Finding Text
Audit Finding 2024-004 – Depository Agreements
Criteria:
Code of Federal Regulations § 982.156 requires depository agreements to be deposited with a financial institution selected as depositary by the PHA in accordance with HUD requirements.
Condition:
During the audit we noted the Authority did not have depository agreements with the banks. The HUD Financial Management Handbook requires that any portion of Housing Authority Funds not insured by a Federal insurance organization shall be fully (100%) and continuously collateralized with specific and identifiable U.S. Government or Agency securities prescribed by HUD in a notice. Collateralization is required on a daily basis at the end of the business day. Such securities shall be pledged and set aside in accordance with applicable law or Federal regulations. The Authority had insufficient pledged collateral as of June 30, 2024, which caused the Authority’s deposits to be under collateralized by approximately $22,313.
Cause:
The Authority did not have all the necessary forms for single audit compliance and did not have an internal control system designed to properly monitor the requirements of pledged collateral. Effect:
The Authority is not in compliance with Federal Award Programs and did not have sufficient collateral pledged.
Recommendation:
We would recommend the Authority completes the necessary forms with the bank to ensure compliance and to monitor all deposits to determine if there is adequate collateral pledged to secure deposits in accordance with HUD regulations.
Views of Responsible Official:
Management agrees with the finding.