Finding 1097519 (2024-001)

Identifying Number: 2024-001 Information on the Federal Program: ALN #14.129, U.S. Department of Housing and Urban Development: Mortgage Insurance – Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities, HUD Project No. 072-22113. Criteria or Specific Requirement: The regulatory agreement (form HUD 92466-E) specifies in Paragraph 5: “The Mortgagor agrees to deposit in a residual receipts fund any residual receipts realized from the operation of the mortgaged property. No distribution from such fund shall be made without the prior written approval of the Secretary. Any distribution from such fund, which the party receiving such distribution is not entitled to retain hereunder, shall be held in trust separate and apart from any other funds.” Condition: The Organization calculated surplus cash of $31,225 as of September 30, 2020 and surplus cash of $39,082 as of September 30, 2021, which includes the undeposited amount from September 30, 2020. This amount was not deposited into a residual receipts fund account. The Organization calculated surplus cash of $149,237 as of September 30, 2022, which includes the undeposited amount from September 30, 2021. The Organization has not deposited this amount into a separate residual receipts fund account within 90 days of the fiscal year-end. Cause: Required deposit of residual receipts in a separate residual receipts fund within 90 days of year-end was not made. Effect: Noncompliance with the HUD compliance requirements per the regulatory agreement. Questioned Costs: Not Applicable Context: The population was tested 100%, therefore was statistically valid. Repeat finding: This finding is a repeat finding (2023-002, 2022-002, 2021-002). Recommendation: Procedures should be implemented and placed in service to ensure residual receipts are deposited into a separate fund within 90 days of year-end. The Organization should deposit in a separate residual receipts fund residual receipts of $149,237 realized from the operation of the mortgaged property in the prior year. Views of Responsible Officials: Management disagrees with finding 2024-001.