FAC Explorer

Audit 344495

FY End
2024-09-30
Total Expended
$3.63M
Findings
4
Programs
1
Organization: Cheney Care Community (WA)
Year: 2024 Accepted: 2025-03-03
Auditor: Hansen Hunter & CO PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
525272 2024-001 Material Weakness Yes L
525273 2024-002 - - L
1101714 2024-001 Material Weakness Yes L
1101715 2024-002 - - L

Programs

ALN Program Spent Major Findings
14.129 Mortgage Insurance_nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities $3.63M Yes 2

Contacts

Name Title Type
XKL5Z49JMY11 John Gannon 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, 2024. 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 $3,462,337 as of September 30, 2024.
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, 2024.

Finding Details

Finding 2024-001
S3800-010 Finding Reference Number – 2024-001 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 – 2023-001 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, 2024, 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, allowance for credit losses, and the provision for bad debt and credit losses. - Significant entries to net asset activity and related party contributions. - Entries to accounts payable and related expenses. - Entries to related party receivables and management fee revenue. - Entries to fixed assets, accumulated depreciation and depreciation 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, 2025 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 2024-002
S3800-010 Finding Reference Number – 2024-002 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 – Resolved 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 the regulatory agreement Section 9(e), annual financial statements shall be submitted to HUD within 60 days of the end of the year. This requirement was extended to within 90 days of the end of the year by HUD S3800-030 Statement of Condition – Cheney Care Community did not meet the financial statement filing requirements for the year ended September 30, 2024. As a not-for-profit organization, Uniform Guidance allows the earlier of 9-months after fiscal year end or 30-days after the report is issued to submit. The audit was submitted within the Uniform Guidance requirements. S3800-032 Cause – Additional time was required to obtain certain information to complete the financial statement audit. S3800-033 Effect or Potential Effect – HUD does not have the financial information of the project available for review. HUD may request the holder of the note declare the note immediately due for noncompliance with the regulatory agreement. S3800-035 Auditor Non-Compliance Code – Z (Other) 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. S3800-080 Recommendation – We recommend management of Cheney Care Community implement internal controls to ensure that the audited financial statements are filed in accordance with the regulatory agreement. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – On February 8, 2025, the audit was submitted to HUD through REAC. Cheney Care Community will review the process and procedures in place for the audit, and implement internal controls to ensure that the audited financial statements are filed in accordance with the regulatory agreement going forward. S3800-130 Response Indicator – Agree S3800-140 Completion Date – February 8, 2025 S3800-150 Response – On February 8, 2025, the audit was submitted to HUD through REAC. Cheney Care Community will review the process and procedures in place for the audit, and implement internal controls to ensure that the audited financial statements are filed in accordance with the regulatory agreement going forward.
Finding 2024-001
S3800-010 Finding Reference Number – 2024-001 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 – 2023-001 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, 2024, 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, allowance for credit losses, and the provision for bad debt and credit losses. - Significant entries to net asset activity and related party contributions. - Entries to accounts payable and related expenses. - Entries to related party receivables and management fee revenue. - Entries to fixed assets, accumulated depreciation and depreciation 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, 2025 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 2024-002
S3800-010 Finding Reference Number – 2024-002 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 – Resolved 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 the regulatory agreement Section 9(e), annual financial statements shall be submitted to HUD within 60 days of the end of the year. This requirement was extended to within 90 days of the end of the year by HUD S3800-030 Statement of Condition – Cheney Care Community did not meet the financial statement filing requirements for the year ended September 30, 2024. As a not-for-profit organization, Uniform Guidance allows the earlier of 9-months after fiscal year end or 30-days after the report is issued to submit. The audit was submitted within the Uniform Guidance requirements. S3800-032 Cause – Additional time was required to obtain certain information to complete the financial statement audit. S3800-033 Effect or Potential Effect – HUD does not have the financial information of the project available for review. HUD may request the holder of the note declare the note immediately due for noncompliance with the regulatory agreement. S3800-035 Auditor Non-Compliance Code – Z (Other) 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. S3800-080 Recommendation – We recommend management of Cheney Care Community implement internal controls to ensure that the audited financial statements are filed in accordance with the regulatory agreement. S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations – On February 8, 2025, the audit was submitted to HUD through REAC. Cheney Care Community will review the process and procedures in place for the audit, and implement internal controls to ensure that the audited financial statements are filed in accordance with the regulatory agreement going forward. S3800-130 Response Indicator – Agree S3800-140 Completion Date – February 8, 2025 S3800-150 Response – On February 8, 2025, the audit was submitted to HUD through REAC. Cheney Care Community will review the process and procedures in place for the audit, and implement internal controls to ensure that the audited financial statements are filed in accordance with the regulatory agreement going forward.