MATHISON RETIREMENT COMMUNITY, INC. PROJECT NO… District/AL Mathison Retirement... · MATHISON...

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MATHISON RETIREMENT COMMUNITY, INC.

PROJECT NO. 063-22066

FINANCIAL STATEMENT

JUNE 30, 2017 AND 2016

Mathison Retirement Community, Inc. Project No. 063-22066 Panama City, Florida

Independent Auditors' Report

Financial Statements

Statements of Financial Position

Statements of Activities

TABLE OF CONTENTS

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 A wards

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 Accountants' Report on Applying Agreed-Upon Procedure

Financial Statement Electronic Submission

June 30, 2017 and 2016

Page Number

1-2

3-4

5-6

7

8-9

10-13

14-15

16

17

18-19

20

21

22

23-24

25-26

27

28

29

30-32

33-47

COOKE, CAMERON, TRAVIS & COMPANY, P.C. Certified Public Accountants

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COOKE, CAMERON, TRAVIS & COMPANY, P.C.

MICHAEL W. COOKE, C.P.A. DENNIS R. CAMERON, C.P.A.

W. GERALD TRAVIS, C.P.A.

To the Board of Trustees Mathison Retirement Community, Inc. Panama City, Florida

Report on the Financial Statements

Certified Public Accountants 2109 DEVEREUX CIRCLE

BIRMINGHAM, ALABAMA 35243 PHONE (205) 967-0101

FACSIMILE (205) 967-0401

INDEPENDENT AUDITORS' REPORT

MEMBERS AMERICAN INSTITUTE OF

CERTIFIED PUBLIC ACCOUNTANTS ALABAMA SOCIETY OF C.P.A.s

We have audited the accompanying financial statements of Mathison Retirement Community, Inc. HUD Project No.063-22066, which comprise the statement of financial position as of June 30, 2017 and 2016, and the related statement of activities, changes in net assets and cash flows 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.

Auditors' Responsibility

Our responsibility is to express an opinion on these fmancial 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 fmancial 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 fmancial 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 or.der 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 fmancial 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 fmancial statements referred to above present fairly, in all material respects, the financial position of Mathison Retirement Community, Inc. as of June 30, 2017 and 2016, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

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Other Matters

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplemental information shown on pages 14 to 22 is presented for purposes 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 purposes of additional analysis and is not a required part of the financial statements. The information has been subjected to the auditing principles 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 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 September 15, 2017 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 purpose 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

(i ~ ( '!..Ju, ~' I A4v.~: l._.p~ ~- L.-. Cooke, Cameron, Travis and Company, P.C. \ _ , Birmingham, Alabama ·"' \ September 15, 2017 \J

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STATEMENTS OF FINANCIAL POSITION

Mathison Retirement Community Project No. 063-22066 Panama City, Florida

ASSETS Account Number 2017 2016

Current assets Cash - operations 1120 $ 740,266 $ 641,071 Accounts receivable

Tenants 1130 384 34,181 Other 1140 6,942

Prepaid expenses 1200 125,142 133,684 Inventory 1210 8,338 5,023

Total current assets 1100T 874,130 820,901

Deposits held in trust-security deposits 1191 44,978 27,633

Restricted deposits and funded reserves Escrow deposits 1310 112,047 113,122 Reserve for replacement 1320 277,618 222,785 Other reserves 1330 7,101 7,101 Residual receipts reserve 1340 326,453 326,290

Total restricted deposits and funded reserves 1330T 723,219 669,298

Fixed assets (Notes 1 and 2) Land and improvements 1410 1,480,000 1,480,000 Building 1420 10,472,328 10,390,949 Building equipment - portable 1440 295,647 272,151 Automobile 1480 69,719 69,719 Capital lease assets 1490 13,624 13,624

1400T 12,331,318 12,226,443 Less: accumulated depreciation 1495 (913,696) (592,467)

Total fixed assets 1400N 11,417,622 11,633,976

Total assets 1000T $ 13,059,949 $ 13,151,808

See accompanying notes to financial statements

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STATEMENTS OF FINANCIAL POSITION

Current liabilities Current portion oflong-tenn liability (Note 2) Accounts payable

Trade Entity

Accrued expenses Interest Salaries Payroll taxes

Prepaid revenue

Total current liabilities

Deposit liabilities Tenant security

Long-tenn liabilities

Mortgages payable, less current portion (Note 2) Deferred loan cost and organization costs,

net of amortization (Note 1) Total long tenn liabilities net of deferred loan cost

Net Assets Unrestricted net assets

Total net assets

Total liabilities and net assets (deficit)

As of June 30, 2017 and 2016

LIABILITIES Account Number 2017 2016

2170 $ 103,054 $ 107,676

2110 81,479 58,050 2113 58,876 42,098

2131 25,862 2120 112,144 116,294 2121 90 1,563 2210 82,093 65,034

2122T 437,736 416,577

2191 23,351 21,000

2320/2322 7,258,277 7,370,508

1500T {361,860~ {373,169~ 2300T 6,896,417 6,997,339

3131 5,702,445 5,716,892

3130T 5,702,445 5,716,892

2033T $ 13,059,949 $ 13,151,808

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STATEMENTS OF ACTIVITY

Mathison Retirement Community

n Project No. 063-22066 For the years ended Panama City, Florida June 30, 2017 and 2016

Account Number 2017 2016

Revenue Assisted living revenue 5300 $ 3,736,852 $ 3,680,174 Financial revenue

Operations 5410 19 10 Residual receipts 5430 163 139

n Replacement reserve and escrows 5440 125 155

Total financial revenue 5400T 307 304

Total revenue 5000T 3,737,159 3,680,478

Cost of operations before depreciation and amortization Administrative 6263T 485,844 439,195 Utilities 6400T 210,872 193,406 Operating and maintenance 6500T 219,006 190,702 Taxes and insurance 6700T 392,864 393,220 Interest expense 6800T 319,248 312,324 Assisted living 6900T 1,360,947 1,376,763

Total cost of operations before depreciation and amortization 6000T 2,988,781 2,905,610

Change in net assets before depreciation and amortization 5060T 748,378 774,868

Depreciation 6600 321,228 311,838 Amortization 6610 11,308

Change in net assets (deficit) 5060N $ 427,150 $ 451,722


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STATEMENTS OF ACTNITIES-CONTINUED


Total mortgage principal payments (12) required during the audit year Additional mortgage principal payment (1) during audit year

Total mortgage principal payments for year ending June 30, 2017

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.

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.


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$

$

$

$

$

For the years ended June 30, 2017 and 2016

2017 2016

107,676 $ 103,306 9,177

116,853 $ 103,306

60,804 $ 60,804

$

$


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STATEMENTS OF CHANGES IN NET ASSETS <DEFICIT)


Beginning balance

Surplus cash (withdrawal)

Change in net assets (deficit)

Ending balance


$

$

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2017

5,716,892

(441,597)

427,150

5,702,445


$

$

2016

5,713,167

(447,997)

451,722

5,716,892


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STATEMENTS OF CASH FLOW Mathison Retirement Community Project No. 063-22066 Panama City, Florida

Cash flows from operating activities Receipts

Assisted living Interest

Total receipts

Disbursements Administrative Management fees Utilities Payroll taxes Operating and maintenance Payrolls Interest on building Miscellaneous tax and insurance Property insurance Assisted living

Total disbursements

Net cash provided by operating activities

Cash flows from investing activities Increase/decreases in security deposits funded over liability 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

Net cash (used in) provided by investing activities

Cash flows from financing activities Mortgage principal payments Surplus cash withdrawal

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

Cash at beginning of year Operation

Cash at end of year


2017

$ 3,794,956 307

3,795,263

83,592 223,102 204,299

91,056 159,801

1,208,702 333,801 138,435 156,962 364,080

2,963,830

831,433

(14,994) (54,833)

(163) 1,075

(104,875)

(173,790)

(116,853) (441,595)

(558,448)

99,195

641,071

$ 740,266

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2016

$ 3,660,466 304

3,660,770

81,955 218,882 193,406 91,449

215,294 1,185,046

312,681 129,314 176,228 376,976

2,981,231

679,539

(2,735) 25,373

(326,290) 314,765

(155,302)

(144,189)

(103,306) (447,997)

(551,303)

(15,953)

657,024

$ 641,071


n STATEMENTS OF CASH FLOW - CONTINUED


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

Decrease (increase) in Inventory Prepaid expenses Accounts receivable

Residents

Increase (decrease) in Accounts payable Accrued expenses

Payroll tax Interest Payroll Prepaid revenue

Net cash provided by operating activities


2017

$ 427,150

321,228 11,308

(3,315) 8,542

40,739

40,207

(1,473) (25,862) (4,150) 17,059

$ 831,433

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2016

$ 451,722

311,838 11,308

2,001 (2,836)

(41,123)

(85,648)

(935) (357)

12,154 21,415

$ 679,539


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Mathison Retirement Community, Inc. Project No. 063-22066 Panama City. Florida

NOTES TO FINANCIAL STATEMENTS

NOTE l - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

June 30, 2017 and 2016

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, 2012. The corporation qualifies as an entity exempt from income taxes under Internal Revenue Code section 50l(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 $7,672,500 HUD Section 232 Insured Loan and receiving $5,034,318 in capital contributions (equity in real estate in excess of the loan) from Methodist Homes for the Aging. Loan proceeds were used to retire existing indebtedness, fund repairs and reserves required as a condition of the loan and pay debt 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 the sponsor. Depreciation is provided at rates intended to distribute cost of fixed assets over their estimated useful lives as follows:

Description 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 o:ffby 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.

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NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash Equivalents

June 30, 2017 and 2016

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, 2017 there were no cash equivalents. Amounts are insured by the Federal Insurance Corporation up to $250,000. Mathison Retirement Community, lnc.'s uninsured balances at June 30, 2017 amounted to $534,744.

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 September 15, 2017, which is the date the fmancial statements were available to be issued.

NOTE 2 - MORTGAGE

Mortgages payable, and backed by HUD Section 232 as of June 30, 2017 are as follow:

4.15% Mortgage payable to Walker & Dunlop, LLC; $34,664 payable monthly; maturity date June 18, 2049; insured by HUD; collateralized by the real estate.

Less Current Portion

Net Long Term Debt

Thirteen payments were made in the fiscal year June 30, 2017.

Principal amounts due in the next five years are as follows:

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$7,361,331

103,054

$7,258.277

2018 2019 2020 2021 2022

Thereafter

$7,478,184

107,676

$7,370.508

$ 103,054 116,978 121,926 127,083 132,458

6,759,832

$7,361,331


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NOTE3-RELATEDPARTIES

June 30, 2017 and 2016

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, 2017, and 2016 the management fee amounted to $223,102 and $218,882, 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, 2017 and 2016 amounted to $277,618 and $222,785, respectively for the replacement reserve account. As of June 30, 2017 and 2016, the residual receipts amounted to $326,453 and $326,290 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 958-205.

NOTE 7 - RESIDENT FEES INCREASES

The units of Mathison Retirement, Inc. are subject to affordability requirements as a condition of the financing agreement.

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 of federal, 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.

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n NOTES TO FINANCIAL STATEMENTS

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Mathison Retirement Community, Inc. Project No. 063-22066 Panama City, Florida June 30, 2017 and 2016

NOTE 9 - DEBT ISSUANCE COSTS

For the year ended June 30, 2017, Mathison Retirement Community, Inc. retroactively adopted the requirements of F ASB ASC 835-30 to present debt issuance costs as a reduction in the carrying amount of debt rather than as a other asset, subject to amortization. Long term debt as of June 30, 2016 was previously reported in the Statement of Financial Position as $7,370,508, with the associated $373,169 of unamortized deferred loan costs included in other assets. Upon adoption ofFASB ASC 835-30, amortization of debt issuance costs (formerly deferred loan costs) is reported as interest expense. As of June 30, 2017, interest was reported, including the current amortization below, in the amount of$319,248.

Debt issuance costs consist of fees and related costs of obtaining a mortgage loan with HUD backing and are being amortized on a straight-line basis over the life of the mortgage.

2017 2016

Prepaid Loan Costs $407,283 $407,283

Amortization Prior 34,114 22,805 Current 11,309 11,309 Total 45,423 34,114

Net Costs $361,860 $373,169

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SUPPLEMENTAL DATA REQUIRED BY HUD

SCHEDULE 1 - RESER VE FOR REPLACEMENTS

June 30, 2017 and 2016

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, 2016 Monthly deposits ( 13 months) HUD approved withdrawals Interest earned

Balance, June 30, 2017

The replacement reserve account is maintained by the mortgagee.

SCHEDULE 2 - RESIDUAL RECEIPTS

Balance June 30, 2016 Interest Earned

Balance, June 30, 2017

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$ 222,785 65,871

(11,163) 125

$ 277.618

$ 326,290 163

$ 326,453


Mathison Retirement Community Project No. 063-22066 Panama Ci!l'.,_ Florida

SCHEDULE 3 - CHANGES IN PROPERTY, PLANT AND EQUIPMENT

Cost Balance

6/30/2016 Additions

Land and improvements $ 1,480,000 $ Building 10,390,949 81,379 Building equipment-portable 272,151 23,496 Automobile 69,719 Capital lease assets 13,624

$ 12.d26,443 $ 104,875

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SUPPLEMENTAL DAT A REQUIRED BY HUD

Balance Balance Deductions 6/30/2017 6/30/2016

$ $ 1,480,000 $ 10,472,328 529,545

295,647 33,644 69,719 26,554

_ ___!J_,624 2,724

$ $ _ ___g,331,318 592.467 $ - - -,

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$

$

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Accumulated D.!:(!reciation

Additions Deductions

$ 277,533

28,389 13,944

__ l,362

321,228 $ ===

$

$

Balance 6/30/2017

807,078 62,033 40,499

4,086

913,696 =

As of June 30, 2017

Net Book Value

6/30/2017

$ 1,480,000 9,665,250

233,614 29,220

9,538

$ 11,417,622

Cooke, Cameron, Travis and Compnay, P.C. Certified Public Accountants

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Computation of Surplus Cash, Distributions and Residual Receipts

U.S. Department of Housing and Urban Development

Office of Residential Care Facilities

0MB Approval No. 2502-0605 (exp. 06/30/2017)

Section 232

Public reporting burden for this collection of information is estimated to average 0.5 hour(s). This includes the time for collecting, reviewing, and reporting the data. The information 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 information to determine 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 information, and you are not required to complete this form, unless ii 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.

Fiscal Period Ended: 06/30/17 FHA Project Number: 063-22066

Cash 1. Cash (Accounts 1120, 1170, 1191) $

2. Medicare/Medicaid Receivables to be received within 60 days and not encumbered by Accounts Receivable Financing ( optional for non- rofit ro · ects $

3. Other (describe) Escrow for Non-Critical Repairs to be $

reimbursed (a) Total Cash (Add Lines 1, 2 and 3)

Current Obli ations 4. Accrued Mortgage Interest Payable $

5. Delinquent Mortgage Principal Payments $

6. Delinquent Deposits to Reserve for Replacements $

7. Accounts Payable (due within 30 days) $

8. Loans and Notes Payable (due within 30 days) $

9. Deficient Tax Insurance or MIP Escrow Deposits $

10. Accrued Expenses (not escrowed) $

11. Prepaid Revenue (Account 2210) $

12. Tenant Security Deposits Liability (Account 2191) $

13. Other (describe) Payroll Withholdings $

(b) Total Current Obligations (add Lines 4 through 13)

(c) Surplus Cash (Deficiency) (Line 3(a) minus Line 13(b))

785,244

0

0

0

0

0

81,479

0

0

112,234

82,093

23,351

0

ts 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: Approver (Signature, Name and Title):

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486,087

486,087

Date:


SCHEDULES OF ASSISTED LIVING, BOARD AND CARE, AND OTHER ELDERLY CARE REVENUES

Mathison Retirement Community, Inc.

n Project No. 063-22066 For the years ended Panama City, Florida June 30, 2017 and 2016

Account Number 2017 2016 Assisted living/board and care and other elderly care revenues

Private pay room and board 5301 $ 3,711,733 $ 3,607,302 Application fees 5390 5,800 Contractual adjustments 5303 (40,621) 10,542

n Donations 5331 13,065 I Food 5332 7,672 14,402

Laundry and linen 5370 2,910 4,071 Other service revenue 5390 36,293 43,857

Total assisted living/board and care and other elderly care revenues 5300T $ 3,736,852 $ 3,680,174

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n SCHEDULES OF COSTS OF OPERATIONS BEFORE DEPRECIATION

Mathison Retirement Community, Inc. Project No. 063-22066 For the years ended Panama City, Florida June 30, 2017 and 2016

Account Number 2017 2016 Administrative expenses

Advertising and marketing 6210 $ 18,315 $ 9,172 Office salaries 6310 168,431 138,358 Office expenses 6311 7,675 7,818 Management fees 6320 223,102 218,882 Professional fees 6390 21,219 31,059 Computer expense 6390 33,889 20,743 Travel expense 6390 769 8,650 License fees/membership dues 6390 10,713 4,513 Employee benefits and awards 6390 1,731

Total administrative expenses 6263T 485,844 439,195

Utilities Electricity 6450 142,647 130,107 Water 6451 53,989 51,090 Gas 6452 14,236 12,209

Total utilities 6400T 210,872 193,406

Operating and maintenance expenses Payroll 6510 64,999 61,056 Garbage and trash removal 6525 5,094 7,461 Vehicle and maintenance equipment operation and repairs 6570 2,658 4,104 Lease expense 6580 8,382 8,602 Telephone 6590 11,040 12,682 Cable 6590 29,276 30,571

n Repairs and maintenance - pool 6590 6,479 1,134 Pest control 6590 4,447 4,358 Repairs and maintenance - building 6590 19,108 7,378 Repairs and maintenance - equipment 6590 27,260 23,160 Furnishings and decorations 6590 2,736 Grounds upkeep 6590 38,208 27,415 Fire alarm repair and inspection 6590 Employee benefits and awards 6590 2,055 45

Total operating and maintenance expenses 6500T 219,006 190,702

Taxes and insurance n Payroll taxes 6711 89,584 90,514 Property and liability insurance 6720 108,376 128,602 Workmen's compensation 6722 49,427 40,511 Health insurance and other employee benefits 6723 97,550 88,803 Miscellaneous taxes, licenses, permits and insurance 6790 47,927 44,790

Total taxes and insurance 6700T 392,864 393,220

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SCHEDULES OF COSTS OF OPERATIONS BEFORE DEPRECIATION - CONTINUED

Mathison Retirement Community, Inc.

n Project No. 063-22066 For the years ended Panama Ci~, Florida June 30, 2017 and 2016

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Account Number 2017 2016 Financial expenses

Interest on mortgage payable 6810 319,248 312,324 Total financial expenses 6800T 319,248 312,324

Assisted Jiving/board and care expenses

Dietary salaries 6930 279,171 307,932

Food 6932 279,251 272,256

Dietary supplies 6933 60,138 58,085

License Practical Nurses payroll 6941 183,259 220,036

Other nursing salaries 6942 447,608 398,522

Housekeeping salaries 6950 61,074 71,296

Housekeeping supplies 6951 22,143 8,012

Medical supplies 6963 12,900 9,447

Pharmacy purchased services 6967 25,735

Other service expenses 6990 15,403 5,442

Total assisted living/board and care expenses 6900T 1,360,947 1,376,763

Total cost of operations before depreciation

and amortization 6000T $ 2,988,781 $ 2,905,610 -

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SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS


Program Title

Section 232 Insured Loan

Total

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Federal CFDA

Number

14.129

June 30, 2017

Expenditures

$ 7,361,331

$ 7,361,331


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NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS


Basis of Presentation

June 30, 2017 and 2016

The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal grant activity of Mathison Retirement Community, Inc, HUD Project No. 063-22066 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 schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.

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SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


NONE

June 30. 2017 and 2016

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Certified Public Accountants 2109 DEVEREUX CffiCLE


FACSIMILE (205) 967-0401



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 35603

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, 2017, 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 September 15, 2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Mathison Retirement Community, lnc.'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 laws, 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.

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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.

~' (v.f-.PAW-·'~·!. ~ ~A- ~ Cooke, Cameron, Travis and Company, P. C. J ~ Birmingham, Alabama September 15, 201 7

.L

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FACSIMILE (205) 967-0401


CERTIFIED PUBLIC ACCOUNTANTS ALABAMA SOCIETY OF C.P.As

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE


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, 2017. Mathison Retirement Community, lnc.'s major federal program is identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, 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 a1,1dits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 US. 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, Inc.'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, 2017.

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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, lnc.'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 weaknesses, 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.

U- ~.-C-JWl~ ! ~CJ Cooke,

1Cameron, Travis and Company, P. C. V

Birmingham, Alabama September 15, 2017

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS


Summary of Audit Results

1.

2.

3.

4.

5.

6.

7.

8.

The auditors' report expresses an unqualified opinion on the financial statements of Mathison Retirement Community, Inc.

No material weaknesses were identified during the audit of the financial statements.

No instances of noncompliance material to the financial statements of Mathison Retirement Community, Inc. were disclosed during the audit.

No material weaknesses were identified during the audit of the major federal award programs.

The auditors' report on compliance for the major federal award programs for Mathison Retirement Community, Inc. expresses an unqualified opinion.

Audit findings that are required to be reported in accordance with Section 200.516(a) ofOMB Uniform Guidance are reported in this Schedule.

The program tested as a major program was a Section 232 Insures Loan (14.129).

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.

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CERTIFICATION OF OFFICERS

We hereby certify that we have examined the accompanying financial statements and supplemental data of Mathison Retirement Community, Inc. (46-2392994) and, to the best of our knowledge and belief, they are a true statement of financial condition as of June 30, 2017.

/?lad1;J d ~ ature

Title

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COOKE, CAMERON, TRAVIS &. COMPANY, P.C. Certified Public Accountants

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 I.D. Number is 63-0376518 .

Methodist Homes for the Aging

By: _ C __ ~_~ __ . --Christopher T ornlin, President

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FACSIMILE (205) 967-0401



INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURE


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 agreedupon procedure engagement was conducted in accordance with the attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards issued 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.

This agreed-upon procedure engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards issued by the Comptroller General of the United States. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on whether the electronic submission of the items listed in the "UFRS Rule Information" column agrees with the related hard copy documents within the audit reporting package. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

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, 2017, and have issued our report thereon dated September 15, 2017. 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 September 15, 2017 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.

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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.

u/ ~ :-r-A"'Vt: .~ ~ ~ p,. c__.... Cooke, Cameron, Travis & Company, P.C. ~ September 18, 2017

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ATTACHMENT TO INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURE

UFRS Rule Information Hard Coov Document(s) Findine;s Balance Sheet, Revenue and Expense and Cash Supplementary Schedules with Financial Agrees Flow data (account numbers 1120 to 7100T and Statement Data the S1200 Series) Surplus cash (SI300 series accounts) Computation of Surplus Cash, Distributions, and Agrees

Residual Receipts (Annual) Footnotes (S3100 series of accounts) Footnotes to the audited Financial Statements A~ees 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 Auditors' Report on Supplementary Information Agrees S3400-100) 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

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Financial Statement Electronic Submission

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Annual Financial Statement

Electronic Submission U.S. Department of Housina and Urban DevelOPment Public Indian Housing - Real Estate Assessment Center (PIH-REAC)

TIN: 462392994 Owner: Mathison Retirement Community, Inc. Reporting From: 07/01/2016 FHA/Contract Number(s): 06322066

Reporting To: 06/30/2017 Submission Type: AUD-OMB

Assets Account Description Value

1120 Cash - Operations $740,266 1130 Tenant/Member Accounts

$ 384 Receivable (Coops) 1130N Net Tenant Accounts

$ 384 Receivable 1180 Inventory $8,338

Details - Other Reserves 1330-005 - Description REPAIR ESCROW 1330-01 O - Other Reserves $7,101 Detail

1200 Prepaid Expenses $125,142 1100T Total Current Assets $874,130 1191 Tenant/Patient Deposits Held

$44,978 in Trust 1310 Escrow Deposits $112,047 1320 Replacement Reserve $277,618 1330 Other Reserves $7,101 1340 Residual Receipts Reserve $326,453

1300T Total Deposits $ 723,219 1410 Land $1,480,000 1420 Buildings $ 10,472,328 1440 Building Equipment

$295,647 (Portable) 1450 Furniture for Project/Tenant

$0 Use 1480 Motor Vehicles $69,719 1490 Miscellaneous Fixed Assets $13,624

1400T Total Fixed Assets $ 12,331,318 1495 Accumulated Depr~ciation $913,696

1400N Net Fixed Assets $11,417,622 1520 Deferred Financing Costs $361,860

1500T Total Other Assets $361,860 1000T Total Assets $ 13,421,809

Liabilities Account Description Value

2110 Accounts Payable -$81,479 Operations

2113 Accounts Payable - Entity $58,876 2120 Accrued Wages Payable $112,144 2121 Accrued Payroll Taxes $ 90 Payable

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2170

2210 2122T 2191

2320

2300T 2000T

Account 3131 3130

2033T

Account 5120

5100T

Account 5220

5200T 5152N

Account 5300

Account 5410

5430

5440

5400T

Account 5910

5970 5990

5900T 5000T

Account

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

Description Unrestricted Net Assets Total Net Assets Total Liabilities and Equity/Net Assets

Description Rent Revenue - Gross Potential Total Rent Revenue

Description Apartments Total Vacancies Net Rental Revenue (Rent Revenue Less Vacancies}

AFS Submission

Net Assets

Rent Revenue

Vacancies

5300 Revenue Description

Nursing Homes/ Assisted Living/Board & Care/Other Elderly Care/Coop/ and Other Revenues

Financial Revenue Description

Financial Revenue - Project Operations Revenue from Investments -Residual Receipts Revenue from Investments -Replacement Reserve Total Financial Revenue

Description Laundry and Vending Revenue Gifts Miscellaneous Revenue Total Other Revenue Total Revenue

Other Revenue

Administrative Expenses Description

$103,054

$82,093 $437,736

$23,351

$7,258,277

$7,258,277 $ 7,719,364

Value $5,702,445 $5,702,445

$ 13,421,809

Value

$0

$0

Value $0 $0

$0

Value

$3,736,852

Value

$19

$ 163

$ 125

$ 307

Value

$0

$0 $0 $0

$3,737,159

Value·

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6210 6310 6311 6320 6390

6263T

Account 6450 6451 6452

6400T

Account 6510 6525 6570

Account 6580

Account 6590

AFS Submission

Advertising and Marketing Office Salaries Office Expenses Management Fee Miscellaneous Administrative Expenses Details - Miscellaneous Administrative Expenses 6390-010 - Description Professional Fees 6390-020 -Amount $21,219 6390-010 - Description Computer/Data Expenses 6390-020 - Amount $ 33,889 6390-010 - Description Travel 6390-020 - Amount $ 769 6390-010 - Description License Fees/Membership Dues 6390-020 -Amount $ 10,713 6390-010 - Description Employee benefits and awards 6390-020 -Amount $ 1,731 Total Administrative Expenses

Description Electricity Water Gas Total Utilities Expense

Utilities Expenses

Operating & Maintenance Expenses Description

Payroll Garbage and Trash Removal Vehicle and Maintenance Equipment Operation and Repairs

Description Lease Expense

Operating & Maintenance Expenses Description

Miscellaneous Operating and Maintenance Expenses Details - Miscellaneous Operating and Maintenance Expenses 6590-010 - Description Telephone 6590-020 - Amount $ 11,040 6590-010 - Description Cable 6590-020 -Amount $ 29,276 6590-010 - Description R&M Pool 6590-020 - Amount $ 6,479 6590-01 O - Description Pest Control 6590-020 - Amount $ 4,447 6590-010 - Description R&M Building 6590-020 -Amount $ 19,108 6590-010 - Description R&M Equipment 6590-020 - Amount $ 27,260 6590-010 - Description Grounds Upkeep 6590-020 - Amount $ 38,208 6590-010 - Description Employee Benefits & Awards

$18,315 $ 168,431

$7,675 $223,102

$68,321

$485,844

Value $142,647 $53,989 $14,236

$210,872

Value $64,999 $5,094

$2,658

Value $8,382

Value

$137,873

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6590-020 - Amount $2,055 6500T Total Operating and

$219,006 n Maintenance Expenses Taxes & Insurance

Account Description Value 6711 Payroll Taxes (Project's $89,584

Share) 6720 Property & Liability $108,376

Insurance (Hazard) 6722 Workmen's Compensation $ ~9,427 6723 Health Insurance and Other

$97,550 Employee Benefits

6790 Miscellaneous Taxes, Licenses, Permits and $47,927 Insurance Details - Miscellaneous Taxes, Licenses, Permits and Insurance 6790-010 - Description Mortgage Insurance Premium 6790-020 - Amount $47,927

6700T Total Taxes and Insurance $392,864 Financial Expenses

Account Description Value 6820 Interest on First Mortgage (or

$319,248 Bonds) Payable 6800T Total Financial Expenses $319,248

6900 Expenses Account Description Value

6900 Nursing Homes/Assisted Living/ Board & Care/Other $1,360,947 Elderly Care Expenses

Operating Results Account Description Value 6000T Total Cost of Operations

$ 2,988,781 before Depreciation 5060T Profit (Loss) before

$748,378 Depreciation 6600 Depreciation Expenses $ 321,228

5060N Operating Profit or (Loss) $427,150 Change in Net Assets from Operations

Account Description Value 3247 Change in Unrestricted Net

$427,150 Assets from Operations - 3250 Change in Total Net Assets $427,150

from Operations Part II

Account Description Value S1000-010 Total first mortgage (or bond)

principal payments required during the audit period (usually 12 months). This $116,853 applies to all direct loans, HUD-held and HUD-insured first mortgages.

S1000-020 The total of all monthly $60,804 reserve for replacement

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Account S1100-060

3247

S1100-065

3131 S1100-050

3250

S1100-055

3130

Account S1200-020 S1200-030 S1200-040 S1200-050 S1200-070 S1200-090 S1200-100 S1200-110 S1200-140 S1200-150

S1200-160 S1200-170 S1200-180 S1200-230 S1200-240

Account S1200-250

S1200-255

AFS Submission

deposits (usually 12 months) required during the audit period even if deposits have been temporarily waived or suspended.

Description Previous Year Unrestricted Net Assets Change in Unrestricted Net Assets from Operations Other Changes in Unrestricted Net Assets Unrestricted Net Assets Previous Year Total Net Assets Change in Total Net Assets from Operations Other Changes in Total Net Assets

Equity Data

Details - Other Changes in Net Assets

S1100-056 - De~cription - PARTICIPANT AGREEMENT ALLOWED Other Changes m Total Net DISTRIBUTIONS Assets S1100-057 -Amount - Other $- 441 597 Changes in Total Net Assets ' Total Net Assets

Cash Flow from Operating Activities Description

Interest Receipts Other Operating Receipts Total Receipts Administrative Management Fee Utilities Salaries and Wages Operating and Maintenance Property Insurance Miscellaneous Taxes and Insurance Tenant Security Depdsits Other Operating Expenses Interest on First Mortgage Total Disbursements Net Cash provided by (used in) Operating Activities

Cash Flow from Investing Activities Description

Net Deposits to the Reserve for Replacement account Net Deposits to Other Reserves Details - Net Deposits to Other Reserves S1200-256 - Description DECREASE IN OTHER RESERVES

Value

$5,716,892

$427,150

$-441,597

$5,702,445

$ 5,716,892

$427,150

$-441,597

$5,702,445

Value $ 307

$3,794,956 $3,795,263

$- 83,592 $-223,102 $-204,299

$- 1,208, 702 $-159,801 $- 156,962

$- 229,491

$0 $- 364,080 $- 333,801

$- 2,963,830

$831,433

Value

$- 54,833

$1,075

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$1200-260

$1200-330

$1200-340

$1200-350

Account $1200-360

$1200-420 $1200-460

$1200-470

AFS Submission

S1200-257 - Net Deposits to $ 1,075 Other Reserves Detail Net Deposits to the Residual Receipts account Net Purchase of Fixed Assets Other Investing Activities Details - Other Investing Activities S 1200-341 - Description -Other Investing Activities SECURITY DEP FUNDED OVER LIAB

S 1200-342 - Amount - Other $- 14 994 Investing Activities ' Net Cash used in Investing Activities

Cash Flow from Financing Activities Description

Principal Payments - First Mortgage ( or Bonds) Distributions Net Cash used in Financing Activities Net increase (decrease) in Cash and Cash Equivalents

Cash and Cash Equivalents

$-163

$- 104,875

$- 14,994

$- 173,790

Value

$- 116,853

$- 441,595

$- 558,448

$99,195

Account Description Value $1200-480 Beginning of Period Cash $641,071

S1200T End of Period Cash $740,266 Reconciliation of Net Profit (Loss) to Net Cash Provided by (Used in) Operating Activities

Account Description Value 3250 Change in Total Net Assets

from Operations $427,150

Adjustments to Reconcile Net Profit (Loss) to Net Cash Provided by (Used in) Operating Activities

Account 6600

$1200-486

$1200-490

S1200-520

S1200-530

$1200-540

S1200-560

S1200-570

S1200-580

Description Depreciation Expenses Amortization of Debt Issuance Costs Decrease (increase) in Tenant/Member Accounts Receivable Decrease (increase) in Prepaid Expenses Decrease (increase) in Cash Restricted for Tenant Security Deposits Increase (decrease) in Accounts Payable Increase (decrease) in Accrued Liabilities Increase (decrease) in Accrued Interest Payable Increase (decrease) in Tenant Security Deposits held in trust

Value $ 321,228

$11,308

$40,739

$8,542

$0

$40,207

$- 5,623

$- 25,862

$0

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S1200-590

S1200-600

Account S1200-610

Increase (decrease) in Prepaid Revenue Other adjustments to reconcile net profit (loss) to Net Cash provided by (used in) Operating Activities

AFS Submission

$17,059

$- 3,315

Details - Other adjustments to reconcile net profit (loss) to Net Cash provided by (used in) Operating Activities S1200-601 - Description -Other adjustments to reconcile net profit (loss) to INCREASE IN INVENTORIES Net Cash provided by (used in) Operating Activities S1200-602 -Amount - Other adjustments to reconcile net profit (loss) to Net Cash provided by (used in) Operating Activities

$-3,315

Net Cash provided by (used in} Operating Activities Description

Net Cash provided by (used in) Operating Activities

Notes

Value

$831,433

Account Description Value S3100-010 Organization and

Presentation Note

S3100-040 Summary of Significant Accounting Policies Note

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Mathison Retirement Community, Inc. (a not for profit corporation) was formed and incorporated under the laws of the state of Florida on November 7, 2012. 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 nonprofit 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-fourunit 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 $7,672,500 HUD Section 232 Insured Loan and receiving $5,034,318 in capital contributions (equity in real estate in excess of the loan) from Methodist Homes for the Aging. Loan proceeds were used to retire existing indebtedness, fund repairs and reserves required as a condition of the loan and pay debt 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. NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (continued) The accounting policies followed by Mathison Retirement Community, Inc. and the method of applying those policies which affect the determination of

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S3100-050 Mortgages (or Bond) Payable Note

Details - Mortgages Payable S3100-060 - Principal Payments in the next 12 months - Year 1 S3100-070 - Principal Payments in the next 12 months - Year 2 S3100-080 - Principal Payments in the next 12 months - Year 3 S3100-090 - Principal

AFS Submission

the financial position, changes in financial position and results of operations are summarized below. FIXED ASSETS Fixed assets are stated at fair value at the date of purchase, which equals to purchase price plus fair value of contribution by the sponsor. Depreciation is provided at rates intended to distribute cost of fixed assets over their estimated useful lives as follows: Description/Method/ Est Building S/L 15-40 Bldg Port S/L 5-10 Auto S/L 5 Leased S/L 10 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. 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, 2017 there were no cash equivalents. Amounts are insured by the Federal Insurance Corporation up to $250,000. Mathison Retirement Community, lnc.'s uninsured balances at June 30, 2017 amounted to $534,744. 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 MANAGEMENTS REVIEW Subsequent events were evaluated through September 15, 2017, which is the date the financial statements were available to be issued. NOTE 2 - MORTGAGE Mortgages payable, and backed

by HUD Section 232 as of June 30, 2017 are as follows: 4.15% Mortgage payable to Walker & Dunlop, LLC; $34,664 payable monthly; Maturity June 18, 2049; insured by HUD; collateralized by the real estate. Net Long Term Debt: $7,361,331 2017 $ (103,054) current $7,258,277 Net 2017 $7,478,184 2016 $ (107,676) current $7,370,508 Net 2016 Thirteen payments were made in the fiscal year June 30, 2017.

$103,054

$116,978

$ 121,926

$127,083

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S3100-200

Payments in the next 12 months - Year 4 S3100-100 - Principal Payments in the next 12 months - Year 5 S3100-110 - Principal Payments remaining after Years Related Party Transactions Note

AFS Submission

$132,458

$6,759,832

NOTE 3 - RELATED PARTIES Methodist Homes for the Aging, Inc. (the sponsor} manages the project. The management agreement and fee are subject to HUD approval.

Details - Related Party Transactions S3100-210 - Company Name S3100-220 -Amount Received

S3100-230 Management Fee Note

S3100-240 Additional Note





METHODIST HOMES FOR THE AGING

$223,102

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, 2017, and 2016 the management fee amounted to $223,102 and $218,882, 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, 2017 and 2016 amounted to $277,618 and $222,785, respectively for the replacement reserve account. As of June 30, 2017 and 2016, the residual receipts amounted to $326,453 and $326,290 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 958- 205. NOTE 7 - RESIDENT FEE INCREASES The units of

Mathison Retirement, Inc. are subject to affordability requirements as a condition of the financing agreement.

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 of federal, 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. NOTE 9 - DEBT ISSUANCE COSTS For the year ended

June 30, 2017, Mathison Retirement Community, Inc.

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retroactively adopted the requirements of FASS ASC 835-30 to present debt issuance costs as a reduction in the carrying amount of the mortgage rather than as an other asset, subject to amortization. Long term debt as of June 30, 2016 was previously reported in the Statement of Financial Position as $7,370,508, with the associated $373, 169 of unamortized deferred loan costs included in other assets. Upon adoption of FASS ASC 835-30, amortization of debt issuance costs (formerly deferred loan costs) is reported as interest expense. As of June 30, 2017, interest was reported, including the current amortization below, in the amount of $319,248. Debt issuance costs consist of fees and related costs of obtaining a mortgage loan with HUD backing are being amortized on a straight-line basis over the life of the mortgage. Net deferred debt issuance costs amounted to $361,860 in 2017 and $373,169 in 2016, respectively. Under the new rule the unamortized loan costs reduce the face value of long term debt, rather than present as an 'other asset' to be amortized.

Report on the Financial Statement and on the Supplementary Schedule of Federal Awards Account Description Value

S3400-020 Opinion UNMODIFIED S3400-050 Going Concern" Issue N

Report on Supplemental Data Account Description

S3400-100 Opinion S3400-110 Opinion Explanation NA

Value UNMODIFIED

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 Account Description

S3500-020 Instances of Fraud, Noncompliance, or Abuse of Laws, Regulations, Contracts or Grants That Have A Material Effect on the Financial Statements

S3500-030 Significant Deficiencies or Material Weaknesses in Internal Controls Over Financial Reporting Indicator

Value-

N

N

Report on Compliance and Internal Control over Compliance Applicable to Each Major Program; Report on Internal Control Over Compliance; and Report on Schedule of

Expenditures of Federal Awards Required by Uniform Guidance Account Description

S3600-015 Opinion on Compliance with Laws, Regulations, and Contracts Applicable to Each Major Program

S3600-020 Significant Deficiencies or Material Weaknesses in Internal Controls Over Compliance Indicator

Value

UNMODIFIED

N

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Report on Compliance Applicable to Each Major Program and on Internal Control over Compliance in Accordance with 0MB Circular A-133

Account Description S3600-035 Comments on Non NA

Account $3700-010

$3700-020

$3700-030

Account S3800-160 $3800-170 S3800-180

Account 1320P

1320DT 13201NT

1320WT 1320

1320R

Account 1340P

13401NT

1340

compliance Schedule of Findings and Questioned Costs

Description Indicator - Any audit findings disclosed that are required to be reported in accordance with section 200.516 of 0MB Uniform Guidance Dollar threshold used to distinguish between type A and type B programs Low-Risk Auditee Indicator

Findings & Questioned Costs Description

Contact Person First Name Contact Person Middle Initial Contact Person Last Name

Schedule of Reserve for Replacement Description

Balance at Beginning of Year Total Monthly Deposits Interest on Replacement Reserve Accounts Approved Withdrawals Balance at End of Year, Confirmed by Mortgagee Deposits Suspended or Waived Indicator

Schedule of Residual Receipts Description

Balance at Beginning of Year Interest on Residual Receipt Accounts Balance at Current Fiscal Year End

Value

Value

N

$750,000

N

Value MICHAEL

w COOKE

Value $222,785

$65,871

$ 125

$11,163

$277,618

N

Value $326,290

$ 163

$326,453

Computation of Surplus Cash, Distributions, and Residual Receipts (Annual) Account Description

S 1300-01 O Cash S1300-040 Total Cash S1300-060 Delinquent Mortgage (or

Bond)PrincipalPaymen~ S1300-075 Accounts Payable - 30 days S 1300-100 Accrued Expenses [not

2210 2191

$1300-140 S1300-150 S1300-200

escrowed] Prepaid Revenue Tenant/Patient Deposits Held In Trust (Contra) Total Current Obligations Surplus Cash (Deficiency) Amount Available for

Value $785,244 $785,244

$0

$81,479

$ 112,234

$82,093

$23,351

$299,157 $486,087 $486,087

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distribution during next fiscal period

n Schedule of Changes in Fixed Asset Accounts Account Description Value

1410P Beginning Balance for 1410 $1,480,000

1410AT Additions for 141 O $0

Details -Additions for 1410 1410A-010 - Item Purchased NONE 1410A-030 - Total Amount $0

1410DT Deductions for 1410 $0

Details - Deductions for 1410 141OD-010 - Description NONE 141 OD-030 - Total Deduction $0

1410 Land $1,480,000

1420P Beginning Balance for 1420 $ 10,390,949

1420AT Additions for 1420 $ 81,379

Details -Additions for 1420 1420A-010 - Item Purchased Steamer 1420A-030 - Total Amount $ 17,911 1420A-010 - Item Purchased Signage 1420A-030 - Total Amount $1,440 1420A-010 - Item Purchased Major Paint Enhancement 1420A-030 - Total Amount $13,045 1420A-010 - Item Purchased New Screens 1420A-030 - Total Amount $2,751 1420A-010 - Item Purchased Masonry Improvements 1420A-030 - Total Amount $20,102 1420A-010 - Item Purchased Attached Doors 1420A-030 - Total Amount $6,383 1420A-010 - Item Purchased Landscape Addition 1420A-030 - Total Amount $7,200 1420A-010 - Item Purchased Fountain Tile 1420A-030 - Total Amount $1,500 1420A-010 - Item Purchased Walk in Freezer Attached 1420A-030 - Total Amount $3,896 1420A-010 - Item Purchased HVAC 1420A-030 - Total Amount $2,400 1420A-010 - Item Purchased Carpeting 1420A-030 - Total Amount $4,751

1420DT Deductions for 1420 $0

Details - Deductions for 1420 1420D-010 - Description NONE 1420D-030 - Total Deduction $0

1420 Buildings $ 10,472,328

- 1440P Beginning Balance for 1440 $272,151

1440AT Additions for 1440 $23,496

Details -Additions for 1440 1440A-010 - Item Purchased Dishwashers 1440A-030 - Total Amount $1,627 1440A-010 - Item Purchased Kitchen Duct 1440A-030 - Total Amount $1,221 1440A-010 - Item Purchased Shelving 1440A-030 - Total Amount $ 600 1440A-010 - Item Purchased lcemakers

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14400T

1440

1450P 1450AT

14500T

1450

1480P 1480AT

14800T

1480 1490P

1490AT

14900T

1490 1400PT

1400AT 14000T 1400T 1495P

AFS Submission

1440A-030 - Total Amount $1,077 1440A-010 - Item Purchased Industrial lcemaker 1440A-030 - Total Amount $3,252 1440A-010 - Item Purchased Awning 1440A-030 - Total Amount $8,397 1440A-010 - Item Purchased Carpet 1440A-030 - Total Amount $1,675 1440A-010 - Item Purchased Heavy Washer 1440A-030 - Total Amount $ 998 1440A-O 10 - Item Purchased Care point Station 1440A-030 - Total Amount $4,649 Deductions for 1440 Details - Deductions for 1440 14400-010 - Description NONE 14400-030 - Total Deduction $0 Building Equipment (Portable) Beginning Balance for 1450 Additions for 1450 Details -Additions for 1450 1450A-010 - Item Purchased NONE 1450A-030 - Total Amount $0 Deductions for 1450 Details - Deductions for 1450 14500-010 - Description NONE 14500-030 - Total Deduction $0 Furniture for Project/Tenant Use Beginning Balance for 1480 Additions for 1480 Details - Additions for 1480 1480A-010 - Item Purchased NONE 1480A-030 - Total Amount $0 Deductions for 1480 Details - Deductions for 1480 14800-010 - Description NONE 14800-030 - Total Deduction $0 Motor Vehicles Beginning Balance for 1490 Additions for 1490 Details -Additions for 1490 1490A-010 - Item Purchased NONE 1490A-030 - Total Amount $0 Deductions for 1490 Details - Deductions for 1490 14900-010 - Description NONE 14900-030 - Total Deduction $0 Miscellaneous Fixed Assets Total Beginning Balance for Fixed Assets Total Asset Additions Total Asset Deductions Total Fixed Assets Beginning Balance for 1495

$0

$295,647

$0 $0

$0

$0

$ 69,719 $0

$0

$ 69,719 $13,624

$0

$0

$13,624

$ 12,226,443

$104,875 $0

$12,331,318 $592,468

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6600 1400ADT

1495

1400N

Account 5301 5303 5331 5332 5370 5390

Account 6930 6932 6933 6941

6942 6950 6951 6963 6990

S3300-020

Account S3300-500

S3300-510

Account

AFS Submission

Total Provisions $321,228

$0 Total Accumulated Depreciation from Disposed Assets Ending Balance for Accumulated Depreciation Total Net Book Value

$913,696

$11,417,622 Schedule of 5300 Accounts

Description Private Pay Room & Board Contractual Adjustments Contributions and Gifts Food Laundry and Linen Other Service Revenue

Value $3,711,733

$-40,621 $13,065 $7,672 $2,910

$42,093 Schedule of 6900 Accounts

Description Dietary Salaries Food Dietary Supplies Licensed Practical Nurses Payroll Other Nursing Salaries Housekeeping Salaries Housekeeping Supplies Medical Supplies Other Service Expenses

Value $279,171 $279,251

$60,138

$183,259

$447,608 $61,074 $22,143 $12,900 $15,403

Details - Schedule of Expenditures of Federal Awards Program Number S3300-030 - Name of Federal Agency S3300-040 - Name of Federal Program

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

SECTION 232 HUD INSURED LOAN

232

S3300-050 - CFDA Number 14.129 S3300-080 - Federal Awards $

7 361 331 Expended ' ' S3300-150 - Opinion UNMODIFIED

Schedule of Expenditures of Federal Awards Description

Total Federal Awards Expended Note to the Schedule

Description

Value

$7,361,331

The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal grant activity of Mathison Retirement Community, Inc, HUD Project No. 063-22066 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 schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.

Mortgagor's Certification Value

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S2900-01 O Narrative I/we hereby certify that I/we have examined the accompanying financial statements AND supplemental data and, to the best of my/our knowledge and belief, the same is complete AND accurate.

S2900-020 Name of Signatory #1 S2900-025 Title of Certifying Official #1 S2900-030 Name of Signatory #2

MARTY CLARK CHAIR

BUZZ BARREIT

Account S2900-035

Account S2900-040 S2900-050 S2900-080 S2900-090

S2900-110 S2900-120 S2900-130 S2900-150 S2900-160 S2900-170

S2900-180

Account S3000-010

S3000-020 S3000-030 S3000-040 S3000-050

Account S3200-005 S3200-010 S3200-020 S3200-030 S3200-040 S3200-045 S3200-050

S3200-070 S3200-080 S3200-090 S3200-110 S3200-120 S3200-130

S3200-140 S3200-150

Mortgagors Certification Description Value

TREASURER Title of Certifying Official #2 Mortgagor's Certification

Description Auditee Telephone Number Date of Certification Auditee Name Auditee Street Address Line 1 Auditee City Auditee State Auditee Zip Code Auditee Contact Name Auditee Contact Title Auditee Contact FAX Number

Value 205-951-2442

09/18/2017 MATHISON RETIREMENT COMMUNITY INC

1520 COOPER HILL ROAD

BIRMINGHAM ALABAMA

35210 BRUCE AKINS

CHIEF FINANCIAL OFFICER

205-956-5001

Auditee Contact E-mail [email protected] Managing Agent's Certification

Description Narrative

Name of Managing Agent Name of Signatory Managing Agent TIN Name of Property Manager

Value I/we hereby certify that I/we have examined the

accompanying financial statements AND supplemental data and, to the best of my/our knowledge and belief, the same is complete AND accurate.

METHODIST HOMES FOR THE AGING INC CHRISTOPHER TOMLIN PRESIDENT

63-0376518 MARY DAVIS

Auditor's Transmittal Letter Description

Audit Firm ID (UII) Audit Firm Lead Auditor First Name Lead Auditor Middle Name Lead Auditor Last Name Auditor Contact Title Auditor Street Address Line 1 Auditor City Auditor State Auditor Zip Code Telephone Number Audit Firm TIN Date of Independent Auditor's Report Auditor Contact FAX Number Auditor Contact E-mail

Value 01180

Cooke Cameron Travis & Company, P.C. MICHAEL WILLIAM COOKE

SHAREHOLDER

P.O. Box 360336

Birmingham AL

35236 205-967-0101

631185848

09/15/2017

205-967-0401 [email protected]

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MATHISON RETIREMENT COMMUNITY, INC. PROJECT NO… District/AL Mathison Retirement... · MATHISON...

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