Genesee Valley Presbyterian Nursing Center d/b/a Kirkhaven

C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARDS PROGRAM Finding 2023-001 – Assistance Listing No. 14.129 – United States Department of Housing and Urban Development Criteria Under the terms of the related regulatory agreement Kirkhaven is required to make timely monthly debt payments and deposits in certain escrow accounts. Condition/Context As part of our compliance testing, we reviewed the debt and escrow schedules and noted that Kirkhaven did not make all required debt and escrow payments during the year. Cause Kirkhaven was experiencing significant cash constraints and was not able to make debt payments and escrow payments as they were due. Effect Kirkhaven is out of compliance with the HUD regulatory agreement. Recommendation We recommend that Kirkhaven evaluate the necessary options to become current on mortgage and escrow payments. Management Response Kirkhaven’s HUD mortgage was paid in full in February 2024.

Finding 2023-001 - Assistance Listing No. 14.129 - United States Department of Housing and Urban Development Criteria Under the terms of the related regulatory agreement Kirkhaven is required to make timely monthly debt payments and deposits in certain escrow accounts. Condition/Context As part of our compliance testing, we reviewed the debt and escrow schedules and noted that Kirkhaven did not make all required debt and escrow payments during the year. Cause Kirkhaven was experiencing significant cash constraints and was not able to make debt payments and escrow payments as they were due. Effect Kirkhaven is out of compliance with the HUD regulatory agreement. Recommendation We recommend that Kirkhaven evaluate the necessary options to become current on mortgage and escrow payments. Management Response and corrective action plan Kirkhaven’s HUD mortgage was paid in full in February 2024.

2022-001

SUMMARY OF AUDITOR?S RESULTS 1. The Independent Auditor?s Report expresses an unmodified opinion on the financial statements of Genesee Valley Presbyterian Nursing Center d/b/a Kirkhaven, HUD Project 014-43199 (Kirkhaven) prepared in accordance with generally accepted accounting principles. 2. No significant deficiencies or material weaknesses related to the audit of the financial statements are reported in the Independent Auditor?s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. 3. No instances of noncompliance material to the financial statements of Kirkhaven which would be required to be reported in accordance with Government Auditing Standards were disclosed during the audit. 4. No material weaknesses or significant deficiencies were identified relating to the audit of each major federal award program in the Independent Auditor?s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance. 5. The independent auditor?s report on compliance for Kirkhaven?s major federal award programs expresses an unmodified opinion. 6. Audit finding (2022-001) that is required to be reported in accordance with 2 CFR section 200.516(a) are reported in this schedule. 7. The program tested as a major program was: ? United States Department of Housing and Urban Development (HUD), Assistance Listing No. 14.129 8. The threshold for distinguishing Types A and B programs was $750,000. 9. Kirkhaven was determined to be a low-risk auditee. B. FINDINGS - FINANCIAL STATEMENT AUDIT None. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARDS PROGRAM Finding 2022-001 ? Assistance Listing No. 14.129 ? United States Department of Housing and Urban Development Criteria Under the terms of the related regulatory agreement Kirkhaven is required to make timely monthly debt payments and deposits in certain escrow accounts. Condition/Context As part of our compliance testing, we reviewed the debt and escrow schedules and noted that the debt payments and escrow payments due in October through December of 2022 were not made.

Cause Kirkhaven was experiencing significant cash constraints and was not able to make debt payments and escrow payments as they were due. Effect Kirkhaven is out of compliance with the HUD regulatory agreement. Recommendation We recommend that Kirkhaven utilize grant funding if allowable to become up to date in debt principal payments and escrow payments. Management Response Kirkhaven was and continues to be in communication with both HUD and mortgage servicer (Berkadia) with regards to the lack of payment of the October to December mortgage and escrow required payments amounting to $192,947 due to the cash flow challenges. They are aware of the executed CHOW Letter of Intent. Subsequent to year-end, Kirkhaven has made the required interest only payments for October to December and continues to make the monthly interest payments. Kirkhaven also has applied for relief of the required escrow payments, but was subsequently denied. Management will continue to monitor cash flow and if feasible make mortgage principal and escrow payments as able, however, the VAPAP grant proceeds did not include funds for debt payments. Managements position is that since the executed CHOW, intention is to use proceeds to pay of the mortgage balance, that paying the principal earlier versus later is less critical.

A. SUMMARY OF AUDITOR?S RESULTS 1. The Independent Auditor?s Report expresses an unmodified opinion on the financial statements of Genesee Valley Presbyterian Nursing Center d/b/a Kirkhaven, HUD Project 014-43199 (Kirkhaven) prepared in accordance with generally accepted accounting principles. 2. No significant deficiencies or material weaknesses related to the audit of the financial statements are reported in the Independent Auditor?s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. 3. No instances of noncompliance material to the financial statements of Kirkhaven which would be required to be reported in accordance with Government Auditing Standards were disclosed during the audit. 4. One significant deficiency relating to the audit of the major federal award programs is reported in the Independent Auditor?s Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance. 5. The independent auditor?s report on compliance for Kirkhaven?s major federal award programs expresses an unmodified opinion. 6. There was one audit finding that is required to be reported in accordance with Section 200.516(a) of the Uniform Guidance. 7. The program tested as a major program was: ? Department of Health and Human Services - Provider Relief Fund, Assistance Listing No. 93.498 8. The threshold for distinguishing Types A and B programs was $750,000. 9. Kirkhaven was determined to be a low-risk auditee. B. FINDINGS - FINANCIAL STATEMENT AUDIT None.C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARDS PROGRAM Finding 2021-001 ? Assistance Listing No. 93.498 ? Provider Relief Funds, U.S. Department of Health and Human Services Criteria Kirkhaven is required to submit Period 1 and Period 2 Provider Relief Fund reports to the Department of Health and Human Services (HHS). The reports require providers to account for and certify that eligible expenses and lost revenues are used to determine proper usage and recognition of funds. Condition/Context As part of our compliance testing, we selected a haphazard sample of 40 expenditures to ensure they were allowable. As a result of this testing, we noted that four expenditures tested were not eligible under HHS guidelines. The expenditures related to an August 2020 mortgage payment on the property and three expenditures related to information technology/infrastructure updates. These expenditures were not incurred as a result of the COVID-19 pandemic which is a requirement for use of the Provider Relief Funds. Cause Kirkhaven included ineligible expenditures in its Period 1 Provider Relief Funds report due to evolving guidance and believed at the time to be in compliance based on HHS portal instructions at the time of the Period 1 submission. Eligible expenditures are required to be reported as required by Provider Relief Fund compliance supplement. Effect Kirkhaven is at risk of having Period 1 Provider Relief Funds returned to HHS services should ineligible expenditures be reported. Kirkhaven was not in compliance with Provider Relief Fund compliance supplement. Recommendation We recommend that Kirkhaven maintain documentation that notes that while specific expenditures were incorrectly included in the Period 1 submission, Kirkhaven has lost revenue that is in excess of the funding received to qualify to maintain this funding. It is noted that at this time there is not a mechanism to amend the portal submission. Management Response The ineligible expenditures relating to mortgage payments and information technology upgrades were included in the period 1 Provider Relief report based on the guidance believed at the time of submission. If these expenditures were not included, Kirkhaven would have been eligible to apply these applicable funds against its lost revenue for the period being reported. The total of eligible expenditures and lost revenue, substantially exceeds the amount of Provider Relief Funds received. Kirkhaven did not inappropriately utilize funds and should not be at risk of having any funds returned to HHS. Kirkhaven has maintained documentation of all eligible expenditures and lost revenue calculations to support this assertion.

FINDINGS - MAJOR FEDERAL AWARDS PROGRAM SIGNIFICANT DEFICIENCY 2021-001 Assistance Listing No. 93.498 - Provider Relief Fund Recommendation: Kirkhaven will maintain documentation that notes that while specific expenses were incorrectly included in the Period 1 submission, Kirkhaven has lost revenue that is in excess of the funding received to qualify to maintain this funding. It is noted that at this time there is not a mechanism to amend the portal submission. Action Taken: The ineligible expenses relating to mortgage payments and information technology upgrades were included in the period 1 provider relief report based on the guidance believed at the time of submission. If these expenses were not included, Kirkhaven would have been eligible to apply these applicable funds against its lost revenue for the period being reported. The total of eligible expenses and lost revenue, substantially exceeds the amount of provider relief funding received. Kirkhaven did not inappropriately utilize funds and should not be at risk of having any funds returned to the Department of Health and Human Services. Kirkhaven has maintained documentation of all eligible expenses and lost revenue calculations to support this assertion.