Finding Text
S3800-010 Finding Reference Number – 2023-001
S3800-011 Title and CFDA Number of Federal Program –
Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129
S3800-015 Type of Finding – Financial Statement and Federal Award Finding
Material weakness in internal control over financial reporting
Material weakness in internal control over compliance
S3800-016 Finding Resolution Status – In progress
S3800-017 Information on Universe Population Size – N/A
S3800-018 Sample Size Information – N/A
S3800-019 Identification of Repeat Finding and Finding Reference Number – N/A
S3800-020 Criteria –
Cheney Care Community is responsible for establishing and maintaining a system of internal controls, including monitoring, and the internal controls should be in place to provide reasonable assurance that financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Per Section 9(d) of the regulatory agreement, the Borrower shall keep the books and accounts of the operations of the mortgaged property and of the project in accordance with the requirements of the Secretary.
S3800-030 Statement of Condition –
During our audit, we noted that the Organization had not properly accounted for a number of transactions, resulting in material audit adjustments recorded.
S3800-032 Cause –
As of and during the year ended September 30, 2023, Cheney Care Community did not properly record certain transactions, resulting in the accounts being misstated throughout the reporting period.
S3800-033 Effect or Potential Effect –
Without the recorded material audit adjustments, the financial statements would be materially misstated. Inaccurate reporting to HUD could adversely affect Cheney Care Community’s funding.
S3800-035 Auditor Non-Compliance Code – S (Internal Controls)
S3800-037 FHA/Contract Number – 171-22029
S3800-038 Questioned Costs – $0
S3800-040 Questioned Costs – $0
S3800-045 Reporting Views of Responsible Officials –
Cheney Care Community is in agreement with the findings, and the recommendations will be implemented.
S3800-050 Context –
While performing audit procedures, there were several instances where reported balances did not meet audit expectations or reconcile to underlying supporting documents or subsidiary ledgers.
Specifically, we noted the following:
- Significant entries to accounts receivable, allowance for uncollectible accounts and bad debt expense.
- Significant entries to related party receivable and elimination of intercompany transactions.
- Significant entries to construction in progress and loss on disposal of fixed assets.
- Significant entries to accrued expenses and related financial expenses.
- Entries to accumulated depreciation and depreciation expense.
- Entries to interest expense.
S3800-080 Recommendation –
We recommend management of Cheney Care Community review their internal controls over the financial reporting and close processes to determine whether additional controls over the preparation of the final trial balances and related schedules can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP.
S3800-090 Auditor’s Summary of Auditee Comments on the Findings and Recommendations –
Cheney Care Community will review their internal controls over the financial reporting and close processes to determine whether additional controls need to be implemented going forward.
S3800-130 Response Indicator – Agree
S3800-140 Completion Date – September 30, 2024
S3800-150 Response –
Cheney Care Community will review their internal controls over the financial reporting and close processes to determine whether additional controls need to be implemented going forward.
S3800-160 Contact Person First Name – Ashley
S3800-180 Contact Person Last Name – Healey