Audit 9162

FY End
2023-06-30
Total Expended
$31.69M
Findings
2
Programs
3
Year: 2023 Accepted: 2024-01-02
Auditor: Moss Adams LLP

Organization Exclusion Status:

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Findings

ID Ref Severity Repeat Requirement
7098 2023-002 Material Weakness - N
583540 2023-002 Material Weakness - N

Contacts

Name Title Type
EP3YU1PWMZM1 Judy Massler Auditee
5107692726 Joelle Pulver Auditor
No contacts on file

Notes to SEFA

Title: Basis of presentation Accounting Policies: Expenditures reported on the Schedule 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: AVSF has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of Elder Care Alliance of San Francisco (“AVSF”) under a program of the federal government for the year ended June 30, 2023. 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 AVSF, it is not intended to and does not present the financial position, results of operations, or changes in net assets or cash flows of AVSF. In accordance with guidance from the U.S. Department of Health and Human Services (“DHHS”), AVSF included the Reporting Period 5 expenditures for Provider Relief Fund and American Rescue Plan Rural Distribution Assistance Listing No. 93.498 of $211,140 in the Schedule for the year ended June 30, 2023, to align with DHHS reporting guidelines. In accordance with U.S. GAAP, the total amount of $211,140 of Provider Relief Fund assistance received by AVSF was recognized as revenue during the year ended June 30, 2022, and is included in beginning net assets as of and for the year ended June 30, 2023.
Title: Loan Balance Accounting Policies: Expenditures reported on the Schedule 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: AVSF has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The federal loan program identified below is administered directly by AVSF, and balances and transactions relating to this program are included in the financial statements of AVSF. Loans outstanding at the beginning of the year are included in the federal expenditures presented in the Schedule. The balance of loans outstanding at June 30, 2023 consisted of: Federal Assistance Listing Number 14.129; Program Name Mortgage Insurance Nursing Homes; Outstanding Balance at June 30, 2023 of $30,652,286.

Finding Details

Finding 2023-002: Cash Receipts - Material Weakness in Internal Control Over Compliance Federal Program: Mortgage Insurance Nursing Homes (Assistance Listing #14,129) Federal Agency: U.S. Department of Housing and Urban Development Award Year: Loan Criteria: Management is responsible for establishing and maintain an effective control over compliance. A strong internal control system ensures that compliance requirements are met. Condition: Management is required to maintain financial reporting for gross rent revenues and losses from apartment vacancies in accordance with HUD Handbook 4370.2. During our audit procedures for vacancy losses, we evaluated by recalculating the reported amount based apartment vacancy census and board approved apartment prices and found that rent revenue – gross potential and vacancies – apartments were both overstated by $954,212. Cause and Effect: Rent revenue – gross potential and vacancies – apartments calculated during annual financial close contained a calculation error. As a result, the entry to record the rent revenue – gross potential and vacancies – apartments was recorded incorrectly. Context: Management’s internal control for reviewing the vacancy loss calculation did not function properly. Questioned costs: $0 Repeat Finding: Not a repeat finding. Recommendation: We recommend management institute a process for AVSF’s finance team review checks and balances relative to the maximum rent revenue – gross potential during year end financial close, so that the vacancy loss reported as vacancies – apartments can be recorded correctly. Views of Responsible Officials and Planned Corrective Action: Management agrees with this recommendation and will institute the recommended process change. Going forward, management will add check totals to the vacancy loss adjustment, in order to post the appropriate entries in the general ledger.
Finding 2023-002: Cash Receipts - Material Weakness in Internal Control Over Compliance Federal Program: Mortgage Insurance Nursing Homes (Assistance Listing #14,129) Federal Agency: U.S. Department of Housing and Urban Development Award Year: Loan Criteria: Management is responsible for establishing and maintain an effective control over compliance. A strong internal control system ensures that compliance requirements are met. Condition: Management is required to maintain financial reporting for gross rent revenues and losses from apartment vacancies in accordance with HUD Handbook 4370.2. During our audit procedures for vacancy losses, we evaluated by recalculating the reported amount based apartment vacancy census and board approved apartment prices and found that rent revenue – gross potential and vacancies – apartments were both overstated by $954,212. Cause and Effect: Rent revenue – gross potential and vacancies – apartments calculated during annual financial close contained a calculation error. As a result, the entry to record the rent revenue – gross potential and vacancies – apartments was recorded incorrectly. Context: Management’s internal control for reviewing the vacancy loss calculation did not function properly. Questioned costs: $0 Repeat Finding: Not a repeat finding. Recommendation: We recommend management institute a process for AVSF’s finance team review checks and balances relative to the maximum rent revenue – gross potential during year end financial close, so that the vacancy loss reported as vacancies – apartments can be recorded correctly. Views of Responsible Officials and Planned Corrective Action: Management agrees with this recommendation and will institute the recommended process change. Going forward, management will add check totals to the vacancy loss adjustment, in order to post the appropriate entries in the general ledger.