Finding 502133 (2023-002)

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 232 Mortgage Insurance for Nursing Homes and Section 241(a) Supplemental Loan Insurance Multifamily Rental Housing Assistance Listing Number: 14.129 and 14.151 Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: HUD requires the Organization to maintain fidelity bond coverage of at least two months cash collections. Condition: The fidelity bond obtained by the Organization was below requirements for the period under audit. In March 2024, the Organization increased the fidelity bond to an appropriate amount. Questioned costs: None Context: The Organization's resident service revenue increased in the current year, to an amount that is higher than historical fidelity bond coverage. Cause:. The Organization did not compare an estimate of two months of cash collections to existing fidelity bond coverage and increase the coverage appropriately. Effect: There were no negative effects to the Project. Repeat Finding: No. Recommendation: We recommend that the Organization obtain the requisite fidelity bond coverage and to monitor the coverage to ensure it is in compliance with HUD requirements. Views of responsible officials: Fidelity bond was increased accordingly.