Finding Text
2022 ? 003 Federal agency: U.S. Department of Housing and Urban Development Federal program: Section 232 Mortgage Insurance for Nursing Homes Federal Assistance Listing Number: 14.129 Award Period: 2022 Type of Finding: ? Material Weakness in Internal Control Over Compliance ? Other Matters Criteria or specific requirement: Per the Project's Borrower Regulatory Agreement with HUD, no funds derived from or in connection with the operation of the Organization may be distributed, advanced, or otherwise used for any purpose other than making payments required under the loan documents, making payments pursuant to any AR financing documents, and making payments for goods and services Condition: The Organization paid $436,547 to a related party, Chelsea Jewish Lifecare, Inc., for costs that have not yet been incurred. Questioned costs: None Context: The Organization has a $436,547 receivable from a related party as of December 31, 2022. Cause: The Organization operates under a common paymaster agreement with Chelsea Jewish Lifecare, Inc. (CJL), the sole corporate member of the Organization. As such, the Organization transfers funding to cover its share of payroll and related costs on a weekly basis to CJL. Approximately $192,000 of the advance noted was to cover payroll and related costs for the pay period ending December 31, 2022 which was paid the first week in January 2023. The remaining balance resulted from the weekly transfer amount not being adjusted following a number of terminations at the beginning of November 2022. Effect: No negative effect was discovered during the audit. Repeat finding: No Recommendation: The Project should monitor transactions with related parties to ensure they comply with HUD guidelines. Views of responsible officials and planned corrective actions: The Organization operates under a common paymaster agreement with Chelsea Jewish Lifecare, Inc. (CJL), the sole corporate member of the Organization. As such, the Organization transfers funding to cover its share of payroll and related costs on a weekly basis to CJL. Approximately $192,000 of the advance noted was to cover payroll and related costs for the pay period ending December 31, 2022 which was paid the first week in January 2023. The remaining balance resulted from the weekly transfer amount not being adjusted following a number of terminations at the beginning of November 2022. Amounts transferred in excess were fully utilized to cover payroll and related costs in January 2023. Management has reviewed and revised procedures to ensure excess funds are not transferred in the future.