Finding Text
Federal Agency: United States Department of Housing and Urban Development
Federal Program: Section 232 Mortgage Insurance for Nursing Homes
Federal Assistance Listing Number: 14.129
Award Period: 2024
Type of Finding: Other
Criteria: The Project's Borrower Regulatory Agreement with HUD requires the Organization to
deposit any excess surplus cash into a residual receipts account within 90 days after the end of
the annual or semi-annual fiscal period for which surplus cash is calculated.
Condition: The Organization had surplus cash as of June 30, 2021 which it had not deposited into
a residual receipts account by September 2021.
Questioned Costs: None.
Context: The surplus cash balance was $2,111,922 at June 30, 2021. At this time, the
Organization also had owner advances due in the amount of $1,660,755.
Effect: No negative effect was discovered during the audit.
Cause: The Organization has not deposited June 30, 2021 surplus cash into a residual receipts
account.
Repeat Finding: Yes, prior year finding 2023-002.
Recommendation: Per the terms of the Project’s borrower regulatory agreement with HUD,
management should request HUD approval to pay back owner advances of $1,660,755 prior to
depositing remaining surplus cash. Management should then deposit the remaining amount of
surplus cash resulting from the June 30, 2021 calculation into the residual receipts account as
soon as possible and monitor surplus cash closely during each annual and semi-annual period.