Finding Text
FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT
Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182
STATEMENT OF CONDITION
The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000.
CRITERIA
HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail.
EFFECT OF CONDITION
The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024.
CONTEXT
Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit.
CAUSE OF CONDITION
The Project’s bank accounts exceeded the FDIC limit at September 30, 2024.
RECOMMENDATION
The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit.
VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS
Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000.
Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions:
1. Risk Mitigation Plan
Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category.
2. Diversification of Funds
The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure.
3. Ongoing Monitoring
Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold.
4. Policy Update
Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed.
Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.