Audit 371451

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: HUD Insured Mortgage Assistance Listing Number: 14.129 Type of Finding: • Material Weakness in Internal Control over Compliance Criteria or specific requirement: The Community was required to obtain written approval from HUD prior to surrendering 12 licensed beds to the State of Ohio that were collateral for the HUD-insured mortgage. The Community was also required to obtain written approval for the member substitution transaction with Otterbein Homes, Inc. Condition: The Community did not obtain HUD’s approval prior to requesting and obtaining approval from the Ohio Department of Health (ODH) to reduce the licensed beds from 87 to 74 for the nursing facility during April 2023. The Community also did not obtain HUD’s approval for the member substitution transaction with Otterbein Homes, Inc. prior to closing. Questioned costs: None Context: Finding was identified in prior year and remains unresolved. Cause: The Community requested a bed reduction from ODH for the nursing facility to reduce monthly expenses for unoccupied licensed beds and the Community entered into a member substitution agreement with Otterbein Homes, Inc. Effect: The collateral of the mortgaged property was changed prior to HUD’s written approval and HUD has identified this as a Tier 2 flag. Repeat Finding: Yes, 2023-001 Recommendation: The Community should adhere to the Regulatory Agreement and obtain HUD’s approval prior to taking any actions specifically precluded in the Regulatory Agreement. Views of responsible officials: There is no disagreement with the audit finding. Management is working with HUD to obtain the necessary approvals.