Recurring losses from operations, a net-asset deficiency, and negative working capital are among the financial shortfalls revealed in a recent independent audit by KPMG LLC of the Resurrection Nursing Home, a nonprofit facility in Castleton, N.Y.
The Albany-based KPMG audited the balance sheets, and changes in net deficit and cash flows for the years ending Dec. 31, 2009, and 2008, the results of which were disclosed on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website last week.
In the post, KPMG revealed its findings in a letter to the nursing home’s board of trustees that accompanied the results of its July 2010 audit of the 80-bed facility.
According to the audit, the nursing home had net losses for 2009 and 2008 of $409,159 and $765,512, respectively. Additionally, as of Dec. 31, 2009, it had negative working capital of $9.84 million and a net asset deficiency of $9.19 million.
The president of the New York State Dormitory Authority — which issued mortgage revenue bonds back in 1995 on behalf of the nursing home — said since the bonds are insured by the Federal Housing Administration, that mitigates any risk associated with the past financial losses.
“There are no issues from a bondholder standpoint [because] a worst-case scenario would simply mean they would be paid off sooner,” Paul Williams Jr. said in an e-mail last week.
The bond issue, which had an interest rate of 6.8%, has a final maturity in 2027, while future principal payments total $5.629 million, according to the audit.
In order to improve operations, management has appointed a regional manager from its Chicago corporate headquarters to directly oversee operations and revise its governance and oversight policies, the audit said.
Among other efforts, the home marketed itself to area hospitals and senior centers to attract new residents and increased participation in managed care contracts to increase its overall caseload mix and associated revenue in 2008 and 2009.
The home’s sole corporate member is the Resurrection Ministries of New York.
The nursing home did not return calls or e-mails seeking comment before press time.