Finding Text
Criteria
HUD regulations require the project's management agent to have fidelity bond coverage equal
to the greater of $50,000 or the value of two months gross potential rent. If the policy covers
more than one project, this minimum must be computed using the project with the highest gross
potential rent.
Cause
Management was unaware of the required minimum coverage.
Effect or Potential Effect
The cost of the assistance may be disallowed.
Recommendation
Management should obtain fidelity coverage as required by HUD regulations immediately.
Auditor Noncompliance Code: Section N - Special Tests and Provisions
Views of Responsible Officials
Auditee has submitted the application to update/increase the Fidelity Bond Coverage to
$500,000 through the insurance broker. Coverage is expected to be changed by 4-1-25.