Finding Text
Finding Reference Number: 2025-003 Assist Listing Title: Supportive Housing for the Elderly Program Assistance Listing Number: 14.157 Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Award Identification Number (FAIN): Federal Award Year: 2025 Pass-Through Entity: N/A Criteria: The Corporation must provide insurance coverage for fidelity bond or employee dishonesty coverage for all principals of the management agent and all persons who participate directly or indirectly in the management and maintenance of the project and its assets, accounts and records. Coverage shall be equal to the project's gross potential income for two months. Condition: Fidelity bond coverage lapsed on September 11, 2025, during the audit period ending September 30, 2025. Coverage was reinstated on November 12, 2025. Cause: Failure to pay premiums timely resulted in lapse of fidelity bond coverage. Effect or Potential Effect: Noncompliance with HUD insurance requirements, exposing the corporation to risk of loss without adequate protection during the lapse period. Questioned Costs: $- Perspective Information: This appears to be an isolated instance; no systemic issue identified. Repeat Finding: No; not a repeat finding. Recommendation: Management should ensure continuous fidelity bond coverage that meets HUD standards throughout the audit period. Policies must be reviewed regularly for compliance. Views of Responsible Officials: Management agrees with the finding and has reinstated coverage as of November 12, 2025. Auditor's Summary of Auditee's Comments: Management confirmed reinstatement of fidelity bond coverage and implementation of monitoring controls to prevent future lapses. Response Indicator: Agree Completion Date: 11/12/2025 Response: Management has obtained fidelity bond coverage and strengthened internal controls over premium payments to ensure continuous compliance.