Finding Text
2022-003 Federal agency: U.S. Department of Housing and Urban Development Federal program title: Mortgage Insurance ? Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities Assistance Living Number: 14.129 Award Period: Year Ended June 30, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: Failure to Maintain Approved Management Agreements Condition: St. John Lutheran Care Center (St. John) was charged a management fee by Lutheran SeniorLife, its parent but did not have an approved management contract meeting the requirements of the regulatory agreement. Questioned costs: $0. Context: St. John did not have an approved management agreement. Cause: St. John?s existing management agreement was with Lutheran Affiliated Services (LAS) from 1992 and had not been updated to reflect the current management fee charged by the successor to LAS, Lutheran SeniorLife. Effect: The management agreement was not approved by HUD and did not contain the provisions required by the regulatory agreement. Recommendation: St. John should enter into an approved management agreement with Lutheran SeniorLife.Views of Responsible Officials and Planned Corrective Actions: St. John updated internal agreements to reflect the change from Lutheran Affiliated Services to Lutheran SeniorLife, but neglected to complete the process with HUD. St John will submit the paperwork to obtain a certified HUD approved management agreement. While the organization was operating without this agreement in place, management fees charged were only to reimburse costs incurred in performing these management functions. During Fiscal Year 2021, St John entered into a refinancing plan with a lender in order to facilitate a repositioning of the facility and to enable facility improvements that were identified. The closing on the refinancing of the existing HUD loan took place on July 8, 2021.