U.S. Department of Housing and Urban Development (“HUD”)
Norwood Life Society respectfully submits the following corrective action plan for the year ended December 31, 2023.
Audit period: January 1, 2023 – December 31, 2023
The findings from the schedule of findings and questioned costs are discusse...
U.S. Department of Housing and Urban Development (“HUD”)
Norwood Life Society respectfully submits the following corrective action plan for the year ended December 31, 2023.
Audit period: January 1, 2023 – December 31, 2023
The findings from the schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule.
FINDINGS—FEDERAL AWARD PROGRAMS AUDITS
Department of Housing and Urban Development
2023-001 Mortgage Insurance_Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities – Assistance Listing No. 14.129
Recommendation: We recommended to Management that they continue to monitor related party transactions and request prior approval before any advances are made or considered to be made in support of other related parties in the future.
Explanation of disagreement with audit finding: There is no disagreement with the audit finding.
Action taken in response to finding: Rick Steffens, the CFO, will oversee this plan, and the plan has been implemented and fully resolved. The unauthorized loan was due to an increasing intercompany balance due from an affiliated nursing home (“Bethesda”) who was losing money and unable to reimburse Norwood Crossing for shared bills for items including benefits and insurance. Due to the size of the losses, we realized this issue was unable to be resolved without disposing of Bethesda and began working on selling Bethesda in the second quarter of 2022. Bethesda was supposed to close on the sale on November 30, 2022, which would have solved the intercompany issue during the 2022 audit year, which was our plan. However, the sale was continuously delayed due to numerous serious issues pushing the actual sale date all the way back to July 1, 2023.
The audit finding for the unauthorized intercompany loan was for $1,724,731.69, and was a finding on the 2022 audit. However, the intercompany balance continued to grow in 2023 and had an additional $574,583.86 of expenses that built up in 2023 before the sale occurred. This made a grand total of $2,299,315.55 that needed to be repaid from Bethesda to Norwood Crossing for the unauthorized intercompany loans through the sale date. Bethesda worked to repay the intercompany loans the best it could during 2023 before the sale occurred, and completely paid down the remaining balance on the unauthorized intercompany loans shortly after the sale of Bethesda occurred.
The following payments were made from Bethesda to Norwood Crossing:
Payment Dates Payment Amounts
5/8/2023 $675,000.00
5/23/2023 $350,000.00
7/17/2023 $1,274,315.55
Total $2,299,315.55
These repayments above fully resolved the unauthorized intercompany loans that were 1) in the 2022 Audit as a finding, 2) increases that occurred in 2023 after the 2022 year end, and 3) the resolutions occurred before the 2022 audit was issued and only are a finding in the 2023 audit because the loans were not fully paid off as of 2022. Furthermore, Bethesda has officially been sold as of July 1, 2023 and is no longer causing this issue to continue to occur going forward.
Name(s) of the contact person(s) responsible for corrective action: Rick Steffens
Planned completion date for corrective action plan: July 17, 2023
If the Oversight Agency for Audit has questions regarding this plan, please call Rick Steffens at 773-577-5334.