FAC Explorer

Finding 1225078 (2026-001)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2026
Accepted
2026-07-30
Audit: 408236
Organization: Orlando Rehabilitation Group (FL)
Auditor: FORVIS MAZARS LLP

AI Summary

  • Core Issue: ORG donated $8 million to not-for-profit entities for skilled nursing services without HUD authorization.
  • Impacted Requirements: Cash disbursements must be supported by approved documentation and only used for authorized project expenses.
  • Recommended Follow-Up: ORG should seek HUD's written approval for the donations and prepare for potential repayment if not authorized.

Finding Text

Information on the Federal Program: Assistance Listing number: 14.129 Program Title: Insurance - Nursing Home, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities Agency: United States Department of Housing and Urban Development Finding Year: 2026 Criteria or Specific Requirement: Cash Disbursements All disbursements from the regular operating account must be supported by approved invoices, bills, or other supporting documentation. Project funds should only be used to pay for mortgage payments, required deposits to the reserve for replacement fund, reasonable expenses necessary for the operation and maintenance of the project, distributions of surplus cash as permitted, and repayment of owner advances from surplus cash or as authorized by HUD. Disbursements from a centralized account must clearly be traceable to each project. The actual cash position of each project in this account must be easily identifiable at all times without exception. Condition: During 2026, ORG made cash donations approximating $8,000,000 to not-for-profit entities that provide skilled nursing services not authorized by HUD. One of the not-for-profit entities share a common board chair with ORG. Cause: Management and governance oversight and were not aware of disbursement requirements. Effect or Potential Effect: By donating funds without HUD authorization, there is potential that HUD will not approve the donation and require the funds to be repaid in a manner that was different from what ORG originally planned on. Questioned Costs: $8,000,000 of donated project funds. Identification as a Repeat Finding: Not applicable Recommendation: ORG should request written approval from HUD on the allowability of the $8,000,000 donations to other not-for-profit entities that provide skilled nursing services. In the event that HUD does not approve the donations, ORG should seek repayment of such donations. Views of Responsible Officials and Planned Corrective Actions: See attached for management’s correction action plan.

Corrective Action Plan

To Whom it May Concern, Orlando Rehabilitation Group, Inc. issued $8.0 million in grants during the fiscal year ending March 31, 2026. These grants were made to unaffiliated not-for-profit healthcare organizations. Orlando Rehabilitation Group, Inc., was unaware that these grants were not permitted to be made according to the structure of their HUD Mortgage. Kane Financial Services was also unaware. The plan to correct it includes the following action steps:  Seeking approval from HUD for the $8.0M in grants.  If the grant is not approved, then the Orlando Rehabilitation Group, Inc., will attempt to facilitate a re-payment plan over an extended period of time with the recipients of the grants. It is understood that such grants will not be made going forward without prior HUD approval. The contact information for oversight of the plan is: Susan Shain Executive Vice President of Finance, Kane Financial Services Email: SShain@kanefs.com Phone: 561-223-4161

Categories

HUD Housing Programs Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1225079 2026-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.129 MORTGAGE INSURANCE NURSING HOMES, INTERMEDIATE CARE FACILITIES, BOARD AND CARE HOMES AND ASSISTED LIVING FACILITIES $27.05M