Finding Text
Federal Agency Name: U.S. Department of Housing and Urban Development
Assistance Listing Number: 14.128
Program Name: Mortgage Insurance for Hospitals
Compliance Requirement: Special Tests and Provisions
Type of Finding: Significant Deficiency in Internal Control Over Compliance and Noncompliance
Criteria: As part of its loan agreement with HUD, the Hospital is not permitted to hold receivables from affiliated entities that are older than 90 days.
Condition: The Hospital has amounts due from affiliate of $678,628 that are older than 90 days as of September 30, 2023.
Cause: The Hospital funded significant costs on behalf of affiliate as a result of poor cash flows. The affiliate has been unable to pay the balance back to the Hospital in a timely manner.
Effect: The Hospital is in violation of a loan covenant from HUD. The Hospital has implemented a payment plan with affiliate starting at $30,000 per month, increasing by $5,000 increments per quarter, until the balance is paid off.
Questioned Costs: None reported.
Context: Sampling was not used.
Report Finding from Prior Year: Yes
Recommendation: We recommend that management follow its payment plan that is currently in place in order to reduce the outstanding receivable balance from affiliate.
Views of Responsible Officials: Management agrees with the finding. See corrective action plan.