CFDA #10.766 USDA Community Facilities Loans and Grants Continuing Compliance Requirement Finding 2022-001 ? Failure to Meet Required Loan Covenants riteria: The USDA loan agreements require the Home to maintain a debt service coverage ratio of 1.25x and 65 days of unrestricted cash on hand, as of December 31, 2022. Condition: At December 31, 2022, the Home did not meet the days cash on hand requirement. The Home has 52 days of unrestricted cash on hand as of December 31, 2022. Cause: Due to increased expenses of the Home and a decrease in cash flows, as well as certain cash balances which are restricted to use, management was unable to meet the loan covenant. Effect: As a continuing compliance requirement, violation of a loan covenant could place the loan in default status, which could jeopardize future funding from the lender. Questioned Costs: There were no questioned costs. Context: The Home received multiple USDA loans which have ongoing continuing compliance requirements, including maintaining debt covenants. Repeat Finding: This is a repeat finding. The Home did not meet the days cash on hand requirement in 2021. Recommendation: We recommend management track cash flows monthly to ensure a minimum of 65 days cash on hand at the end of each six-month reporting period (every June 30th and December 31st). Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and has implemented a three-phase plan to reduce overhead and managerial costs while maintaining a Skilled Nursing Census in the mid to high 80s.
CFDA #10.766 USDA Community Facilities Loans and Grants Continuing Compliance Requirement Finding 2022-001 ? Failure to Meet Required Loan Covenants riteria: The USDA loan agreements require the Home to maintain a debt service coverage ratio of 1.25x and 65 days of unrestricted cash on hand, as of December 31, 2022. Condition: At December 31, 2022, the Home did not meet the days cash on hand requirement. The Home has 52 days of unrestricted cash on hand as of December 31, 2022. Cause: Due to increased expenses of the Home and a decrease in cash flows, as well as certain cash balances which are restricted to use, management was unable to meet the loan covenant. Effect: As a continuing compliance requirement, violation of a loan covenant could place the loan in default status, which could jeopardize future funding from the lender. Questioned Costs: There were no questioned costs. Context: The Home received multiple USDA loans which have ongoing continuing compliance requirements, including maintaining debt covenants. Repeat Finding: This is a repeat finding. The Home did not meet the days cash on hand requirement in 2021. Recommendation: We recommend management track cash flows monthly to ensure a minimum of 65 days cash on hand at the end of each six-month reporting period (every June 30th and December 31st). Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and has implemented a three-phase plan to reduce overhead and managerial costs while maintaining a Skilled Nursing Census in the mid to high 80s.
CFDA #10.760 USDA Water and Waste Disposal Procurement, Suspension & Debarment Finding 2022-002 ? Noncompliance with Federal Code of Regulations 2 CFR 200.318 Criteria: 2 CFR 200.318 requires the non-federal entity to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. The officers, employees and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. Condition: The employee code of conduct does not specifically address Federal contracts. Cause: Management was unaware of the specific requirements noted in 2 CFR 200.318. Effect: Employees involved in the selection, award, or administration of Federal awards could have a conflict of interest with contractors, subcontractors, and/or vendors. Questioned Costs: There were no questioned costs. Context: There were no findings regarding apparent conflicts of interest between employees and Federal award contractors, subcontractors, or vendors. Repeat Finding: This is not a repeat finding, as this is a new federal award for 2022. Recommendation: We recommend management amend the code of conduct policy for both employees and board members to include specific language noted in 2 CFR 200.318. Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and will amend the Employee and Board Codes of Conduct to address Federal Contracts.
CFDA #10.760 USDA Water and Waste Disposal Procurement, Suspension & Debarment Finding 2022-003 ? Noncompliance with Federal Code of Regulations 2 CFR 200.214 Criteria: 2 CFR 200.214 requires the non-federal entity to maintain written documentation verifying that all vendors working on federal contracts have not been suspended or debarred. Condition: The procurement package for one of two vendors selected for testing did not have documentation showing where management verified the vendor?s eligibility to work on federal contracts. Cause: Management was unaware of the specific requirements noted in 2 CFR 200.214. Effect: A vendor could have been utilized on the federally-funded project when they were not allowed to work on a federal contract. Questioned Costs: There were no questioned costs. Context: The auditor verified through sam.gov that the vendor had not been suspended or debarred. Repeat Finding: This is not a repeat finding, as this is a new federal award for 2022. Recommendation: We recommend management amend the procurement policy to include specific procedures to ensure vendors/contractors on Federal projects have not been suspended or debarred. This verification should be performed on every contractor/vendor, and said verification should be documented in writing as part of the contract procurement package. Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and will amend the Procurement Policy to include a vetting process to avoid a selection of a contractor /vendor that has been suspended or debarred from working on Federal Contracts.
CFDA #10.766 USDA Community Facilities Loans and Grants Continuing Compliance Requirement Finding 2022-001 ? Failure to Meet Required Loan Covenants riteria: The USDA loan agreements require the Home to maintain a debt service coverage ratio of 1.25x and 65 days of unrestricted cash on hand, as of December 31, 2022. Condition: At December 31, 2022, the Home did not meet the days cash on hand requirement. The Home has 52 days of unrestricted cash on hand as of December 31, 2022. Cause: Due to increased expenses of the Home and a decrease in cash flows, as well as certain cash balances which are restricted to use, management was unable to meet the loan covenant. Effect: As a continuing compliance requirement, violation of a loan covenant could place the loan in default status, which could jeopardize future funding from the lender. Questioned Costs: There were no questioned costs. Context: The Home received multiple USDA loans which have ongoing continuing compliance requirements, including maintaining debt covenants. Repeat Finding: This is a repeat finding. The Home did not meet the days cash on hand requirement in 2021. Recommendation: We recommend management track cash flows monthly to ensure a minimum of 65 days cash on hand at the end of each six-month reporting period (every June 30th and December 31st). Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and has implemented a three-phase plan to reduce overhead and managerial costs while maintaining a Skilled Nursing Census in the mid to high 80s.
CFDA #10.766 USDA Community Facilities Loans and Grants Continuing Compliance Requirement Finding 2022-001 ? Failure to Meet Required Loan Covenants riteria: The USDA loan agreements require the Home to maintain a debt service coverage ratio of 1.25x and 65 days of unrestricted cash on hand, as of December 31, 2022. Condition: At December 31, 2022, the Home did not meet the days cash on hand requirement. The Home has 52 days of unrestricted cash on hand as of December 31, 2022. Cause: Due to increased expenses of the Home and a decrease in cash flows, as well as certain cash balances which are restricted to use, management was unable to meet the loan covenant. Effect: As a continuing compliance requirement, violation of a loan covenant could place the loan in default status, which could jeopardize future funding from the lender. Questioned Costs: There were no questioned costs. Context: The Home received multiple USDA loans which have ongoing continuing compliance requirements, including maintaining debt covenants. Repeat Finding: This is a repeat finding. The Home did not meet the days cash on hand requirement in 2021. Recommendation: We recommend management track cash flows monthly to ensure a minimum of 65 days cash on hand at the end of each six-month reporting period (every June 30th and December 31st). Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and has implemented a three-phase plan to reduce overhead and managerial costs while maintaining a Skilled Nursing Census in the mid to high 80s.
CFDA #10.760 USDA Water and Waste Disposal Procurement, Suspension & Debarment Finding 2022-002 ? Noncompliance with Federal Code of Regulations 2 CFR 200.318 Criteria: 2 CFR 200.318 requires the non-federal entity to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. The officers, employees and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. Condition: The employee code of conduct does not specifically address Federal contracts. Cause: Management was unaware of the specific requirements noted in 2 CFR 200.318. Effect: Employees involved in the selection, award, or administration of Federal awards could have a conflict of interest with contractors, subcontractors, and/or vendors. Questioned Costs: There were no questioned costs. Context: There were no findings regarding apparent conflicts of interest between employees and Federal award contractors, subcontractors, or vendors. Repeat Finding: This is not a repeat finding, as this is a new federal award for 2022. Recommendation: We recommend management amend the code of conduct policy for both employees and board members to include specific language noted in 2 CFR 200.318. Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and will amend the Employee and Board Codes of Conduct to address Federal Contracts.
CFDA #10.760 USDA Water and Waste Disposal Procurement, Suspension & Debarment Finding 2022-003 ? Noncompliance with Federal Code of Regulations 2 CFR 200.214 Criteria: 2 CFR 200.214 requires the non-federal entity to maintain written documentation verifying that all vendors working on federal contracts have not been suspended or debarred. Condition: The procurement package for one of two vendors selected for testing did not have documentation showing where management verified the vendor?s eligibility to work on federal contracts. Cause: Management was unaware of the specific requirements noted in 2 CFR 200.214. Effect: A vendor could have been utilized on the federally-funded project when they were not allowed to work on a federal contract. Questioned Costs: There were no questioned costs. Context: The auditor verified through sam.gov that the vendor had not been suspended or debarred. Repeat Finding: This is not a repeat finding, as this is a new federal award for 2022. Recommendation: We recommend management amend the procurement policy to include specific procedures to ensure vendors/contractors on Federal projects have not been suspended or debarred. This verification should be performed on every contractor/vendor, and said verification should be documented in writing as part of the contract procurement package. Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and will amend the Procurement Policy to include a vetting process to avoid a selection of a contractor /vendor that has been suspended or debarred from working on Federal Contracts.