Finding Text
Criteria: HUD guidelines require cash to be maintained in financial institutions, which meet minimum
Government National Mortgage Association (GNMA) ratings, when balances exceed federal
insurance limits.
Condition: The Organization maintains cash balances in excess of federally insured limits in a
financial institution that does not meet HUD guidelines.
Questioned Costs: None
Context: The cash balance at December 31, 2023 was approximately $1,300,000, held in two
financial institutions, which exceeded federal insurance limits by approximately $800,000.
Effect: No negative effect was discovered during the audit.
Cause: As the Organization is a community based nonprofit organization, management considers
supporting a local bank to be a worthwhile endeavor.
Repeat finding: Yes, prior year finding 2022-001.
Recommendation: The Organization should transfer all funds to a financial institution that meets
HUD guidelines.