Finding Text
Federal Agency Name: U.S. Department of Housing and Urban Development
Assistance Listing Number: 14.128
Program Name: Mortgage Insurance for Hospitals
Compliance Requirement: Special Tests and Provisions
Type of Finding: Significant Deficiency in Internal Control Over Compliance and Noncompliance
Criteria: As part of its loan agreement with the U.S. Department of Housing and Urban
Development (HUD), the Hospital is required to fully fund its mortgage reserve fund (MRF) in accordance with the MRF schedule.
Condition: The Hospital’s MRF is underfunded by $167,150 as of September 30, 2023.
Cause: The Hospital’s system of internal controls did not allow for management to be properly notified of the MRF being underfunded prior to year‐end.
Effect: The Hospital is in violation of a loan covenant from HUD, and the Hospital has 60 days to
cure the underfunding.
Questioned Costs: None reported.
Context: Sampling was not used.
Report Finding from Prior Year: No
Recommendation: We recommend that management review its operating and review procedures in order to ensure the MRF is not underfunded in subsequent periods.
Views of Responsible Officials: Management agrees with the finding. See corrective action plan.