CENTRE CARE INCNon-Profit

Finding No. 2025-001: Late Submission of Reporting Package and Data Collection Form – Compliance and Other Matters Finding – ALN # 10.766 U.S. Department of Agriculture, Community Facilities Loans and Grants Criteria The Uniform Guidance requires that both the reporting package and the data collection form must be submitted to the Federal Audit Clearinghouse (FAC) no later than the earlier of 30 days following receipt of the auditor’s reports or nine months after the end of the audit period. An extension beyond this timeframe is permissible only if it has been granted in advance by the cognizant or oversight agency for audit. The submission requirement is deemed fulfilled by the Federal Audit Clearinghouse once it has received the electronic submission of both the data collection form and the complete reporting package. Condition The reporting package and data collection form for the year ended December 31, 2024 was not submitted to the FAC by the September 30, 2025 deadline. Cause There was turnover within the Organization. Effect The Organization was not in compliance with federal reporting requirements. Repeat Finding No. Recommendation We recommend that management continue its efforts to ensure that all filing requirements under federal awards are met. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

2023-001 Compliance Over Timely Report Submissions Federal Agency: U.S. Department of Agriculture Federal Program: 10.766, Rural Development, Community Facilities Direct Loan Criteria or Specific Requirement - 45 CFR § 75.512, Report Submission, requires completion of an audit and submission of the data collection form and reporting package within the earlier of thirty calendar days after receipt of the auditors’ report, or nine months after the end of the audit period. Condition - The audit and data collection form are being submitted after the required due date. Cause - The Organization did not maintain appropriate levels of staff to ensure audit information was provided timely in order to ensure compliance with regulatory filing requirements. Effect - Noncompliance with the requirements of 45 CFR § 75.512. There is a potential for suspension or cessation of federal funding under the federal award. Questioned Cost - To be determined by the grantor. Context - We reviewed the audit submission date in comparison to the required due date. Repeat Finding - This is a repeat finding from the prior year. See prior year finding 2022-002. Recommendation - The Organization should take steps to ensure that its financial records are maintained on a current basis, reconciled timely, and audited within nine months after year end. View of Responsible Officials and Planned Corrective Actions - Due the ongoing impact of the COVID 19 pandemic, the Organization and CHR Consulting Services, Inc. (“CHR”), the entity responsible for maintaining the books and records of the Organization, experienced staffing shortages due to retirements and medical leave. In addition, as a result of the ongoing impact of the COVID 19 pandemic, the Organization continued to experience noncompliance with certain debt covenants in 2023 and first half of 2024. In addition, the Organization had several vendor or liabilities, including the Pennsylvania bed tax liability that required resolution prior to the issuance of the audited financial statements. The Organization and CHR have been able to recruit additional staff and CHR has added additional supervisory personnel to oversee the financial reporting and audit process. In an effort to improve communications with the Grantor, in August 2023, the Organization began providing monthly financial and operational information. In addition, monthly calls were implemented with the representatives of the Grantor, discussing key operational and performance measures. While key issues were identified and discussed with the Grantor, the Grantor has not been able to provide waivers for such noncompliance with covenant requirements. As noted in Note 2 to the audited financial statements, the financial performance of the Organization has improved, allowing the Organization to enter into long-term payment plans for the resolution of the key liabilities of the Organization. It is anticipated that the audit for 2024 and related forms will be issued within the allowable time period in the loan agreements.

Criteria or Specific Requirement - 45 CFR § 75.512, Report Submission, requires completion of an audit and submission of the data collection form and reporting package within the earlier of thirty calendar days after receipt of the auditors’ report, or nine months after the end of the audit period. Condition - The audit and data collection form are being submitted after the required due date. Cause - The delay in filing required submissions timely was driven by slow communications from grantor in relation to the Organization missing certain debt covenants and providing corrective actions. Effect - Noncompliance with the requirements of 45 CFR § 75.512. There is a potential for suspension or cessation of federal funding under the federal award. Questioned Cost - To be determined by the grantor. Context - We reviewed the audit submission date in comparison to the required due date. Repeat Finding - No Recommendation - The Organization should seek to identify potential issues earlier and begin discussions with the grantor as soon as possible to work together in finding a resolution. View of Responsible Officials and Planned Corrective Actions - On June 28, 2023, prior to the expiration of the 180 day deadline after year-end for the issuance of the audit report, and prior to the nine month period for the issuance of the Single Audit report, representatives of CHR Consulting Services, Inc. held a conference call with representatives of the USDA informing them that the issuance of the audit report would be delayed due to open items for the audit addressing non-compliance with certain covenants, including the Debt Service Coverage Ratio. Centre Care requested waivers from the USDA on the covenant violations to avoid the classification of the USDA mortgage as current, resulting in the inclusion in the audit report of an Emphasis of matter paragraph for a Going Concern. Centre Care wished to avoid such an audit opinion as it has ongoing grant requests which would be adversely impacted by such an audit opinion. It was eventually determined that the no waivers would be issued by the USDA to avoid the aforementioned audit opinion and the Board of Directors and Finance Committee determined to proceed with the issuance of the audit with the Emphasis of Matter as a Going Concern. Centre Care is working with the external auditors for the completion and submission of the audit for the year ended December 31, 2022. Future audits will be issued and submitted within the appropriate deadlines.