Finding Text
Program
Assistance Listing # 14.850 - Public Housing Operating Fund from Department of Housing and Urban
Development (HUD)
Criteria
HUD requires all cash accounts to be federally insurance through FDIC or NCUA coverage. In order to
monitor proper coverage the Housing Commission is required to maintain depository agreements with
their financial institutions. As part of the depository agreement, the financial institution is to monitor
cash accounts and inform the Housing Commission when they are reaching the FDIC or NCUA
coverage threshold.
Condition
The Housing Commission has the proper depository agreements in place with all financial institutions.
However, the cash amount in one of the financial institutions exceeds the federally insured threshold
when considering the total cash deposited in the financial institution between the various programs.
Questioned costs
No questioned costs related to compliance finding.
Context
The Housing Commission relies on the financial institution to notify them when they are approaching
the federally insured threshold.
Effect
The Housing Commission is exposed to a custodial credit risk and the potential for a loss.
Cause
The Housing Commission relied on the financial institution. The Housing Commission also had a
misunderstanding with federal coverage requirements. The Housing Commission thought coverage was
based on the different program's bank accounts and was not aware that federal coverage is based on the
Housing Commission's EIN.
Recommendation
We recommend the Housing Commission move their funds to another financial institution to maintain
proper FDIC or NCUA coverage. We also recommend the Housing Commission monitor's their bank
accounts in order to confirm proper compliance requirements are being followed.
Views of the Responsible Officials and Planned Corrective Action
The Executive Director discussed federal coverage with the auditors and the financial institution to get a
better understanding of FDIC and NCUA coverage. The Executive Director will monitor the bank accounts rather than strictly rely on the financial institutions. The Executive Director has moved the funds to another financial institution to be in fill compliance.