Marion Senior Living, Inc.Non-Profit

Statement of condition #2022-001: The required deposit of $16,084, per the June 30, 2021 Computation of Surplus Cash, Distributions and Residual Receipts, was not deposited into the Residual Receipts Fund within 90 days of the fiscal year end. Criteria: The Regulatory Agreement requires Surplus Cash, as defined by HUD, to be deposited into a separate Residual Receipts Fund within 90 days of the fiscal year end. Effect: The Corporation was not in compliance with the Regulatory Agreement. Cause: Management did not make the required deposit to the Residual Receipts Fund within 90 days of fiscal year end based on the Computation of Surplus Cash, Distributions and Residual Receipts as of June 30, 2021. Recommendation: Management should monitor the Surplus Cash position and make required deposits to the Residual Receipts Fund within 90 days of fiscal year end. Completion date: March 31, 2022 Management?s response: Management concurs with the finding and the auditor's recommendation. Management deposited the $16,084 to the Residual Receipts Fund on March 31, 2022.

FINDING 2020-001: Section 202 Capital Advance Program ? CFDA #14.157 Condition: Required replacement reserve deposit of $3,902 was not deposited into the Organization?s replacement reserve account during June 2020, resulting in only 5 deposits made during fiscal year 2020. Criteria: The regulatory agreement states that the replacement reserve should have 12 monthly deposits. However, HUD approved a suspension of 6 months of deposits, therefore 6 monthly deposits should have been made for fiscal year 2020. Cause: Marion Senior Living, Inc.?s internal control over compliance failed to ensure there were monthly deposits to the replacement reserve during the year. This issue was discovered and corrected by management on July 2, 2020. Effect: This overdue deposit results in a violation of the provision agreed to in the Regulatory Agreement. The deposit was made in full to the replacement reserve account in July 2020. Recommendation: Procedures should be put into place to ensure the monthly replacement reserve deposits are to be made timely and are adhering to the Regulatory Agreement. View of Responsible Officials and Planned Corrective Actions: Marion Senior Living, Inc. agrees with the finding, corrected the error in July 2020, and will implement the recommended procedures.

FINDING 2019-001: Section 202 Capital Advance Program ? CFDA #14.157 Condition: Marion Senior Living, Inc. has an open inquiry from HUD about whether the project has the capacity to pay accrued management fees totaling $32,504 at June 30, 2019. HUD also inquired as to whether the project is adhering with its Management Agent Certification by paying management fees for expenses considered to be reasonable and necessary. Criteria: Marion Senior Living, Inc. is required to adhere to the provisions of their Management Agent Certification by only paying management fees on expenses considered to be reasonable and necessary. Cause: HUD inquired during their review of the June 30, 2017 financial statements as to the status of fees paid and accrued to the management agent. As a result of this inquiry, the management agent forgave $20,000 in management fees accrued from previous years. The forgiveness of these accrued fees was approved by HUD during the year ended June 30, 2018. There was no forgiveness of accrued management fees for the year ended June 30, 2019. Effect: HUD has not yet closed the inquiry and continues their review of the matters noted above. The last correspondence received from HUD was dated July 16, 2018 noting these matters are still under review. Recommendation: The project should continue to work with HUD to assure they are in compliance with their Management Agent Certification. Views of Responsible Officials and Planned Corrective Actions: Marion Senior Living, Inc. agrees with the finding and will work with HUD on this open inquiry to determine if any further corrective action is needed.

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