Finding 1160610 (2024-001)

Section III - Federal Award Findings and Questioned Costs Finding 2024-001: Significant Deficiency in Internal Controls Over Compliance - Debt Payments Federal Program: U.S. Department of Housing and Urban Development Mortgage Insurance, Nursing Home (Section 232) Assistance Listing Number: 14.129 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: N/A Questioned Costs: N/A Criteria: In accordance with the terms of its debt agreements, the Organization is required to make timely principal and interest payments as scheduled. Condition: During the year under audit, the Organization did not make two scheduled debt service payments when due as a result of insufficient available funds. The payments were subsequently remitted after the due dates; however, the Organization was in noncompliance with the terms of its debt agreements at the time of the missed payments. Effect: Failure to make timely debt service payments exposes the client to potential default under its debt agreements Cause: The missed payments were due to cash flow constraints. Recommendation: We recommend management strengthen its cash flow forecasting and monitoring processes to ensure that adequate funds are reserved and available to make debt service payments when due. View of Responsible Officials: Management of the Company agrees with this finding. Current Status: Management is aware of the requirement to make timely debt service payments and has implemented procedures to ensure funds are available when payments are due. As of the date of this report, the Organization is current on all required debt service payments.