Audit 410548

Statement of Condition: Garden Terrace Senior Living (the Corporation) did not have adequate and effective controls over compliance related to special testing and provisions requirements. Specifically, the Corporation did not deposit surplus cash of $135,886 into the residual receipts account within the timeframe required by the U.S. Department of Housing and Urban Development (HUD). Criteria: Uniform Guidance requires the Corporation to establish and maintain effective internal controls over compliance with applicable federal requirements. In addition, the regulatory agreement requires the Corporation to deposit surplus cash into the residual receipts account within 90 days after the fiscal year end. Questioned Costs: None. Context: The required surplus cash deposit, which is calculated annually, was not made within HUD’s required timeframe. Cause: Management was not familiar with the HUD requirements regarding timing and disposition of the surplus cash deposit as this was the first year the Corporation had surplus cash. Effect: The Corporation was not in compliance with HUD requirements because the required surplus cash deposit was not made to the residual receipts account within 90 days of the fiscal year-end. The amount was subsequently applied directly to the Flexible Subsidy Loan in December 2025. Recommendation: We recommend management establish and implement processes and controls to ensure that surplus cash is properly deposited into the residual receipts account within the timeframe required by HUD. Management’s Response: Management agrees with the finding and will implement processes and controls to ensure that required surplus cash deposits are made timely in the future.