Finding Text
The insurance coverage for the property had been consolidated with the management company (TCCC) at the end of 2020. It was determined in early 2022 that only property insurance, but not general liability or D&O insurance was in place. The Project obtained general liability coverage in March 2022. The Project obtained property insurance coverage in October 2022. The Project had no D&O or fidelity bond coverage for the year ending December 31, 2022. Additionally, TCC did not have crime liability insurance until October 2022. Cause: Management of TCCC did not receive a breakdown from their insurance agent of the property, general liability and D&O or fidelity insurance that it paid on a consolidated basis as to how the insurance was allocated between the management company and the Project. Management assumed that the Project was covered by the consolidated general liability policy and only was informed in 2022 that this was not the case and that the Project was only covered by property insurance and not general liability or D&O. The Project bought an individual policy for general liability coverage in March 2022. TCCC still covered the Project for property insurance, but it did not obtain this coverage until October 2022. There was no coverage for D&O or fidelity bond. Effect: The Property did not have certain insurance coverage required by their regulatory agreement and had a lapse in other required insurance coverage. Noncompliance code: Z. Other Questioned cost: None Reporting views of officials: Management agrees with the finding. Context: This was an oversight by management due to not receiving detailed information from the insurance company. Recommendation: The proper amount of insurance coverage as required by the regulatory agreement should be put in place for the Project immediately. Auditors' summary of auditee's comments: They are in agreement and are in the process of obtaining all required coverage. Completion date: 12/31/23 Response: Management is in the process of obtaining all required insurance coverage. Corrective Action: In progress