Finding Text
2024-009 ALN 14.850 – Public Housing Operating Fund – Special Tests and Provisions – Depository Agreements
Condition and Criteria:
Per HUD regulations and the Annual Contributions Contract (ACC), PHAs must execute and
maintain a fully executed HUD Form 51999 with each depository in which federal funds are
held. This agreement outlines the responsibilities of the financial institution and ensures that
federal funds are protected in accordance with HUD requirements.
During our testing of special tests and provisions related to depository agreements for the
Public Housing program, the Authority was unable to provide documentation of an executed
HUD Form 51999 – General Depository Agreement – for its financial institutions during the
audit period. This form is required to be on file to ensure compliance with HUD regulations
governing the custody and handling of federal funds.
Amount of Questioned Costs:
None.
Context: The HUD Form 51999 – General Depository Agreement that was in place during the audit
period was unable to be provided.
Cause:
The absence of an executed agreement appears to be due to a lapse in internal control and
recordkeeping procedures related to required HUD documentation. This was the result of prior
management's record keeping and current management being unable to locate documentation
that was maintained by the prior management.
Effect:
Without a properly executed HUD Form 51999, there is an increased risk that federal funds
are not adequately protected or handled in accordance with HUD regulations. It also
represents noncompliance with special tests and provisions requirements under the PH
program.
Auditor’s Recommendation:
We recommend that the Authority strengthen its internal controls to ensure all required HUD
depository agreements are fully executed and maintained on file for all institutions holding
program funds. A periodic compliance review should be conducted to confirm all depository
agreements are current and properly executed
Grantee Response:
Management acknowledges the finding and will follow the auditor’s recommendation.