Finding Text
Criteria HUD regulations stipulate that fidelity bond coverage must meet or exceed two months of gross potential rent and cover all persons who participate directly or indirectly in the management and maintenance of the Project. Statement of Condition Two months of gross potential rent for Palmyra Interfaith Manor HUD Project No. 034-EH015 is $275,024. Management’s fidelity bond coverage of Palmyra Interfaith Manor HUD Project No. 034-EH015 was $200,000 during the period under audit which is insufficient by $75,024. Questioned Costs N/A Effect or Potential Effect In the event of theft or other crime, the Project may be exposed to liability not covered by insurance. Cause The fidelity bond coverage of the management company does not cover two months gross rent of the Project. Recommendation We recommend that management increase the fidelity bond policy coverage to two months gross rent of the Project. Views of Responsible Officials and Planned Corrective Action Management accepts the recommendation of the auditor and has contacted the insurance carrier to increase the amount of the fidelity bond to cover two months gross rent. This action was completed on May 16, 2025, Management obtained a fidelity bond policy with coverage of $500,000.