Finding 559064 (2024-002)

Material Weakness Repeat Finding
Requirement
P
Questioned Costs
-
Year
2024
Accepted
2025-05-02
Audit: 355322

AI Summary

  • Core Issue: The Organization failed to deposit surplus cash of $2,111,922 into a residual receipts account within the required 90 days.
  • Impacted Requirements: This finding violates the Project's Borrower Regulatory Agreement with HUD, and it is a repeat issue from the previous year.
  • Recommended Follow-Up: Management should seek HUD approval to repay owner advances of $1,660,755 and promptly deposit the remaining surplus cash into the residual receipts account, ensuring better monitoring in the future.

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.

Corrective Action Plan

Name of contact person: Jennifer Santerre, Chief Financial Officer Corrective Action: The Organization was fortunate to have sufficient cash on hand in order to continue to provide the highestquality of care to its residents during the COVID-19 pandemic, primarily as a result of federal and state stimulus funds, which were restricted in usage, received during 2020 and 2021. The Organization made it a priority to ensure that its staff continued to be compensated throughout the pandemic. Accordingly, the Organization kept cash on hand in order to meet the needs of the residents cared for daily and the dedicated staff who serve them. The Organization was not expecting a surplus cash situation at December 31, 2020 or June 30, 2021. Had the Organization not received stimulus funds through programs such as the Provider Relief Fund and Paycheck Protection Program, the Organization would not have had surplus cash at both December 31, 2020 and June 30, 2021. The required deposit due to the residual receipt account for the year ended December 31, 2020 was made on May 31, 2022. The Organization is currently in the process of discussing repayment terms for the deposit due for the period June 30, 2021 with its asset manager which includes discussions for the repayment of $1,660,755 in frontline costs that were funded by the Parent Organization back to the Parent. Proposed Completion Date: No later than December 31, 2025

Categories

HUD Housing Programs

Other Findings in this Audit

  • 559063 2024-001
    Material Weakness Repeat
  • 1135505 2024-001
    Material Weakness Repeat
  • 1135506 2024-002
    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 $16.95M