Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for the Elderly Section 232 ALN Number: 14.129 Award Period: Year Ended December 31, 2025 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: The Home was required to obtain written approval for the member substitution transaction with The Carmelite System, Inc. prior to closing. Condition: Membership transfer agreements must be in place and signed by HUD during the transition of Ownership / Governance. Questioned costs: None Context: Formal HUD approval was not obtained in relation the Member Substitution in which the Carmelite System, Inc. became the sole member and sponsor of the Home. Cause: Clerical Error- failure to timely achieve an approved membership transfer. Effect: The Home remains out of compliance with HUD. Repeat finding: No Recommendation: The Home should adhere to the Regulatory Agreement and obtain HUD’s approval prior to taking any actions specifically precluded in the Regulatory Agreement. Views of responsible officials: There is no disagreement with the audit finding. Management is working to obtain the necessary HUD approvals.