Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157
Award Period: January 1, 2024 through December 31, 2024
Type of Finding:
-Significant Deficiency in Internal Control over Compliance
-Other Matters
Criteria or specific requirement: HUD guidelines require cash to be maintained in financial institutions which meet minimum GNMA ratings when balances exceed FDIC-insured limits. Bank ratings are to be monitored by management on a quarterly basis and documentation maintained for at least three years as required by the HUD Handbook 4350.1.
Condition: Management did not maintain documentation of their monitoring of the financial institution's ratings.
Questioned costs: None
Context: The Organization's cash balances are held in federally insured accounts and the bank meets minimum GNMA ratings. However, management did not maintain documentation of the monitoring of the financial institution's ratings.
Cause: Management Oversight.
Effect: There were no negative effects to the Organization.
Repeat Finding: No.
Recommendation: It is recommended that management implement internal controls to document the monitoring of the financial institution's rating on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA) and maintain documentation of the ratings for at least three years.
Views of responsible officials: While management monitored the financial institutions ratings on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA), management did not maintain documentation of the monitoring of the financial institution's ratings.
The management company agrees with this and will begin documenting the financial institutions ratings on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA) and maintain this documentation in the administrative record for three years, including the current year.