Audit 409598

Assistance Listing Number, Federal Agency, and Program Name - 14.128, U.S. Department of Housing and Urban Development (HUD), Mortgage Insurance Hospitals Federal Award Identification Number and Year - N/A (2021) Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2024-004 Criteria - Per the Consolidated Audit Guide for Audits of HUD Programs Handbook issued by the HUD Office of Inspector General, hospitals are required to submit a budget for the new fiscal year within thirty (30) days of the start of the new fiscal year. Condition - The Organization did not submit the budget to HUD within 30 days of the start of its fiscal year. Questioned Costs - None If Questioned Costs Are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During testing, it was noted that the Organization's budget for the September 30, 2025 fiscal year was not submitted. Cause and Effect - The lack of effective internal controls over budget reporting resulted in the untimely submission of the budget. Recommendation - We recommend that the Organization implement internal controls to ensure that the budget is submitted timely within the deadline. Views of Responsible Officials and Planned Corrective Actions - Management has implemented a new review and oversight process related to the process for the budget submissions in question to ensure timely submission on a go forward basis.

Assistance Listing Number, Federal Agency, and Program Name - 14.128, U.S. Department of Housing and Urban Development (HUD), Mortgage Insurance Hospitals Federal Award Identification Number and Year - N/A (2021) Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - Yes 2024-005 Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations (COSO). Condition - Controls were not designed or implemented effectively to ensure the following: a) mortgage and escrow payments were made in accordance with the due dates and amounts specified in the executed mortgage note agreement. b) earnings are retained in the replacement reserve account. c) the Organization completes the required financial reports in accordance with the applicable accounting basis, supported by underlying records representing the activity for the period reported. Questioned Costs - None If Questioned Costs Are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - While gaining an understanding of management's processes and internal controls to ensure compliance with the areas noted above, we noted no effectively designed control in place to ensure compliance. Cause and Effect - Though noncompliance was not identified, a lack of internal controls could result in noncompliance with program requirements. Recommendation - We recommend that management design and implement internal controls to ensure compliance with mortgage escrow payments, reserve account funding, and quarterly financial reporting requirements. Views of Responsible Officials and Corrective Action Plan - Management will design and implement internal controls to ensure compliance with mortgage escrow payments, reserve account funding, and quarterly financial reporting requirements, including a process to ensure that documentation of reviews is retained.