FAC Explorer

Audit 294723

FY End
2023-09-30
Total Expended
$3.87M
Findings
6
Programs
2
Organization: Cheney Care Community (WA)
Year: 2023 Accepted: 2024-03-12
Auditor: Hansen Hunter & CO PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
375642 2023-001 Material Weakness - L
375643 2023-002 - - N
375644 2023-003 - - N
952084 2023-001 Material Weakness - L
952085 2023-002 - - N
952086 2023-003 - - N

Programs

ALN Program Spent Major Findings
14.129 Mortgage Insurance_nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities $3.79M Yes 3
93.498 Provider Relief Fund $84,877 - 0

Contacts

Name Title Type
XKL5Z49JMY11 Ashley Healey Auditee
5092356196 Lou McCollum Auditor
No contacts on file

Notes to SEFA

Title: BASIS OF PRESENTATION Accounting Policies: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Expenditures reported on the schedule of expenditures of federal awards 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. De Minimis Rate Used: N Rate Explanation: Cheney Care Community has not elected to use the 10 percent de minimis indirect cost rate as allowed under Uniform Guidance. The schedule of expenditures of federal awards includes the federal award activity of Cheney Care Community under programs of the federal government for the year ended September 30, 2023. 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 Cheney Care Community, it is not intended to and does not present the financial position, changes in net position, or cash flows of Cheney Care Community.
Title: SECTION 232 LOAN – MORTGAGE INSURANCE NURSING HOMES, INTERMEDIATE CARE FACILITIES, BOARD AND CARE HOMES AND ASSISTED LIVING FACILITIES LOAN BALANCE Accounting Policies: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Expenditures reported on the schedule of expenditures of federal awards 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. De Minimis Rate Used: N Rate Explanation: Cheney Care Community has not elected to use the 10 percent de minimis indirect cost rate as allowed under Uniform Guidance. The ending balance for the mortgage payable was $3,628,939 as of September 30, 2023.
Title: CARES ACT GRANT Accounting Policies: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Expenditures reported on the schedule of expenditures of federal awards 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. De Minimis Rate Used: N Rate Explanation: Cheney Care Community has not elected to use the 10 percent de minimis indirect cost rate as allowed under Uniform Guidance. In accordance with the guidance from the U.S. Department of Health and Human Services (HHS), Cheney Care Community included the Period 4 expenditures for the Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution program in the schedule for the year ended September 30, 2023 to align with HHS reporting guidelines. In accordance with accounting principles generally accepted in the United States of America, the funding associated with the Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution program was recognized by Cheney Care Community during the year ended September 30, 2022, and is included in beginning net assets for the year ended September 30, 2023.
Title: SUBRECIPIENTS Accounting Policies: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Expenditures reported on the schedule of expenditures of federal awards 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. De Minimis Rate Used: N Rate Explanation: Cheney Care Community has not elected to use the 10 percent de minimis indirect cost rate as allowed under Uniform Guidance. Cheney Care Community did not provide any federal awards to subrecipients during the year ended September 30, 2023.

Finding Details

Finding 2023-001
S3800-010 Finding Reference Number – 2023-001 S3800-011 Title and CFDA Number of Federal Program – Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 S3800-015 Type of Finding – Financial Statement and Federal Award Finding Material weakness in internal control over financial reporting Material weakness in internal control over compliance S3800-016 Finding Resolution Status – In progress S3800-017 Information on Universe Population Size – N/A S3800-018 Sample Size Information – N/A S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A S3800-020 Criteria – Cheney Care Community is responsible for establishing and maintaining a system of internal controls, including monitoring, and the internal controls should be in place to provide reasonable assurance that financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Per Section 9(d) of the regulatory agreement, the Borrower shall keep the books and accounts of the operations of the mortgaged property and of the project in accordance with the requirements of the Secretary. S3800-030 Statement of Condition – During our audit, we noted that the Organization had not properly accounted for a number of transactions, resulting in material audit adjustments recorded. S3800-032 Cause – As of and during the year ended September 30, 2023, Cheney Care Community did not properly record certain transactions, resulting in the accounts being misstated throughout the reporting period. S3800-033 Effect or Potential Effect – Without the recorded material audit adjustments, the financial statements would be materially misstated. Inaccurate reporting to HUD could adversely affect Cheney Care Community’s funding. S3800-035 Auditor Non-Compliance Code – S (Internal Controls) S3800-037 FHA/Contract Number – 171-22029 S3800-038 Questioned Costs – $0 S3800-040 Questioned Costs – $0 S3800-045 Reporting Views of Responsible Officials – Cheney Care Community is in agreement with the findings, and the recommendations will be implemented. S3800-050 Context – While performing audit procedures, there were several instances where reported balances did not meet audit expectations or reconcile to underlying supporting documents or subsidiary ledgers. Specifically, we noted the following: - Significant entries to accounts receivable, allowance for uncollectible accounts and bad debt expense. - Significant entries to related party receivable and elimination of intercompany transactions. - Significant entries to construction in progress and loss on disposal of fixed assets. - Significant entries to accrued expenses and related financial expenses. - Entries to accumulated depreciation and depreciation expense. - Entries to interest expense. S3800-080 Recommendation – We recommend management of Cheney Care Community review their internal controls over the financial reporting and close processes to determine whether additional controls over the preparation of the final trial balances and related schedules can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – Cheney Care Community will review their internal controls over the financial reporting and close processes to determine whether additional controls need to be implemented going forward. S3800-130 Response Indicator – Agree S3800-140 Completion Date – September 30, 2024 S3800-150 Response – Cheney Care Community will review their internal controls over the financial reporting and close processes to determine whether additional controls need to be implemented going forward. S3800-160 Contact Person First Name – Ashley S3800-180 Contact Person Last Name – Healey
Finding 2023-002
S3800-010 Finding Reference Number – 2023-002 S3800-011 Title and CFDA Number of Federal Program – Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 S3800-015 Type of Finding – Federal Award Finding Other Matters S3800-016 Finding Resolution Status – In progress S3800-017 Information on Universe Population Size – 1,710 checks and bank transfers, all disbursements from bank accounts. S3800-018 Sample Size Information – Sample size was 49 disbursements. Errors were found on 2 out of the 49 disbursements tested. S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A S3800-020 Criteria – Per 2 CFR sections 200.302 and 200.303 of the Uniform Guidance, an entity must establish and maintain effective internal control over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. Allowable cost controls of Cheney Care Community require general ledger account coding to be written on each invoice to be reviewed by the Executive Director before the invoice is processed to be paid. S3800-030 Statement of Condition – During our audit, we noted two invoices that did not include the general ledger account coding on the invoices, as required by Cheney Care Community’s allowable cost controls. The invoices were recorded to the proper general ledger accounts. S3800-032 Cause – Cheney Care Community did not follow their documented internal controls over financial reporting and allowable costs to ensure general ledger coding is included on each invoice for review and approval. S3800-033 Effect or Potential Effect – Failure to maintain effective internal controls over compliance with federal requirements increases the risk of unauthorized or unallowable transactions occurring. S3800-035 Auditor Non-Compliance Code – S (Internal Controls) S3800-037 FHA/Contract Number – 171-22029 S3800-038 Questioned Costs – $0 S3800-040 Questioned Costs – $0 S3800-045 Reporting Views of Responsible Officials – Cheney Care Community is in agreement with the findings, and the recommendations have been implemented. S3800-050 Context – A sample of 49 checks totaling $206,327 was selected for audit from a population of 1,710 checks totaling $11,294,298. The test found two checks that were not in compliance with Cheney Care Community’s allowable cost controls totaling $93. The invoices were recorded to the proper general ledger accounts. Our sample was a statistically valid sample. S3800-080 Recommendation – We recommend management of Cheney Care Community review their internal controls over the cash disbursement process with the necessary individuals involved in the process to ensure the implementation of general ledger account coding on cash disbursements is consistently performed going forward. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – The Executive Director and A/P Clerk agreed upon using certain general ledger account codes consistently for similar purchases from the same vendor. In Cheney Care Community’s accounting system, these agreed upon general ledger account codes have been pre-set as a default for certain vendors. When invoices are received that should be appropriately coded to this default general ledger account code, errors of not documenting the general ledger account code on the invoice are periodically made. Cheney Care Community will consistently perform the general ledger account coding internal control procedures on invoices going forward. S3800-130 Response Indicator – Agree S3800-140 Completion Date – September 30, 2024 S3800-150 Response – Cheney Care Community will consistently perform the general ledger account coding internal control procedures on invoices going forward.
Finding 2023-003
S3800-010 Finding Reference Number – 2023-003 S3800-011 Title and CFDA Number of Federal Program – Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 S3800-015 Type of Finding – Federal Award Finding Other Matters S3800-016 Finding Resolution Status – In progress S3800-017 Information on Universe Population Size – N/A S3800-018 Sample Size Information – N/A S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A S3800-020 Criteria – Per Section 9(g) of the regulatory agreement, all rents and other receipts of the project shall be deposited in the name of the project in a financial institution, whose deposits are insured by an agency of the Federal Government. S3800-030 Statement of Condition – As of and during the year ended September 30, 2023, Cheney Care Community maintained cash balances with financial institutions in excess of Federal Deposit Insurance Corporation (FDIC) limits. S3800-032 Cause – Cheney Care Community did not monitor the bank ratings on a quarterly basis for the financial institutions where cash was in excess of FDIC limits. S3800-033 Effect or Potential Effect – The project is susceptible to losses related to uninsured balances. S3800-035 Auditor Non-Compliance Code – S (Internal Controls) S3800-037 FHA/Contract Number – 171-22029 S3800-038 Questioned Costs – $0 S3800-040 Questioned Costs – $0 S3800-045 Reporting Views of Responsible Officials – Cheney Care Community is in agreement with the findings, and the recommendations have been implemented. S3800-050 Context – During our audit, we noted Cheney Care Community did not perform the alternative procedures on the financial institutions defined in the HUD Handbook 4370.2. S3800-080 Recommendation – We recommend management of Cheney Care Community review their internal controls over cash and implement a policy to monitor the bank ratings quarterly for the financial institutions the project holds funds at. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – Cheney Care Community will review and update their policies and procedures to ensure the bank ratings for the financial institutions are monitored on a quarterly basis and the documentation is maintained. S3800-130 Response Indicator – Agree S3800-140 Completion Date – December 31, 2023 S3800-150 Response – Cheney Care Community will review and update their policies and procedures to ensure the bank ratings for the financial institutions are monitored on a quarterly basis and the documentation is maintained.
Finding 2023-001
S3800-010 Finding Reference Number – 2023-001 S3800-011 Title and CFDA Number of Federal Program – Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 S3800-015 Type of Finding – Financial Statement and Federal Award Finding Material weakness in internal control over financial reporting Material weakness in internal control over compliance S3800-016 Finding Resolution Status – In progress S3800-017 Information on Universe Population Size – N/A S3800-018 Sample Size Information – N/A S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A S3800-020 Criteria – Cheney Care Community is responsible for establishing and maintaining a system of internal controls, including monitoring, and the internal controls should be in place to provide reasonable assurance that financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Per Section 9(d) of the regulatory agreement, the Borrower shall keep the books and accounts of the operations of the mortgaged property and of the project in accordance with the requirements of the Secretary. S3800-030 Statement of Condition – During our audit, we noted that the Organization had not properly accounted for a number of transactions, resulting in material audit adjustments recorded. S3800-032 Cause – As of and during the year ended September 30, 2023, Cheney Care Community did not properly record certain transactions, resulting in the accounts being misstated throughout the reporting period. S3800-033 Effect or Potential Effect – Without the recorded material audit adjustments, the financial statements would be materially misstated. Inaccurate reporting to HUD could adversely affect Cheney Care Community’s funding. S3800-035 Auditor Non-Compliance Code – S (Internal Controls) S3800-037 FHA/Contract Number – 171-22029 S3800-038 Questioned Costs – $0 S3800-040 Questioned Costs – $0 S3800-045 Reporting Views of Responsible Officials – Cheney Care Community is in agreement with the findings, and the recommendations will be implemented. S3800-050 Context – While performing audit procedures, there were several instances where reported balances did not meet audit expectations or reconcile to underlying supporting documents or subsidiary ledgers. Specifically, we noted the following: - Significant entries to accounts receivable, allowance for uncollectible accounts and bad debt expense. - Significant entries to related party receivable and elimination of intercompany transactions. - Significant entries to construction in progress and loss on disposal of fixed assets. - Significant entries to accrued expenses and related financial expenses. - Entries to accumulated depreciation and depreciation expense. - Entries to interest expense. S3800-080 Recommendation – We recommend management of Cheney Care Community review their internal controls over the financial reporting and close processes to determine whether additional controls over the preparation of the final trial balances and related schedules can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – Cheney Care Community will review their internal controls over the financial reporting and close processes to determine whether additional controls need to be implemented going forward. S3800-130 Response Indicator – Agree S3800-140 Completion Date – September 30, 2024 S3800-150 Response – Cheney Care Community will review their internal controls over the financial reporting and close processes to determine whether additional controls need to be implemented going forward. S3800-160 Contact Person First Name – Ashley S3800-180 Contact Person Last Name – Healey
Finding 2023-002
S3800-010 Finding Reference Number – 2023-002 S3800-011 Title and CFDA Number of Federal Program – Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 S3800-015 Type of Finding – Federal Award Finding Other Matters S3800-016 Finding Resolution Status – In progress S3800-017 Information on Universe Population Size – 1,710 checks and bank transfers, all disbursements from bank accounts. S3800-018 Sample Size Information – Sample size was 49 disbursements. Errors were found on 2 out of the 49 disbursements tested. S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A S3800-020 Criteria – Per 2 CFR sections 200.302 and 200.303 of the Uniform Guidance, an entity must establish and maintain effective internal control over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. Allowable cost controls of Cheney Care Community require general ledger account coding to be written on each invoice to be reviewed by the Executive Director before the invoice is processed to be paid. S3800-030 Statement of Condition – During our audit, we noted two invoices that did not include the general ledger account coding on the invoices, as required by Cheney Care Community’s allowable cost controls. The invoices were recorded to the proper general ledger accounts. S3800-032 Cause – Cheney Care Community did not follow their documented internal controls over financial reporting and allowable costs to ensure general ledger coding is included on each invoice for review and approval. S3800-033 Effect or Potential Effect – Failure to maintain effective internal controls over compliance with federal requirements increases the risk of unauthorized or unallowable transactions occurring. S3800-035 Auditor Non-Compliance Code – S (Internal Controls) S3800-037 FHA/Contract Number – 171-22029 S3800-038 Questioned Costs – $0 S3800-040 Questioned Costs – $0 S3800-045 Reporting Views of Responsible Officials – Cheney Care Community is in agreement with the findings, and the recommendations have been implemented. S3800-050 Context – A sample of 49 checks totaling $206,327 was selected for audit from a population of 1,710 checks totaling $11,294,298. The test found two checks that were not in compliance with Cheney Care Community’s allowable cost controls totaling $93. The invoices were recorded to the proper general ledger accounts. Our sample was a statistically valid sample. S3800-080 Recommendation – We recommend management of Cheney Care Community review their internal controls over the cash disbursement process with the necessary individuals involved in the process to ensure the implementation of general ledger account coding on cash disbursements is consistently performed going forward. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – The Executive Director and A/P Clerk agreed upon using certain general ledger account codes consistently for similar purchases from the same vendor. In Cheney Care Community’s accounting system, these agreed upon general ledger account codes have been pre-set as a default for certain vendors. When invoices are received that should be appropriately coded to this default general ledger account code, errors of not documenting the general ledger account code on the invoice are periodically made. Cheney Care Community will consistently perform the general ledger account coding internal control procedures on invoices going forward. S3800-130 Response Indicator – Agree S3800-140 Completion Date – September 30, 2024 S3800-150 Response – Cheney Care Community will consistently perform the general ledger account coding internal control procedures on invoices going forward.
Finding 2023-003
S3800-010 Finding Reference Number – 2023-003 S3800-011 Title and CFDA Number of Federal Program – Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 S3800-015 Type of Finding – Federal Award Finding Other Matters S3800-016 Finding Resolution Status – In progress S3800-017 Information on Universe Population Size – N/A S3800-018 Sample Size Information – N/A S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A S3800-020 Criteria – Per Section 9(g) of the regulatory agreement, all rents and other receipts of the project shall be deposited in the name of the project in a financial institution, whose deposits are insured by an agency of the Federal Government. S3800-030 Statement of Condition – As of and during the year ended September 30, 2023, Cheney Care Community maintained cash balances with financial institutions in excess of Federal Deposit Insurance Corporation (FDIC) limits. S3800-032 Cause – Cheney Care Community did not monitor the bank ratings on a quarterly basis for the financial institutions where cash was in excess of FDIC limits. S3800-033 Effect or Potential Effect – The project is susceptible to losses related to uninsured balances. S3800-035 Auditor Non-Compliance Code – S (Internal Controls) S3800-037 FHA/Contract Number – 171-22029 S3800-038 Questioned Costs – $0 S3800-040 Questioned Costs – $0 S3800-045 Reporting Views of Responsible Officials – Cheney Care Community is in agreement with the findings, and the recommendations have been implemented. S3800-050 Context – During our audit, we noted Cheney Care Community did not perform the alternative procedures on the financial institutions defined in the HUD Handbook 4370.2. S3800-080 Recommendation – We recommend management of Cheney Care Community review their internal controls over cash and implement a policy to monitor the bank ratings quarterly for the financial institutions the project holds funds at. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – Cheney Care Community will review and update their policies and procedures to ensure the bank ratings for the financial institutions are monitored on a quarterly basis and the documentation is maintained. S3800-130 Response Indicator – Agree S3800-140 Completion Date – December 31, 2023 S3800-150 Response – Cheney Care Community will review and update their policies and procedures to ensure the bank ratings for the financial institutions are monitored on a quarterly basis and the documentation is maintained.