Finding 45211 (2022-003)

Significant Deficiency Repeat Finding
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-04-03
Audit: 48393
Organization: Wesley Village INC (OH)
Auditor: Hw&co

AI Summary

  • Core Issue: Project funds, including restricted funds, were improperly invested in mutual funds instead of following USDA Handbook guidelines.
  • Impacted Requirements: Funds should be in cash deposits or U.S. Government-backed investments to minimize risks.
  • Recommended Follow-Up: Management should realign investments with USDA Handbook standards to mitigate market and credit risks.

Finding Text

Condition: Project funds including restricted funds (taxes and insurance) were invested in investments other than in accordance with the USDA Handbook. Criteria: In accordance with the USDA Handbook project funds should be in the form of a cash deposit or invested in obligations backed by the U.S. Government or an Agency of the U.S. Government, Triple A-rated Government National Mortgage Association or Triple A-rate pre-refunded bond. Cause: Management invested a portion of project funds and restricted deposits (taxes and insurance) in mutual funds in an effort to generate higher investment income for the Project. Effect of Potential Effect: The effect of this finding, which cannot be quantified, is that funds invested in mutual funds are exposed to various risks such as market and credit risks. Recommendation: We recommend that management invest Project funds and restricted funds in investments that are in accordance with the USDA Handbook. View of Responsible Officials and Planned Corrective Action: Management is aware of such market and credit risks and, therefore the Project Sponsor (Good Shepherd Home) is committed to reimburse the Project for any net cumulative realized investment losses that the Project incurs. There is a cumulative net gain through December 31, 2022.

Corrective Action Plan

CORRECTIVE ACTION PLAN March 29, 2023 U.S. Department of Agriculture - Rural Development Wesley Village, Inc. respectively submits the following corrective action plan for the year ended December 31, 2022. Name and address of independent public accounting firm: HW&Co. 23240 Chagrin Blvd., Suite 700 Cleveland, OH 44122-5450 Audit period: January 1, 2022 through 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?FEDERAL AWARD PROGRAMS AUDIT 2022-003 ? Restricted Funds Recommendation: Management invested a portion of project funds and restricted deposits (taxes and insurance) in mutual funds in an effort to generate higher investment income for the Project. It was recommended that management invest Project funds and restricted funds in investments that are in accordance with the USDA Handbook. Action Taken: Management is aware of such market and credit risks and, therefore the Project Sponsor (Good Shepherd Home) is committed to reimburse the Project for any net cumulative realized investment losses that the Project incurs. There is a cumulative net gain through December 31, 2022. If the U.S. Department of Agriculture - Rural Development has questions regarding this plan, please call Chris Widman at 419-937-1801. Sincerely yours, Chris Widman, Executive Director

Categories

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Other Findings in this Audit

  • 45212 2022-003
    Significant Deficiency Repeat
  • 45213 2022-003
    Significant Deficiency Repeat
  • 621653 2022-003
    Significant Deficiency Repeat
  • 621654 2022-003
    Significant Deficiency Repeat
  • 621655 2022-003
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
10.427 Rural Rental Assistance Payments $175,297
10.415 Rural Rental Housing Loans $86,200