Finding Text
Finding 2022-001 - Mortgage Status Repeat Finding: Yes, 2021-001 Criteria: The Center did not pay mortgage and operating loss loan payments timely, in violation of section 3-5 of the Consolidated HUD Audit Guide. Condition: Procedures must be in place to ensure that the mortgage and operating loss loan payments are made timely. Cause: The Center did not have the necessary cash flow to pay the July 2021 through December 2022 mortgage and operating loss loan payments. Effect: The payments were late in 2022 and the Center incurred additional interest expense. Compliance Code: Q Recommendation: The auditee must implement procedures to ensure that the mortgage, operating loss loan and escrow are paid by the due date. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. In May 2023, the Center closed on the asset purchase agreement and the proceeds were used to payoff the HUD mortgage and operating loss loans in full.