Finding Text
FINDING 2025-004: Material Weakness in Internal Control over Compliance Federal Awards Compliance – Special Tests and Provisions Federal Award Identification: Assistance Listing Program Title: Rural Rental Housing Loans Assistance Listing Program Number: 10.415 Federal Award ID Number and Year: N/A Federal Agency: U.S. Department of Agriculture – Rural Development Criteria: Under 7 CFR Section 3560.105(h): Borrowers must provide fidelity coverage on any personnel entrusted with the receipt, custody, and disbursement of any housing monies, securities, or readily salable property other than money or securities. Borrowers must have fidelity coverage in force as soon as there are assets within the organization and it must be obtained before any loan funds or interim financing funds are made available to the borrower. Condition: During the current year the Project did not maintain fidelity insurance as required by 7 CFR Section 3560.105(h). Context: The Project reduced their insurance coverage by utilizing lender-placed coverage and this coverage did not include fidelity insurance. Effect or Potential Effect: The Project failed to timely renew its fidelity insurance resulting in a lapse of coverage. Cause: Controls over insurance coverage failed to identify a lack of fidelity insurance in a timely manner. Questioned Costs: N/A Repeat Finding: No Recommendation: It is our recommendation that the Project renew its fidelity coverage as soon as possible. Auditee Response and Corrective Action Plan: See Page 44