Finding Text
Finding 2024-005: Deposit Collateralization
Housing Choice Voucher Program – 14.871
Material Weakness/Noncompliance – Special Tests and Provisions
Criteria: The Authority is required to enter into a current depository agreement with its financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD.
Condition: The Authority did have the appropriate HUD depository agreement with its financial institutions but did not monitor to ensure the collateral pledged was an indefinable U.S. Government or Agency security prescribed by HUD in a notice and as a result, collateral that did not meet the terms above were pledged.
Cause: The Authority was not monitoring to ensure the pledged collateral met the terms of the depository agreement.
Effect or Potential Effect: The Authority was in noncompliance with HUD’s requirements.
Recommendation: The Authority should review this situation with the bank in question and obtain appropriate collateral.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.