Finding 403281 (2023-002)

Significant Deficiency

Requirement

Questioned Costs

Year

2023

Accepted

2024-06-27

Audit: 310458

Organization: Booth Residence Inc., A Georgia Corporation (GA)

Auditor: Cohnreznick LLP

AI Summary

Core Issue: The Owner failed to provide proof of required fidelity bond coverage as mandated by HUD regulations.
Impacted Requirements: Coverage must equal at least $50,000 or two months of gross potential rent, calculated from the project with the highest rent.
Recommended Follow-Up: Management should secure the necessary fidelity coverage immediately or provide evidence of compliance by September 30, 2023.

Finding Text

Department of Housing and Urban Development Section 8 Housing Assistance Program, AL 14.195 Criteria HUD regulations require the project’s management agent to have fidelity bond coverage equal to the greater of $50,000 or the value of two months gross potential rent. If the policy covers more than one project, this minimum must be computed using the project with the highest gross potential rent. Condition The Owner did not provide evidence of fidelity bond coverage as required by HUD regulations. Cause The Owner was unable to provide evidence of the required minimum coverage. Effect Management may have coverage below HUD’s required minimum in violation of HUD regulations. Questioned Costs: None Context The Owner did not provide evidence of fidelity bond coverage to the audit team. Identification as a Repeat Finding This finding is not a repeat finding Recommendation Management should obtain fidelity coverage as required by HUD regulations immediately or should provide evidence sufficient fidelity bond insurance was obtained through the year ended September 30, 2023. Views of Responsible Officials

Corrective Action Plan

2. Finding 2023-002 c. Comments on the Finding and Each Recommendation Management agrees with the finding that evidence of a fidelity bond policy was not provided, however, a policy was in place, we were not able to provide evidence to the auditor. d. Action(s) Taken or Planned on the Finding We will implement procedures to ensure we can provide evidence of proper fidelity bond coverage as required by HUD.

Other Findings in this Audit

403280 2023-001

Significant Deficiency
979722 2023-001

Significant Deficiency
979723 2023-002

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
14.155	Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects	$3.74M
14.195	Section 8 Housing Assistance Payments Program	$842,791