During an audit we found a CD opened for a cemetery trust. The CD was opened for only five days. Its maturity date showed only five days. The CD matured and the principal funds and a small bit of interest earned were transferred into the cemetery’s operating/maintenance DDA.

Didn’t this activity breach the definition of 12 CFR 204.2(c)(1)(i) “time deposit”?

From an audit stand point, how should this be conveyed to management?
Is it a violation?

Thank you

It was not a "time deposit". Unless it was for a large amount and over a reporting period (call report, FR2900, etc.) - there should be no actual harm. Just make sure that controls are in place to prevent it in the future.

rlcarey, Thank you.
Although our system recorded it as a CD (our mistake), but it didn't really meet the criterion, would it be considered a savings account or DDA?
The total $ was +/-$4,000. What is the FR2900? I am not familiar with this.
As far as you are concerned, this would not be a violation, right?
Thank you

As far as what it was - it is hard to say. If you consider it a DDA, since you paid interest on the funds, you would violate Regulation Q.

The FR2900 is the reserve report to the Fed.

Is it a violation - I would have to say yes as you briefly misstated your books and possibly violated Reg D and Q. Is there anything you can do about it - I would say no.