Finding Text
Finding 2022-003: U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)/207) Statement of Condition: At December 31, 2022, the Project had $20,273 of funds maintained in an institution that were in excess of FDIC insured limits. Criteria: The HUD Handbook 4370.2, Chapter 2, requires that the cash accounts of the Project be deposited in a bank or banks whose deposits are federally insured. Effect: Noncompliance with HUD regulations. Cause: Management did not transfer funds to separate financial institutions in a timely manner to provide for continuous FDIC insurance coverage. Context: A test was performed to compare the total funds held at each institution to the $250,000 federally insured limit. At December 31, 2022, the total funds held at one bank was $270,273, which was $20,273 in excess of the $250,000 federally insured limit. Recommendation: We recommend that the Project continuously monitor cash balances to ensure that funds are always covered by FDIC insurance limits, collateral agreements are obtained, or funds are invested in government securities. Questioned Costs: N/A Views of Responsible Officials and Corrective Action Plan: Management acknowledges the Project funds were in excess of FDIC insured limits and will transfer funds to provide adequate FDIC insurance coverage for all cash accounts.