Finding Text
2025 – 001
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Name: Section 232 Mortgage Insurance for Nursing Homes
Assistance Listing Number: 14.129
Award Period: June 1, 2024 – May 31, 2025
Type of Finding:
• Significant Deficiency in Internal Control Over Compliance
• Other Matters
Criteria or specific requirement: The Project must obtain a fidelity bond that is equal to or exceeds
two months gross potential collections.
Condition: Actual fidelity bond coverage amount in FY2025 was less than 2 months of calculated
gross potential collections.
Questioned costs: $0
Context: No sampling, entire population tested.
Cause: The Project did not update coverage amount to keep pace with revenue growth.
Effect: Result of the finding is that actual fidelity bond coverage amount fell below the required
minimum.
Repeat finding: Yes
Recommendation: The auditor recommends that management increase their coverage amount to
come into compliance with HUD requirements, as well as develop policies and procedures to monitor
required coverage minimums to ensure that actual coverage amount is kept at least at that level.
Views of responsible officials: There is no disagreement with the audit finding.