Audit 25867

FY End

2022-06-30

Total Expended

$5.16M

Findings

4

Programs

2

Organization: Henderson County Health Care Corporation - Two (KY)

Year: 2022 Accepted: 2022-10-30

Auditor: Miller Mayer Sullivan & Stevens LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
23094	2022-004	-	-	N
23095	2022-005	-	-	A
599536	2022-004	-	-	N
599537	2022-005	-	-	A

ALN	Program	Spent	Major	Findings
14.155	Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects	$4.51M	Yes	2
14.195	Section 8 Housing Assistance Payments Program	$650,892	-	0

Contacts

Name	Title	Type
WBG1BN4DJWL6	Candace Owens	Auditee
2708264920	Darren Johnson	Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Henderson County Health Care Corporation - Two has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. MORTGAGE INSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING MULTIFAMILY HOUSING PROJECTS (14.155) - Balances outstanding at the end of the audit period were 4366750.

Title: Basis of Presentation Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Henderson County Health Care Corporation - Two has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (schedule) includes the federal activity of Henderson County Health Care Corporation - Two, under programs of the federal government for the year ended June 30, 2022. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of Henderson County Health Care Corporation - Two, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Henderson County Health Care Corporation - Two.

Title: U.S. Department of Housing and Urban Development Loan Program Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Henderson County Health Care Corporation - Two has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Henderson County Health Care Corporation - Two, has received a U.S. Department of Housing and Urban Development - insured loan under Section 223(f)/207 of the National Housing Act. The loan balance outstanding at the beginning of the year is included in the federal expenditures presented in the schedule. Henderson County Health Care Corporation - Two received no additional loans during the year. The balance of the loan outstanding on June 30, 2022, consists of: CFDA Number, Program Name, Outstanding Balance on June 30, 2022, 14.155, HUD-insured mortgage, $4,366,750.

Finding Details

Finding 2022-004

At June 30, 2022, the tenants' security deposit account was underfunded by $1,735. Criteria. The "Consolidated Audit Guide for Audits of HUD Programs" states that "The balance in the account must at all times be at least equal to all outstanding obligations under the account for security deposits." Cause. Unknown. Effect. The complex is in violation of HUD requirements. Recommendation. We recommend that funds be transferred to the tenants' security deposit account to adequately fund the liability to tenants as soon as possible.

Finding 2022-005

At June 30, 2022, loans totaling $54,930 have been made to other companies affiliated with management of Henderson County Health Care Corporation - Two. Criteria. Loaning of funds to other entities is prohibited by HUD regulations. Cause. Management processes payroll and some other expenditures through Henderson County Health Care Corporation - Two and is then to repay the portion of the payroll and other expenses that are attributed to other companies. These repayments are not being made at the time of the expenditure, thus the amounts due from these companies has grown significantly. Effect. The complex is in violation of HUD requirements. Recommendation. We recommend that these loans be repaid immediately, and future payroll costs and other expenditures paid by Henderson County Health Care Corporation - Two, be repaid immediately upon the processing of these expenditures.

Finding 2022-004

At June 30, 2022, the tenants' security deposit account was underfunded by $1,735. Criteria. The "Consolidated Audit Guide for Audits of HUD Programs" states that "The balance in the account must at all times be at least equal to all outstanding obligations under the account for security deposits." Cause. Unknown. Effect. The complex is in violation of HUD requirements. Recommendation. We recommend that funds be transferred to the tenants' security deposit account to adequately fund the liability to tenants as soon as possible.

Finding 2022-005

At June 30, 2022, loans totaling $54,930 have been made to other companies affiliated with management of Henderson County Health Care Corporation - Two. Criteria. Loaning of funds to other entities is prohibited by HUD regulations. Cause. Management processes payroll and some other expenditures through Henderson County Health Care Corporation - Two and is then to repay the portion of the payroll and other expenses that are attributed to other companies. These repayments are not being made at the time of the expenditure, thus the amounts due from these companies has grown significantly. Effect. The complex is in violation of HUD requirements. Recommendation. We recommend that these loans be repaid immediately, and future payroll costs and other expenditures paid by Henderson County Health Care Corporation - Two, be repaid immediately upon the processing of these expenditures.