting deadline for the Single Audit reporting package was September 30, 2022; however, Lake Health District did not submit its Single Audit Reporting Package by that date. Cause: Lake Health District was unable to complete the single audit by the deadline due to the documentation not being reconciled and ready for the audit. This resulted in the late submission of the Single Audit reporting package. Effect: Without accurate and timely reporting, the funding agencies are unable to properly oversee the expenditure of Federal awards. Recommendation: We recommend that management implement processes and procedures to identify the required deadlines and related controls to ensure compliance with the deadlines. View of Responsible Officials: Management agrees with the finding above. Management will review the existing accounting policies and procedures and implement additional controls to validate timely submission of reports.

Program Name: Community Facilities Loans and Grants Cluster Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions Questioned Costs: None 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 District did not establish a debt reserve fund as required by the federal award agreement. Cause: The District lacked a system of internal controls necessary to ensure the reserve fund balance was in compliance with the federal award agreement. Effect: The lack of adequate policies governing the monitoring of the required debt covenants and the establishment and funding reserves increases the risk that employees may not be able to detect and correct noncompliance in a timely manner. Recommendation: We recommend that management establish the required reserve fund. View of Responsible Officials: Management agrees with this finding and has committed the resources necessary to maintaining an adequate reserve fund.

Finding 2021-005 Program Name: Provider Relief Fund Federal Assistance Listing Number: 93.498 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Questioned Costs: None Criteria: 2 CFR Part 200.512 requires that, for non-federal entities, ?The audit must be completed, and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period.? Condition: The federal reporting deadline for the Single Audit reporting package was September 30, 2021; however, Lake Health District did not submit its Single Audit Reporting Package by that date. Cause: Lake Health District was unable to complete the single audit by the deadline due to the documentation not being reconciled and ready for the audit. This resulted in the late submission of the Single Audit reporting package. Effect: Without accurate and timely reporting, the funding agencies are unable to properly oversee the expenditure of Federal awards. Recommendation: We recommend that management implement processes and procedures to identify the required deadlines and related controls to ensure compliance with the deadlines. View of Responsible Officials: Management agrees with the finding above. Management will review the existing accounting policies and procedures and implement additional controls to validate timely submission of reports

Finding 2021-006 Program Name: Provider Relief Fund Federal Assistance Listing Number: 93.498 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs Questioned Costs: None Criteria: The Provider Relief Funds were provided under the Coronavirus Aid, Relief and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and are to be used to prevent, prepare for, and respond to coronavirus, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. Condition: During the audit, it was determined the fiscal year 2019 net patient revenue used as a baseline for the lost revenue calculation in Period 1 portal submission was miscalculated. For quarter 2 of 2019, Lake Health District used net revenues instead of net patient revenues. However, since the district did not claim all eligible lost revenues and had adequate unreimbursed lost revenues to cover the calculation error, no questioned cost was reported. Cause: The District made a calculation error. Effect: The lost revenue as reported in the portal was miscalculated and could not be completely supported. Recommendation: We recommend that management review the portal submission calculations to determine accuracy of all information and selections prior to submitting to HHS. View of Responsible Official: Management agrees with this finding. Responsibility for reporting lost revenue using proper method is assigned to the Director of Finance.

Finding 2021-007 Program Name: Provider Relief Fund Federal Assistance Listing Number: 93.498 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs Questioned Costs: $383,222 Condition: The District did not meet its requirements to use the funds to prevent, prepare for, and respond to coronavirus and that the payment shall reimburse the recipient only for healthcare related expenses or lost revenues that are attributable to coronavirus. Criteria: The Provider Relief Funds were provided under the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and are to be used to prevent, prepare for, and respond to coronavirus and that the funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. Context: During the audit, it was determined that seven of 40 transactions tested for non-payroll disbursements were not properly supported with vendor invoices and six of 40 transactions tested for non-payroll disbursements were not properly supported with canceled checks. Therefore, it could not be determined if the expenditures were allowable COVID expense under the Department of Health and Human Services guidelines for the use of Provider Relief Funds. Cause: The District changed financial systems in 2020 and could not access all of the records for the audit. Effect: The District was not in compliance with federal regulations and guidelines surrounding the use of the Provider Relief Funds and record retention requirements. Recommendation: We recommend that management review all invoices for allowability under the criterial provided by the Department of Health and Human Services and retain all necessary records to support the expenditures claimed on the PRF portal submission. View of Responsible Official: Management agrees with this finding. Management will review all invoices to determine allowability under the specific grant?s rules and regulations and retain records according to our policy.