Audit 331617

2023-001 Compliance Over Timely Report Submissions Federal Agency: U.S. Department of Agriculture Federal Program: 10.766, Rural Development, Community Facilities Direct Loan Criteria or Specific Requirement - 45 CFR § 75.512, Report Submission, requires completion of an audit and submission of the data collection form and reporting package within the earlier of thirty calendar days after receipt of the auditors’ report, or nine months after the end of the audit period. Condition - The audit and data collection form are being submitted after the required due date. Cause - The Organization did not maintain appropriate levels of staff to ensure audit information was provided timely in order to ensure compliance with regulatory filing requirements. Effect - Noncompliance with the requirements of 45 CFR § 75.512. There is a potential for suspension or cessation of federal funding under the federal award. Questioned Cost - To be determined by the grantor. Context - We reviewed the audit submission date in comparison to the required due date. Repeat Finding - This is a repeat finding from the prior year. See prior year finding 2022-002. Recommendation - The Organization should take steps to ensure that its financial records are maintained on a current basis, reconciled timely, and audited within nine months after year end. View of Responsible Officials and Planned Corrective Actions - Due the ongoing impact of the COVID 19 pandemic, the Organization and CHR Consulting Services, Inc. (“CHR”), the entity responsible for maintaining the books and records of the Organization, experienced staffing shortages due to retirements and medical leave. In addition, as a result of the ongoing impact of the COVID 19 pandemic, the Organization continued to experience noncompliance with certain debt covenants in 2023 and first half of 2024. In addition, the Organization had several vendor or liabilities, including the Pennsylvania bed tax liability that required resolution prior to the issuance of the audited financial statements. The Organization and CHR have been able to recruit additional staff and CHR has added additional supervisory personnel to oversee the financial reporting and audit process. In an effort to improve communications with the Grantor, in August 2023, the Organization began providing monthly financial and operational information. In addition, monthly calls were implemented with the representatives of the Grantor, discussing key operational and performance measures. While key issues were identified and discussed with the Grantor, the Grantor has not been able to provide waivers for such noncompliance with covenant requirements. As noted in Note 2 to the audited financial statements, the financial performance of the Organization has improved, allowing the Organization to enter into long-term payment plans for the resolution of the key liabilities of the Organization. It is anticipated that the audit for 2024 and related forms will be issued within the allowable time period in the loan agreements.

2023-001 Compliance Over Timely Report Submissions Federal Agency: U.S. Department of Agriculture Federal Program: 10.766, Rural Development, Community Facilities Direct Loan Criteria or Specific Requirement - 45 CFR § 75.512, Report Submission, requires completion of an audit and submission of the data collection form and reporting package within the earlier of thirty calendar days after receipt of the auditors’ report, or nine months after the end of the audit period. Condition - The audit and data collection form are being submitted after the required due date. Cause - The Organization did not maintain appropriate levels of staff to ensure audit information was provided timely in order to ensure compliance with regulatory filing requirements. Effect - Noncompliance with the requirements of 45 CFR § 75.512. There is a potential for suspension or cessation of federal funding under the federal award. Questioned Cost - To be determined by the grantor. Context - We reviewed the audit submission date in comparison to the required due date. Repeat Finding - This is a repeat finding from the prior year. See prior year finding 2022-002. Recommendation - The Organization should take steps to ensure that its financial records are maintained on a current basis, reconciled timely, and audited within nine months after year end. View of Responsible Officials and Planned Corrective Actions - Due the ongoing impact of the COVID 19 pandemic, the Organization and CHR Consulting Services, Inc. (“CHR”), the entity responsible for maintaining the books and records of the Organization, experienced staffing shortages due to retirements and medical leave. In addition, as a result of the ongoing impact of the COVID 19 pandemic, the Organization continued to experience noncompliance with certain debt covenants in 2023 and first half of 2024. In addition, the Organization had several vendor or liabilities, including the Pennsylvania bed tax liability that required resolution prior to the issuance of the audited financial statements. The Organization and CHR have been able to recruit additional staff and CHR has added additional supervisory personnel to oversee the financial reporting and audit process. In an effort to improve communications with the Grantor, in August 2023, the Organization began providing monthly financial and operational information. In addition, monthly calls were implemented with the representatives of the Grantor, discussing key operational and performance measures. While key issues were identified and discussed with the Grantor, the Grantor has not been able to provide waivers for such noncompliance with covenant requirements. As noted in Note 2 to the audited financial statements, the financial performance of the Organization has improved, allowing the Organization to enter into long-term payment plans for the resolution of the key liabilities of the Organization. It is anticipated that the audit for 2024 and related forms will be issued within the allowable time period in the loan agreements.