Finding 1093024 (2024-001)

Condition: The Organization has not deposited the replacement reserve account funds into accounts insured by the Federal Deposit Insurance Corporation (FDIC). Rather, such funds are deposited in cash accounts of a large brokerage firm and are insured by the Securities Investor Protection Corporation (SIPC), which is not a government agency. Criteria: As required by the Regulatory Agreement, the Organization is required to establish these accounts at a financial institution covered under the FDIC program. Cause: During the year ended June 30, 2024, the replacement reserve account funds invested in FDIC-Insured certificates of deposits matured and were not re-invested (either in FDICInsured certificates of deposits or other FDIC-Insured investments). Effect: FDIC coverage is meant to act as protection to both the Organization and HUD for the account balances, and the Organization may be susceptible to risk if the account is not properly insured. Auditor's Recommendation: The Organization should transfer these balances to a participating financial institution. Views of Responsible Officials and Planned Corrective Actions: On November 5, 2024, the Organization transferred the replacement reserve account funds to an FDIC-Insured certificate of deposit.