Finding 1114588 (2024-001)

Special Tests and Provisions - Depository Agreements Finding Number: 2024-001 Assistance Listing Number and Title: AL # 14.871 Section 8 Housing Choice Vouchers and AL #14.879 Mainstream Vouchers Federal Award Identification Number / Year: 2024 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Special Tests and Provisions - Depository Agreements Pass-Through Entity: None Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR §1201.1 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200 which sets forth the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. 24 CFR § 982.156 states in part that all program receipts must be promptly deposited with a financial institution selected as depositary by the Authority in accordance with HUD requirements. It further states that the Authority must enter into an agreement with the depositary in the form required by HUD. Due to deficiencies in compliance with depository agreements, the Authority did not have a signed depository agreement with Park National Bank on the form required by HUD. Failure to use the HUD required form to enter into a depository agreement with Park National Bank can lead to noncompliance with program requirements and mishandling of federal funds. To prevent noncompliance and mishandling of federal funds, the Authority should enter into a depository agreement with Park National Bank using the form prescribed by HUD.