Audit 320493

FY End
2023-12-31
Total Expended
$11.67M
Findings
2
Programs
2
Year: 2023 Accepted: 2024-09-23
Auditor: Bonadio & CO LLP

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
497910 2023-001 Significant Deficiency Yes P
1074352 2023-001 Significant Deficiency Yes P

Contacts

Name Title Type
TJ9LLCJD19C3 Robert Earl Auditee
5857601473 William McDonald Auditor
No contacts on file

Notes to SEFA

Title: DEBT Accounting Policies: The accompanying schedule of expenditures of federal awards (the schedule) presents theactivity of federal award programs of St. Johns Health Care Corporation (the Home). The schedule includes expenditures of federal programs received directly from federal agencies.The accompanying schedule of expenditures of federal awards, as required by Title 2 U.SCode of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards (Uniform Guidance), is prepared in accordance with accounting principles generally accepted in the United States of America. Because the schedule presents only a selected portion of the operations of entity, it is not intended to anddoes not present the financial position, changes in net deficit, or cash flow of the Home. De Minimis Rate Used: N Rate Explanation: Indirect costs may be included in the reported expenses, to the extent that they are included in the federal financial reports used as the source for the data presented. The Home has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. Matching costs are not included in the reported expenses. The Home has the following obligation outstanding at December 31, 2023, which is insured by the U.S. Department of Housing and Urban Development: Project Number Assistance Listing Original Loan Balance Outstanding Balance 014-43221 14.129 $ 12,778,600 $ 10,000,587
Title: COVID-19: DISASTER GRANTS – PUBLIC ASSISTANCE Accounting Policies: The accompanying schedule of expenditures of federal awards (the schedule) presents theactivity of federal award programs of St. Johns Health Care Corporation (the Home). The schedule includes expenditures of federal programs received directly from federal agencies.The accompanying schedule of expenditures of federal awards, as required by Title 2 U.SCode of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards (Uniform Guidance), is prepared in accordance with accounting principles generally accepted in the United States of America. Because the schedule presents only a selected portion of the operations of entity, it is not intended to anddoes not present the financial position, changes in net deficit, or cash flow of the Home. De Minimis Rate Used: N Rate Explanation: Indirect costs may be included in the reported expenses, to the extent that they are included in the federal financial reports used as the source for the data presented. The Home has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. Matching costs are not included in the reported expenses. The amount included in the schedule of expenditures of federal awards is based upon the FEMA project worksheets.

Finding Details

Finding 2023-001 Program: U.S. Department of Housing and Urban Development (HUD) Mortgage Insurance - Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities (Section 232) Assistance Listing #14.129. Condition: During 2023, the Home received a related-party loan without obtaining prior HUD approval. Criteria: The HUD regulatory agreement states there shall not be an encumbrance of any of the mortgaged property without prior written approval of HUD. Context: During testing of debt, it was noted that the Home entered into a loan agreement with a related party. Cause: The Home experienced decreased occupancy, increased labor, benefits, and supply expenditures as a lingering impact of the COVID-19 pandemic. It utilized the U.S. Small Business Administration loan as a means to cover operating expenses. Effect: Failure to obtain written approval from HUD constitutes noncompliance with the HUD regulatory agreement. Gross amounts loaned from the related party amounted to $500,000 during 2023. Recommendation: Adhere to the HUD regulatory agreement in relation to obtaining prior written approval from HUD before encumbering the Project. Views of Responsible Official of the Auditee: The Home obtained the related party loan as a prudent business decision to meet operating expenses.
Finding 2023-001 Program: U.S. Department of Housing and Urban Development (HUD) Mortgage Insurance - Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities (Section 232) Assistance Listing #14.129. Condition: During 2023, the Home received a related-party loan without obtaining prior HUD approval. Criteria: The HUD regulatory agreement states there shall not be an encumbrance of any of the mortgaged property without prior written approval of HUD. Context: During testing of debt, it was noted that the Home entered into a loan agreement with a related party. Cause: The Home experienced decreased occupancy, increased labor, benefits, and supply expenditures as a lingering impact of the COVID-19 pandemic. It utilized the U.S. Small Business Administration loan as a means to cover operating expenses. Effect: Failure to obtain written approval from HUD constitutes noncompliance with the HUD regulatory agreement. Gross amounts loaned from the related party amounted to $500,000 during 2023. Recommendation: Adhere to the HUD regulatory agreement in relation to obtaining prior written approval from HUD before encumbering the Project. Views of Responsible Official of the Auditee: The Home obtained the related party loan as a prudent business decision to meet operating expenses.