MATHISON RETIREMENT COMMUNITY, INC. PROJECT NO FINANCIAL STATEMENT

Transcription

1 MATHISON RETIREMENT COMMUNITY, INC. PROJECT NO FINANCIAL STATEMENT JUNE 30, 2016

2 TABLE OF CONTENTS Mathison Retirement Community, Inc. Project No Panama City, Florida June 30, 2016 and 2015 Page Number Independent Auditors' Report 1-2 Financial Statements Statements of Financial Position Statements of Activities Statements of Changes in Net Assets (Deficit) Statements of Cash Flows Notes to Financial Statements Supplementary Information Supplemental Data Required by HUD Computation of Surplus Cash, Distributions and Residual Receipts Schedules of Assisted Living, Board and Care, and Other Elderly Care Revenues Schedules of Costs of Operations Before Depreciation Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Summary Schedule of Prior Audit Findings Independent Auditors' 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 Independent Auditors' Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by The Uniform Guidance Schedule of Findings and Questioned Costs Certification of Officers Managing Agent's Certification Independent ants' Report on Applying Agreed to Procedure Financial Statement Electronic Submission Certified Public ants

3 Certified Public ants 2109 DEVEREUX CffiCLE BIRMINGHAM, ALABAMA PHONE (205) FACSIMILE (205) MICHAEL W. COOKE, C.P.A. DENNIS R. CAMERON, C.P.A. W. GERALD TRAVIS, C.P.A. MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ALABAMA SOCIETY OF C.P.As INDEPENDENT AUDITORS' REPORT To the Board of Trustees Mathison Retirement Community, Inc. Panama City, Florida Report on the Financial Statements We have audited the accompanying financial statements of Mathison Retirement Community, Inc. HUD Project No , which comprise the statement of financial position as of June 30, 2016 and 2015, and the related statement of activity, changes in net assets and cash flow for the years then ended and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mathison Retirement Community, Inc. as of June 30, 2016 and 2015, and the changes in its net assets and its cash flow for the years then ended in accordance with accounting principles generally accepted in the United States of America. -1-

4 Other Matters Supplemental Information Our audit was conducted for the pwpose of forming an opinion on the financial statements as a whole. The accompanying supplemental information shown on pages 14 to 22 is presented for pwposes of additional analysis as required by the Uniform Financial Reporting Standards issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, and is not a required part of the financial statements. The accompanying schedule of expenditures of federal awards shown on page 20, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for pwposes of additional analysis and is not a required part of the financial statements. The above described supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the above described supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated August 30, 2016 on our consideration of Mathison Retirement Community, Inc.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The pwpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Mathison Retirement Community, Inc. 's internal control over financial reporting and compliance ~J ~,-ra-rlv,~! Ln r\ P. Cooke, Cmnernn, Travis and Company, P.;. \ "\] Birmingham, Alabama August 30, Certified Public ants

5 STATEMENTS OF FINANCIAL POSITION Mathison Retirement Community Project No Panama City, Florida Current assets Cash - operations s receivable Tenants Other Prepaid expenses Inventory ASSETS Number ,071 34,181 6, , , ,848 7,024 Total current assets 1 IOOT 820, Deposits held in trust-security deposits ,633 13,898 Restricted deposits and funded reserves Escrow deposits Reserve for replacement Other reserves Residual receipts reserve , ,785 7, ,290 94, , ,850 Total restricted deposits and funded reserves 1330T 669, ,146 Fixed assets (Notes I and 2) Land and improvements Building Building equipment - portable Automobile Capital lease assets Less: accumulated depreciation T ,480,000 10,3 90, ,151 69,719 13,624 12,226,443 (592,467) 1,480,000 10,381, ,418 69,719 13,624 12,071,141 (280,629) Total fixed assets 1400N 11,633,976 11,790,512 Other assets Deferred loan cost and organization costs, net of amortization (Note I)!SOOT 373, ,477 Total assets IOOOT 13,524,977 13,666,929 See accompanying notes to financial statements -3-

6 STATEMENTS OF FINANCIAL POSITION As of June 30, 2016 and 2015 Current liabilities Current portion of long-term liability (Note 2) s payable Trade Entity Accrued expenses Interest Salaries Payroll taxes Prepaid revenue LIABILITIES Number , , , , ,098 80, ,862 26, , , ,563 2, ,034 43,619 Total current liabilities Deposit liabilities Tenant security Long-tenn liabilities Mortgages payable, less current portion (Note 2) 2122T 416, , ,000 10, /2322 7,370,508 7,478,184 Total liabilities Net Assets Unrestricted net assets 2000T 7,808,085 7,953, ,7 16,892 5,713,167 Total net assets 3130T 5,7 16,892 5,7 13,167 Total liabilities and net assets (deficit) 2033T 13,524,977 13,666, Certified Public ants

7 ST A TEMENTS OF ACTIVITY Mathison Retirement Community Project No For the years ended Panama City, Florida June 30, 2016 and 2015 Number Revenue Assisted living revenue ,680,174 3,708,907 Financial revenue Operations Residual receipts Replacement reserve and escrows Total fi nancial revenue 5400T Total revenue 5000T 3,680,478 3,709,050 Cost of operations before depreciation and amortization Administrative 6263T 439, ,854 Utilities 6400T 193, ,845 Operating and maintenance 6500T 190, ,872 Taxes and insurance 6700T 393, ,279 Interest expense 6800T 3 12, ,531 Assisted living 6900T 1,376,763 1,202,385 Total cost of operations before depreciation and amortization 6000T 2,905,610 2,726,766 Change in net assets before depreciation and amortization 5060T 774, ,284 Depreciation , ,629 Amortization 6610 I 1,308 22,806 Change in net assets (deficit) 5050N 45 1, ,849 See accompanying notes to financial statements -5- Certified Public ants

8 STATEMENTS OF ACTIVITIES - CONTINUED Mathison Retirement Community Project No Panama City, Florida For the years ended June 30, 2016 and Total mortgage principal payments required during the audit year Total of 12 monthly deposits in the audit period deposited into the replacement reserve account, as required by the regulatory agreement, even if payments may be temporarily suspended or reduced. 103, ,010 60,804 55,737 Replacement reserves, or residual receipts and releases which are included as expense items on this statement of activities. Project improvement reserve releases under the flexible subsidy program that are included as expense items on this statement of activities. See accompanying notes to financial statements -6- Certified Public ants

9 STATEMENTS OF CHANGES IN NET ASSETS (DEFICIT) Mathison Retirement Community Project No Panama City, Florida For the years ended June 30, 2016 and Beginning balance 5,713,167 Capital contribution by sponsor, June 30, ,034,318 Surplus cash (withdrawal) Change in net assets (deficit) (447,997) 451, ,849 5,716,892 5,713,167 See accompanying notes to financial statements -7- Certified Public ants

10 Mathison Retirement Community Project No Panama City, Florida ST A TEMENTS OF CASH FLOW For the years ended June 30, 2016 and 2015 Cash flows from operating activities Receipts Assisted living Interest ,660, ,752, Total receipts 3,660,770 3,752,669 Disbursements Administrative Management fees Utilities Payroll taxes Operating and maintenance Payrolls Interest on building Miscellaneous tax and insurance Property insurance Assisted living 81, , ,406 91, ,294 1,185, , , , ,976 64, , ,845 91,060 18, , , , , ,582 Total disbursements 2,98 1,231 2,545,985 Net cash provided by operating activities 679,539 1,206,684 Cash flows from investing activities Increase/decreases in security deposits Net withdrawals (deposits) from the reserve for replacement Net withdrawals (deposits) from the residual receipts Net (deposits) withdrawals to/from other reserves Purchase of fixed assets (2,735) 25,373 (326,290) 3 14,765 (155,302) (3,898) (248,158) (434,988) (7,036,823) Net cash (used in) provided by investing activities (144,189) (7,723,867) Cash flows from financing acti vities Mortgage principal payments Surplus cash withdrawal Payments from loan costs Equity transferred from Mathison Retirement Center, Corp (103,306) (447,997) (91,010) (407,283) 7,672,500 Net cash provided by (used in) financing activities (551,303) 7,174,207 Net increase (decrease) in cash (15,953) 657,024 Cash at beginning of year Operation 657,024 Cash at end of year 641, ,024 Suplemental disclosures: Fair value of capital contribution by sponsor 5,034,3 18 See accompanying notes to financial statements -8- Certified Public ants

11 STATEMENTS OF CASH FLOW - CONTINUED Mathison Retirement Community Project No Panama City, Florida For the years ended June 30, 2016 and 2015 Reconciliation of change in net assets to net cash provided by operating activities Change in net assets ( deficit) Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation Amortization , ,838 11, , ,629 22,806 Decrease (increase) in Inventory Prepaid expenses s receivable Residents Increase (decrease) in s payable Accrued expenses Payroll tax Interest Payroll Prepaid revenue et cash provided by operating activities 2,001 (2,836) (41,123) (85,648) (935) (357) 12,154 21, ,539 (7,024) (130,848) 185,796 2,498 26, ,140 43,619 1,206,684 See accompanying notes to financial statements -9- Certified Public ants

12 NOTES TO FINANCIAL STATEMENTS Mathison Retirement Community, Inc. Project No Panama City, Florida June 30, 2016 and2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies followed by Mathison Retirement Community, Inc. and the method of applying those policies which affect the determination of the financial position, changes in financial position and results of operations are summarized below. Organization Mathison Retirement Community, Inc. (a not for profit corporation) was formed and incorporated under the laws of the state of Florida on November 7, The corporation qualifies as an entity exempt from income taxes under Internal Revenue Code section 501 ( c )3 and is irrevocably dedicated to operating exclusively for non-profit purposes and no part of the income or assets of the corporation shall be distributed to or inure to the benefit of any for profit individual. The purpose of the incorporation of Mathison Retirement Community, Inc. was to receive and operate Mathison Retirement Center a seventy-four unit assisted living facility in Panama City, Florida from its sponsor Methodist Homes for the Aging (a not for profit corporation). Mathison Retirement Community, Inc. commenced operations on June 18, 2014 pursuant to closing a 7,672, HUD Insured Loan and receiving a 5,034,318 capital contribution (equity in real estate in excess of the loan) from Methodist Homes. Loan proceeds were used to retire existing indebtness, fund repairs and reserves required as a condition of the loan and pay issuance costs. The operations and maintenance of the facility is regulated by HUD. Distributions to the sponsor are restricted to surplus cash upon meeting certain conditions as defined in the HUD Healthcare Regulatory agreement. Fixed Assets Fixed assets were stated at fair value at the date of purchase, which equals to purchase price plus fair value of contribution by sponsor. Depreciation is provided for at rates intended to distribute cost of fixed assets over their estimated useful lives as follows: Building Building equipment-portable Automobile Capital lease assets Method Straight-line Straight line Straight-line Straight-line Estimated Service Life 15 to 40 years 5 to 10 years 5 years 10 years Expenditures for maintenance and repairs are charged to operations as incurred; expenditures for renewals and betterments are capitalized and written off by depreciation. Tax Exempt Organization Mathison Retirement Community, Inc. is a non-profit organization and is not subject to income taxes. Deferred Loan Costs Deferred loan costs consist of fees and related costs of obtaining a mortgage loan and are being amortized on the straight-line method over the life of the mortgage Certified Public ants

13 NOTES TO FINANCIAL STATEMENTS Mathison Retirement Community, Inc. Project No Panama City. Florida June 30, 2016 and2015 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred loan costs are as follows: Deferred loan costs 407, ,283 Armrtization Prior 22,806 Current 11,308 Total 34,114 22,806 22,806 Net costs 373, ,477 Cash Equivalents For purposes of the statement of cash flows, all unrestricted investment instruments purchased with a maturity of three months or less are considered to be cash equivalents. At June 30, 2016 there were no cash equivalents. Amounts are insured by the Federal Insurance Corporation up to 250,000. Mathison Retirement Community, Inc. uninsured balances at June 30, 2016 amounted to 390,571. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those amounts. Date of Management's Review Subsequent events were evaluated through August 30, 3026, which is the date the financial statements were available to be issued. NOTE 2- MORTGAGE Mortgage payable as of June 30, 2016 are as follow: 4.15% Mortgage payable to Walker and Dunlop, ILC; 34,664 payable rmnthly; maturity date of June 18, 2049; insured by HUD; collateralized by real estate Less current portion ,478, , ,581, ,306 Total long-term debt 7,370,508 7,478, Certified Public ants

14 NOTES TO FINANCIAL STATEMENTS Mathison Retirement Community, Inc. Project No Panama City, Florida June 30, 2016 and 2015 NOTE 2 - MORTGAGE (continued) Principal amounts due in the next five years are as follows: Thereafter 107, , , , ,083 6,892,291 7,478,184 NOTE 3 -RELATED PARTIES Methodist Homes for the Aging, Inc. (the sponsor) manages the project. The management agreement and fee is subject to HUD approval. NOTE 4 - MANAGEMENT FEES Mathison Retirement Community, Inc. pays a management fee equal to 6% of assisted living revenue to Methodist Homes for the Aging. During the years ended June 30, 20 16, and 2015 the management fee amounted to 218,882 and 218,558, respectively. NOTE 5 - RESTRICTED DEPOSITS Under the Regulatory Agreement, Mathison Retirement Community, Inc. is required to set aside amounts for the replacement of property and other property expenditures approved by HUD. HUD restricted deposits as of June 30, 2016 and 2016 amounted to 222,785 and 248,158, respectively for the replacement reserve account. As of June 30, 2016 and 2015 the residual receipts amounted to 326,290 and 0 respectively. NOTE 6 - UNRESTRICTED NET ASSETS None of the project's net assets are subject to donor imposed restrictions. Accordingly, all net assets are accounted for as unrestricted net assets under ASC NOTE 7 - RESIDENT FEES INCREASES The units of Mathison Retirement, Inc. are subject to affordability requirements as a condition of the financing agreement Certified Public ants

15 NOTES TO FINANCIAL STATEMENTS Mathison Retirement Community, Inc. Project No Panama City, Florida June 30, 2016 and 2015 NOTE 8 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS The Project's operations are concentrated in the multifamily real estate market. In addition, the Project operates in a regulated environment. The operations of the Project are subject to the administrative directives, rules and regulations offederal, state, and local regulatory agencies, including, but not limited to, HUD. Such administrative directives, rules and regulations are subject to change by an act of congress or an administrative change mandated by HUD. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change Certified Public ants

16 Supplementary Information Certified Public ants

17 SUPPLEMENT AL DAT A REQUIRED BY HUD Mathison Retirement Community, Inc. Project No Panama City, Florida June 30, 2016 and 2015 SCHEDULE 1 - RESERVE FOR REPLACEMENTS In accordance with the provisions of the regulatory agreement, restricted cash is escrowed to be used for replacement of property with the approval of HUD as follows: Balance June 30, 2015 Reserve credit Monthly deposits HUD approved withdrawals Interest earned, net charges Balance, June 30, ,158 26,102 60,804 (112,434) ,785 The replacement reserve account is maintained by the mortgagee. SCHEDULE 2 - RESIDUAL RECEIPTS Balance, June 30, 2015 Surplus cash deposit Interest earned Required deposits Balance, June 30, , , Certified Public ants

18 SUPPLEMENTAL DATA REQUIRED BY HUD Mathison Retirement Community Project No Panama City, Florida As of June 30, SCHEDULE 3 - CHANGES IN PROPERTY, PLANT AND EQUIPMENT Balance 6/30/2015 Additions Cost Balance Balance Deductions 6/30/ /30/2015 Accumulated Depreciation Additions Deductions Balance 6/30/2016 Net Book 6/30/2016 Land and improvements 1,480,000 Building 10,381,380 9,569 Building equipment-portable 126, ,733 Automobile 69,719 Capital lease assets 13,624 1,480,000 10,390, , ,151 10, ,719 12,610 13,624 1, ,543 22,989 13,944 1, ,545 33,644 26,554 2,724 1,480,000 9,861, ,507 43,165 10,900 12,071, ,302 12,226, ,629 ======= 311,838 ==== ==5=9=2,=46=7= 11,633,976 Cooke, Cameron, Travis and Compnay, P.C. Certified Public ants -15-

19 Computation of Surplus Cash, Distributions and Residual Receipts Section 232 U.S. Department of Housing and Urban Development Office of Residential Care Facilities 0MB Approval No (exp. 06/30/2017) Public reporting burden for this collection of infonnation is estimated to average 0.5 hour(s). This includes the time for collecting, reviewing, and reporting the data. The infonnation is being collected to obtain the supportive documentation which must be submitted to HUD for approval, and is necessary to ensure that viable projects are developed and maintained. The Department will use this infonnation to detennine if properties meet HUD requirements with respect to development, operation and/or asset management, as well as ensuring the continued marketability of the properties. This agency may not collect this infonnation, and you are not required to complete this fonn, unless it displays a currently valid 0MB control number. Warning: Any person who knowingly presents a false, fictitious, or fraudulent statement or claim in a matter within the jurisdiction of the U.S. Department of Housing and Urban Development is subject to criminal penalties, civil liability, and administrative sanctions. Project Name: Mathison Retirement Fiscal Period Ended: 06/30/16 FHA Project Number: Community Cash 1. Cash(s1120,1170, 1191) 668, Medicare/Medicaid Receivables to be received within 60 days 0 and not encumbered by s Receivable Financing ( optional for non- rofit ro ects 3. Other (describe) Escrow for Non-Critical Repairs to be 0 reimbursed (a) Total Cash (Add Lines 1, 2 and 3) Current Obli ations 4. Accrued Mortgage Interest Payable 25, Delinquent Mortgage Principal Payments 0 6. Delinquent Deposits to Reserve for Replacements 0 7. s Payable (due within 30 days) 58, Loans and Notes Payable (due within 30 days) 8, Deficient Tax Insurance or MIP Escrow Deposits Accrued Expenses (not escrowed) 117, Prepaid Revenue ( 2210) 65, Tenant Security Deposits Liability ( 2191) 21, Other (describe) Payroll Withholdings 0 (b) Total Current Obligations (add Lines 4 through 13) (c) Surplus Cash (Deficiency) (Line 3(a) minus Line 13(b)) 1. Amount Available for distribution during next fiscal period (Non-profit project) (as allowed er the re lato a eement Preparer (Signature, Name and Title): Date: 372, , Certified Public ants

20 SCHEDULES OF ASSISTED LNING, BOARD AND CARE. AND OTHER ELDERLY CARE REVENUES Mathison Retirement Community, lnc. Project No Panama City, Florida For the years ended June 30, 2016 and 2015 Assisted living/board and care and other elderly care revenues Private pay room and board Contractual adjustments Food Laundry and linen Other service revenue Number ,607,302 10,542 14,402 4,071 43, ,606,876 (7,656) 16,466 4,773 88,448 Total assisted living/board and care and other elderly care revenues 5300T 3,680,174 3,708, Certified Public ants

21 SCHEDULES OF COSTS OF OPERATIONS BEFORE DEPRECIATION Mathison Retirement Community, Inc. Project No Panama City, Florida Administrative expenses Advertising and marketing Office salaries Office expenses Management fees Professional fees Litigation losses and settlements Computer expense Travel expense License fees/membership dues Employee benefits and awards Total administrative expenses Utilities Electricity Water Gas Total utilities Operating and maintenance expenses Payroll Garbage and trash removal Vehicle and maintenance equipment operation and repairs Lease expense Telephone Cable Repairs and maintenance - pool Pest control Repairs and maintenance - building Repairs and maintenance - equipment Furnishings and decorations Grounds upkeep Fire alarm repair and inspection Employee benefits and awards Total operating and maintenance expenses Taxes and insurance Payroll taxes Property and liability insurance Workmen's compensation Health insurance and other employee benefits Miscellaneous taxes, licenses, permits and insurance Total taxes and insurance For the years ended June 30, 2016 and 2015 Number ,172 3, , , ,8 18 5, , , ,059 4, , ,743 17, , ,513 7, T 439, , , , ,090 31, ,209 11, T 193, , , , ,461 5, ,104 2, ,602 8, ,682 14, ,571 27, ,134 2, ,358 3, ,378 3, , , , ,415 23, , T 190, , ,514 93, , , ,511 35, , , ,790 85, T 393, , Certified Public ants

22 SCHEDULES OF COSTS OF OPERATIONS BEFORE DEPREClA TION - CONTINUED Mathison Retirement Community, Inc. Project No Panama City, Florida For the years ended June 30, 2016 and 2015 Financial expenses Interest on mortgage payable Total financial expenses Number T , , , ,531 Assisted living/board and care expenses Dietary salaries , ,205 Food Dietary supplies ,256 58, ,898 35,255 License Practical Nurses payroll , ,664 Other nursing salaries , ,160 Housekeeping salaries Housekeeping supplies ,296 8,012 60,798 9,359 Medical supplies ,447 20,220 Pharmacy purchased services Other service expenses ,735 5,442 11,826 Total assisted living/board and care expenses 6900T 1,376,763 1,202,385 Total cost of operations before depreciation and amortization 6000T 2,905,610 2,726, Certified Public ants

23 SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS Mathison Retirement Community, Inc. Project No Panama City, Florida Program Title Section 232 Insured Loan Total Federal CFDA Number June 30, 2016 and 2015 Expenditures 7,478,184 7,478, Certified Public ants

24 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS Mathison Retirement Community, Inc. Project No Panama City, Florida June30,2016 and 2015 Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal grant activity of Mathison Retirement Community, Inc, HUD Project No and is presented on the accrual basis of accounting. The information in this Schedule is presented in accordance with the requirements of 0MB Uniform Guidance: Cost Principles,, Audit, and Administrative Requirements for Federal Awards. Therefore, some amounts presented in this chedule may differ from amounts presented in, or used in the preparation of, the basic financial statements Certified Public ants

25 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Mathison Retirement Community, Inc. Project No Panama City, Florida June 30, 2016 and 2015 NONE -22- Certified Public ants

26 Certified Public ants 2109 DEVEREUX CIRCLE BIRMINGHAM,ALABAMA35243 PHONE (205) FACSIMILE (205) MICHAEL W. COOKE, C.P.A. DENNIS R. CAMERON, C.P.A. W. GERALD TRAVIS, C.P.A. MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ALABAMA SOCIETY OF C.P.A.s INDEPENDENT AUDITORS' 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 To the Board of Trustees Mathison Retirement Community, Inc. Panama City, Florida We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of Mathison Retirement Community, Inc., which comprise the statement of financial position as of June 30, 2016, and the related statements of activities, changes in net assets, and cash flows for the year then ended, and the related notes to the financial statements and have issued our report thereon August 30, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Mathison Retirement Community, Inc. 's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Mathison Retirement Community, Inc. 's internal control. Accordingly, we do not express an opinion on the effectiveness of the Mathison Retirement Community, Inc. 's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Mathison Retirement Community, Inc. ' s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control, that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether Mathison Retirement Community, Inc.' s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of Jaws, regulations, contracts, and grant agreements, noncompliance with which could have a material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. -23-

27 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Mathison Retirement Community, Inc.'s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Mathison Retirement Community, Inc. 's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Lk 1 ~,,,--n.w,~ ~ Cooke, Cameron, Travis and Company, P. C. \ Birmingham, Alabama August 30, 2016 W(j\='. c_ Certified Public ants

28 MICHAEL W. COOKE, C.P.A. DENNIS R. CAMERON, C.P.A. W. GERALD TRAVIS, C.P.A. Certified Public ants 2109 DEVEREUX CffiCLE BIRMINGHAM, ALABAMA PHONE (205) FACSIMILE (205) MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ALABAMA SOCIETY OF C.P.A.s INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Trustees Mathison Retirement Community, Inc. Panama City, Florida Report on Compliance for Each Major Program We have audited Mathison Retirement Community, Inc. ' s compliance with the types of compliance requirements described in the 0MB Compliance Supplement that could have a direct and material effect on each of Mathison Retirement Community, Inc. ' s major federal program for the year ended June 30, Mathison Retirement Community, Inc. 's major federal program is identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of Jaws, regulations, contracts and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for Mathison Retirement Community, Inc.'s major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Mathison Retirement Community, lnc.'s compliance with those requirements and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for its major federal program. However, our audit does not provide a legal determination of Mathison Retirement Community, Inc. 's compliance. Opinion on Each Major Program In our opinion, Mathison Retirement Community, Inc. complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on its major Federal program identified above for the year ended June 30,

29 Report on Internal Control Over Compliance Management of Mathison Retirement Community, Inc.is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Mathison Retirement Community, Inc.'s internal control over compliance with the types of requirements that could have a direct and material effect on its major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for its major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Mathison Retirement Community, Inc.'s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirements of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit the attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material wealmesses, as defined above. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. ~, ~:r;j.,?~.h~~ ~~?.c.. Cooke, Cameron, Travis and Company, P. C. "{ ~ Birmingham, Alabama August 30, Certified Public ants

30 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Mathison Retirement Community, Inc. Project No Panama City, Florida June30,2016 and2015 Summary of Audit Results 1. The auditors' report expresses an unqualified opinion on the financial statements of Mathison Retirement Community, Inc. 2. No material weaknesses were identified during the audit of the financial statements. 3. No instances of noncompliance material to the financial statements of Mathison Retirement Community, Inc. were disclosed during the audit. 4. No material weaknesses were identified during the audit of the major federal award programs. 5. The auditors' report on compliance for the major federal award programs for Mathison Retirement Community, Inc. expresses an unqualified opinion. 6. Audit findings that are required to be reported in accordance with Section I 6(a) ofomb Uniform Guidance are reported in this Schedule. 7. The program tested as a major program was a Section 232 Insures Loan (14.129). 8. The threshold for distinguishing Types A and B programs was 750,000. Findings - Financial Statements Our Audit disclosed no findings that are required to be reported herein under the HUD Consolidated Audit Guide. Findings and Questioned Costs Major Federal Award Programs Audit Our Audit disclosed no findings that are required to be reported herein under the HUD Consolidated Audit Guide Certified Public ants

31 CERTIFICATION OF OFFICERS We hereby certify that we have examined the accompanying financial statements and supplemental data of Mathison Retirement Community, Inc. ( ) and, to the best of our knowledge and belief, they are a true statement of financial condition as of June 30, Title -28- Certified Public ants

32 MANAGING AGENT'S CERTIFICATION We hereby certify that we have examined the accompanying financial statements and supplemental data of Mathison Retirement Community, Inc. and to the best of our knowledge and belief, the same is complete and accurate. Christopher Tomlin, the President of the Methodist Homes for the Aging is responsible for the management of Mathison Retirement Community, Inc. and Mary Davis is the on site manager. Methodist Home for the Aging's tax l.d. Number is Methodist Homes for the Aging c--. ~- ~ - By: Christopher Tomlin, President -29- Certified Public ants

33 MICHAEL W. COOKE, C.P.A. DENNIS R. CAMERON, C.P.A. W. GERALD TRAVIS, C.P.A. Certified Public ants 2109 DEVEREUX CIRCLE BIRMINGHAM, ALABAMA PHONE (205) FACSIMILE (205) MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ALABAMA SOCIETY OF C.P.As INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURE To the Board of Trustees Mathison Retirement Community, Inc. Panama City, Florida We have performed the procedure described in the second paragraph of this report, which was agreed to by Mathison Retirement Community, Inc. and the U.S. Department of Housing and Urban Development, Public Indian Housing - Real Estate Assessment Center (PIH-REAC), solely to assist them in determining whether electronic submission of certain information agrees with the related hard copy documents included in the 0MB Uniform Guidance reporting package. Mathison Retirement Community, Inc. is responsible for accuracy and completeness of the electronic submission. This agreed-upon procedure engagement was conducted in accordance with the attestation standards established by the American Institute of Certified Public ants and the standards applicable to attestation engagements contained in Government Auditing Standards i sued by the Comptroller General of the United States. The sufficiency of the procedure is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. We compared the electronic submission of the items listed in the "UFRS Rule Information" column with the corresponding printed documents listed in the "Hard Copy Documents" column. The results of the performance of our agreed-upon procedure indicate agreement of the electronic submitted information and hard copy documents as shown in the attached chart. We were engaged to perform an audit in accordance with the audit requirements of Title 2 U.S. Code of the Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Rewards (Uniform Guidance), by Mathison Retirement Community, Inc. as of and for the year ended June 30, 2016, and have issued our report thereon dated August 30, The information in the "Hard Copy Documents" column was included within the scope, or was a by-product of that audit. Further, our opinion on the fair presentation of the supplemental financial data templates dated August 30, 2016 was expressed in relation to the basic financial statements of Mathison Retirement Community, Inc. taken as a whole. A copy of the reporting package required by Uniform Guidance, which includes the auditor' s reports, is available in its entirety from Mathison Retirement Community, Inc. We have not performed any additional procedures since the date of the aforementioned audit reports. Further, we take no responsibility for the security of the information transmitted electronically to the U.S. Department of Housing and Urban Development, PIH-REAC. This report is intended solely for the information and use of Mathison Retirement Community, Inc. and the U.S. Department of Housing and Urban Development, PIH-REAC, and is not intended to be and should not be used by anyone other than these specified parties. ~. ~,J *"'\ I f-r."7\1 /J.G Cooke, Cameron, Travis & Company, P~CJ ~ August 31,

34 Mathison Retirement Community, Inc. Project No Panama City. Florida June 30, and2015 ATTACHMENT TO INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURE UFRS Rule Information Hard Copy Document(s) Findine:s Balance Sheet, Revenue and Expense and Cash Supplementary Schedules with Financial Agrees Flow data ( account numbers 1120 to 71 OOT and Statement Data the Sl200 Series) Surplus cash (S 1300 series accounts) Computation of Surplus Cash, Distributions, and Agrees Residual Receipts (Annual) Footnotes (S3100 series of accounts) Footnotes to the audited Financial Statements Agrees Type of opinion on the Financial Statement and Auditors' Reports on the Financial Statements, Agrees Auditor Reports (S3400, S3500 and S3600 series Compliance and Internal Control of accounts) Type of opinion on Supplemental Data (account Auditor's Report on Supplementary Information Agrees S ) Audit findings narrative (S3800 series of Schedule of Findings and Questioned Costs Agrees accounts) General Information (S3300, S3700 and S3800 Schedule of Findings and Questioned Costs and Agrees series of accounts) Federal Award Data Certified Public ants

35 Financial Statement Electronic Submission Certified Public ants

36 8/31/2016 AFS Submission Annual Financial Statement Electronic Submission U.S. Department of HousinA and Urban Development Public Indian Housing - Real Estate Assessment Center (PIH-REAC) Owner: Mathison Retirement Community, Inc. Reporting From: 07/01/2015 FHA/Contract Number(s): TIN : ' Reporting To : 06/30/2016 Submission Type: AUD-OMS N T T T 1495 Assets Cash - Operations Tenant/Member s Receivable (Coops) Net Tenant s Receivable s and Notes Receivable - Operations Detail - s and Notes Receivable - Operations Type of Receivable Insurance refund Miscellaneous Detail for Amount - Miscellaneous Detail for 1140 Inventory Details - Other Reserves Other Reserves Detail Prepaid Expenses Total Current Assets Tenant/Patient Deposits Held in Trust Escrow Deposits Replacement Reserve Other Reserves Residual Receipts Reserve Total Deposits Land Buildings Building Equipment (Portable) Motor Vehicles Miscellaneous Fixed Assets Total Fixed Assets Accumulated Depreciation Property insurance reimbursement 6,942 Assets Repair escrow 7, , , ,181 6,942 5, , ,901 27, , ,785 7, , ,298 1,480,000 10,390, ,151 69,719 13,624 12,226, , /15

37 8/31/ N T 1000T T T 2000T T T 5152N Net Fixed Assets Deferred Financing Costs Total Other Assets Total Assets s Payable - Operations s Payable - Entity Accrued Wages Payable Accrued Payroll Taxes Payable Accrued Interest Payable - First Mortgage ( or Bonds) Mortgage (or Bonds) Payable - First Mortgage (Bonds) (Short Term) Prepaid Revenue Total Current Liabilities Tenant/Patient Deposits Held In Trust (Contra) Mortgage (or Bonds) Payable - First Mortgage ( or Bonds) Total Long Term Liabilities Total Liabilities Unrestricted Net Assets Total Net Assets Total Liabilities and Equity/Net Assets Rent Revenue - Gross Potential Total Rent Revenue Net Rental Revenue (Rent Revenue Less Vacancies) AFS Submission Liabilities Net Assets Rent Revenue Vacancies 5300 Revenue 5300 Nursing Homes/ Assisted Living/Board & Care/Other Elderly Care/Coop/ and Other Revenues Financial Revenue Financial Revenue - Project Operations Revenue from Investments - Residual Receipts Revenue from Investments - 11,633, , ,169 13,524,977 58,050 42, ,294 1,563 25, ,676 65, ,577 21,000 7,370,508 7,370,508 7,808,085 5,716,892 5,716,892 13,524, ,680, ect_afs_header_id= &submission_project_id= &submission_type_refj... 2/15