Audit 410926

Federal Agency: U.S. Department of Housing and Urban Development Federal Program: 14.129, Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Criteria or Specific Requirement - OMB Title 2 U.S. CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, requires specific compliance with the provisions of allowable costs and activities, including that direct charges to federal awards be for allowable costs. To be an allowable cost, charges must be supported by appropriate documentation and be properly approved. The specific requirements for allowable activities are unique to each federal program and are found in the laws, regulations, and the provisions of each contract or grant agreement pertaining to the federal program. The Organization is responsible for having internal controls designed to ensure compliance with this provision. Condition - During our testing of non-payroll expenditures, we noted that documentation provided lacked appropriate authorization of purchases and payments for certain disbursements for the federal program. Cause - There is a lack of sufficient adherence to internal controls to ensure supporting documentation for all payments charged to the program are appropriately authorized and accurately and adequately maintained. Effect - Lack of supporting documentation and authorization could result in misstatements due to error or fraud. This has the potential to result in disbursements being made in amounts that are not allowable program expenses or unauthorized transactions that may be questionable or disallowed expenditures. Questioned Cost - None Context - As part of our audit procedures, we sampled a total of 25 non-payroll expenditures incurred to test internal controls over compliance and compliance with the allowable costs and activities of federal awards. During our testing of non-payroll expenditures, we noted the following deviations: • 21 selections in our statistically valid sample included documentation which lacked appropriate approval by authorized individuals. Repeat Finding – This is not a repeat finding. Recommendation - The Corporation and management company should re-evaluate adherence to their internal controls over general disbursement and expenditure approval process and implement policies to ensure appropriate support is obtained and retained for all expense transactions. Views of Responsible Officials and Planned Corrective Actions – See corrective action plan.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program: 14.129, Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Criteria or Specific Requirement - 2 CFR § 200.512, Report Submission, requires completion of an audit and submission of the data collection form and reporting package within the earlier of thirty calendar days after receipt of the auditors’ report, or nine months after the end of the audit period. Condition - The audit and data collection form are being submitted after the required due date. Cause – The Corporation experienced staff turnover at the facility which resulted in audit information not being provided timely and noncompliance with regulatory filing requirements. Effect – Noncompliance with the requirements of 2 CFR § 200.512. There is a potential for suspension or cessation of federal funding under the federal award. Questioned Cost - None Context – We reviewed the audit submission date in comparison to the required due date. Repeat Finding – This is not a repeat finding. Recommendation – The Corporation should take steps to ensure that its financial records are maintained on a current basis, reconciled timely, and audited within nine months after year end. Views of Responsible Officials and Planned Corrective Actions – See corrective action plan.