Audit 113

Finding 2023-001: Special Tests and Provisions Housing Choice Voucher/Public Housing Material Weakness/Noncompliance Criteria: PHAs are required to enter into depository agreements with their financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: The Authority previously had the majority of its funds with one financial institution for which it did have the required General Depository Agreement, Form HUD 51999, although it was not the current version. During the current year, to help maximize return, the Authority moved funds to different financial institutions but did not have controls in place to ensure the General Depository Agreement was completed before accounts were opened. The Authority had three different financial institutions that had either Housing Choice Voucher or Public Housing funds. One financial institution had the General Depository Agreement although it was not the current one. The Authority did not have the General Depository Agreement with the other two financial institutions. Further, with one of the financial institutions the Authority had both Public Housing program and nonHUD program funds in and the combined bank balance at March 31, 2023 was $503,780.82. Of the $503,780.82, $250,000 had FDIC insurance coverage and the other $253,780.82 was neither insured or collateralized against loss. Cause: The Authority did not have procedures in place to ensure it had the required General Depository Agreement with all banks that had either Public Housing or Housing Choice Voucher funds. Effect or Potential Effect: The Authority was in noncompliance and further had Public Housing funds exposed to loss as they were not insured or collateralized against loss. Recommendation: The Authority obtain General Depository Agreements with all financial institutions that have either Public Housing or Housing Choice Voucher funds in them. The Authority should periodically monitor to ensure it has the most up-to-date form and review whether the bank balances are adequately insured and collateralized against loss. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.

Finding 2023-001: Special Tests and Provisions Housing Choice Voucher/Public Housing Material Weakness/Noncompliance Criteria: PHAs are required to enter into depository agreements with their financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: The Authority previously had the majority of its funds with one financial institution for which it did have the required General Depository Agreement, Form HUD 51999, although it was not the current version. During the current year, to help maximize return, the Authority moved funds to different financial institutions but did not have controls in place to ensure the General Depository Agreement was completed before accounts were opened. The Authority had three different financial institutions that had either Housing Choice Voucher or Public Housing funds. One financial institution had the General Depository Agreement although it was not the current one. The Authority did not have the General Depository Agreement with the other two financial institutions. Further, with one of the financial institutions the Authority had both Public Housing program and nonHUD program funds in and the combined bank balance at March 31, 2023 was $503,780.82. Of the $503,780.82, $250,000 had FDIC insurance coverage and the other $253,780.82 was neither insured or collateralized against loss. Cause: The Authority did not have procedures in place to ensure it had the required General Depository Agreement with all banks that had either Public Housing or Housing Choice Voucher funds. Effect or Potential Effect: The Authority was in noncompliance and further had Public Housing funds exposed to loss as they were not insured or collateralized against loss. Recommendation: The Authority obtain General Depository Agreements with all financial institutions that have either Public Housing or Housing Choice Voucher funds in them. The Authority should periodically monitor to ensure it has the most up-to-date form and review whether the bank balances are adequately insured and collateralized against loss. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.