Finding 36353 (2022-001)

- Repeat Finding
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-09-30

AI Summary

  • Core Issue: The Organization's combined bank accounts exceed FDIC insurance limits, risking loss of funds.
  • Impacted Requirements: Noncompliance with USDA Handbook 2-3560, which mandates that funds must stay within FDIC coverage limits.
  • Recommended Follow-Up: Monitor cash balances regularly, secure collateral agreements, or invest excess funds in government securities.

Finding Text

Statement of Condition: Each wholly owned project of the Organization has its own individual bank account at each financial institution. Because these projects are owned by the Organization, all the projects' bank accounts at this financial institution must be combined when assessing FDIC coverage over these accounts as of year end. At December 31, 2022, the Organization's projects' funds combined with the Organization?s corporate funds held at a financial institution exceeded FDIC insurance coverage limits, putting the wholly owned projects' accounts at risk of loss at this financial institution. Criteria: USDA Handbook 2-3560, Chapter 4 states that bank account funds maintained in an institution may not exceed the limits established for Federal Deposit insurance. If funds exceed the amount covered by Federal Deposit insurance, the Organization must obtain a collateral pledge from the institution to cover all the funds or move funds to an institution that will insure the funds. Cause of Condition: Management did not transfer funds to separate financial institutions in a timely manner to provide for continuous FDIC insurance coverage. Effect of Condition: Noncompliance with USDA RD requirements and risk of loss of the wholly owned projects' funds. Recommendation: The Organization should continuously monitor cash balances to ensure that funds are always covered by FDIC insurance limits, collateral agreements are obtained, or funds are invested in government securities. Questioned Costs: $0. Information based on Universe and Population Size: The finding noted above was not a result of sampling. Sample Size Information: The finding noted above was not a result of sampling. Noncompliance Information: The finding noted above was not a result of sampling. Reporting Views of Responsible Officials: Management agrees with the above finding and is in the process of transferring funds to provide adequate FDIC coverage for all funds. Management will re-evaluate its policies and procedures to determine any necessary changes.

Corrective Action Plan

HOUSING OPPORTUNITIES, INC. P.O. Box 10248 Greensboro, North Carolina 27404 CORRECTIVE ACTION PLAN Single Audit Clearinghouse 1201 East 10th Street Jeffersonville, Indiana 47132 Housing Opportunities, Inc. (the "Organization"), respectfully submits the following Corrective Action Plan for the year ended December 31, 2022. Bernard Robinson & Company, L.L.P. 1501 Highwoods Blvd., Suite 300 Greensboro, North Carolina 27410 Audit period: Year ended December 31, 2022 The finding from the December 31, 2022 Schedule of Findings and Questioned Costs is discussed below. The finding is numbered consistently with the number assigned in the schedule. Findings and Questioned Costs: Finding 2022-001: Section III - Findings and questioned costs relating to the major programs which are required to be reported as defined by the Uniform Guidance [2 CFR 200.516(a)] Recommendation: The Organization should continuously monitor cash balances to ensure that funds are always covered by FDIC insurance limits, collateral agreements are obtained, or funds are invested in government securities. Management's Response: Management agrees with the above finding and is in the process of transferring funds to provide adequate FDIC coverage for all funds. Management will re-evaluate its policies and procedures to determine any necessary changes. If you have questions regarding this plan, please call Terri Gunn at 336-691-9804. Sincerely yours, Terri Gunn Vice-President and Secretary

Categories

Reporting

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
10.415 Rural Rental Housing Loans $7.10M
10.427 Rural Rental Assistance Payments $1.04M