Audit 399404

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: HUD Section 232 Mortgage Insurance for Nursing Homes Assistance Listing Number: 14.129 Award Period: January 1, 2025 through December 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Compliance Criteria or specific requirement: HUD guidelines require that the Management Agent carries adequate fidelity bond coverage as required by the HUD Handbook 4381.5. Condition: During our testing, we noted the Organization did not have adequate fidelity bond coverage. Questioned costs: None Context: The Organization is required to maintain fidelity bonding coverage amounting to at least two months of gross potential collections. Cause: An increase in revenue during the period under audit led to the fidelity bonding coverage amount to become no longer sufficient. Effect: There were no negative effects on the Organization. Repeat Finding: No Recommendation: We recommend that management update its policies and procedures on monitoring policy coverage to ensure that coverage is adequate to cover collections. The auditor also recommends that management update its fidelity policy to bring the Project back into compliance.. Views of responsible officials: There is no disagreement with the audit finding.