BALDWIN CARE CENTER, INC.Non-Profit

Finding 2025-003 - Noncompliance with Required Debt Covenant Financial Ratio Condition: As of December 31, 2025, the Facility’s debt service coverage ratio was 1.14, which is below the Facility’s required ratio under their debt agreement covenant of at least 1.25 to 1.00. Criteria: Under the terms of the Facility’s October 1, 2012, debt indenture agreement for the loan with Compeer Financial Agricultural Credit Association that is a USDA guaranteed loan, the Facility is required to maintain a debt service coverage ratio of at least 1.25 to 1.00 measured annually based upon the audited financial statements. Cause: The Facility’s level of revenue in excess of expenses for the year ended December 31, 2025, compared to current future debt payments resulted in not meeting the debt service coverage ratio debt covenant requirement of at least 1.25 to 1.00 as of December 31, 2025. Effect: The Facility’s debt service coverage ratio as of December 31, 2025, was below the required level. Recommendation: We recommend management put processes into place to evaluate the Facility’s resident mix and increase resident days, while continuing to contain related variable and fixed expenses to increase the Facility’s profitability. View of responsible Officials: Management will continue to evaluate the Facility’s resident mix and manage resident days while continuing to contain related variable and fixed expenses to increase the Facility’s profitability.

Finding 2024-004: Material Weakness - Noncompliance in Reporting Condition: The Facility’s internal control over compliance related to reporting were not effective. The Facility did not have a single audit in accordance with the Uniform Guidance completed for the year ended December 31, 2023 and related data collection form submitted to the Federal Audit Clearinghouse website by the September 30, 2024, deadline. Criteria: Non-federal entities with USDA and USDA guaranteed loans of $750,000 or greater are required to undergo a single audit in accordance with the Uniform Guidance (2 CFR Part 200, Subpart F). Cause: Internal controls over audit report and data collection form submission were not operating effectively. Effect: The Facility did not submit the audit report and data collection form to the Federal Audit Clearinghouse by the due date of September 30, 2024. Recommendation: We recommend management put processes in place over reporting to ensure timely submission of the audit report and data collection form. View of responsible officials: Management will put processes into place to ensure an auditor is engaged to complete a single audit in accordance with the Uniform Guidance to complete timely submission to the Federal Audit Clearinghouse of the audit report and data collection form.

Finding 2024-005: Material Weakness - Noncompliance in Internal Controls over Required Reserves Condition: The Facility’s internal control over compliance related to debt service reserve account requirements were not effective. During 2024, it was identified the Facility’s balance in the debt service reserve account was below the required level and required monthly deposits were not completed. Criteria: Under terms of the Facility’s April 29, 2014, loan agreement with the USDA, the Facility is required to make monthly deposits of $2,304 in a debt service reserve account until the balance reaches $276,432. Cause: Internal controls over compliance related to debt service reserve account deposits were not operating effectively. Effect: During 2024, monthly deposits were not made to the debt service reserve account and the Facility’s balance in the debt service account were below required levels. Recommendation: We recommend management put processes in place over monitoring the balance in the debt service reserve account to ensure required monthly deposits are completed until the balance in the account reaches the required level of funding. View of responsible officials: Upon the discovery of the underfunding of the debt service reserve account, the Facility discussed the situation with the Facility’s USDA contact. The USDA has approved an action plan for the Facility to replenish the debt service reserve account by February 2028 with $5,000 monthly deposits which began in December 2024.