Finding Text
Finding 2024-002:
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Titles: Public and Indian Housing Program, Section 8 Housing Choice Vouchers Program Federal Assistance Listing Numbers: 14.850, 14.871
Noncompliance – N. Special Tests and Provisions – Depository Agreements
Non Compliance Material to the Financial Statements: No
Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions
Criteria: PHAs are required to enter into depository agreements with their financial institution using the HUD-51999 (OMB No. 2577-0075) or a form required by HUD in the ACC. The agreements serve as safe guards for Federal funds and provide third-party rights to HUD (Section 9 of the ACC). Condition: Based on inspection of files and discussions with management, it was determined that depository agreements were not on file during the time of audit.
Context: The Authority did not have depository agreements with their financial institutions on file during the time of audit. We were unable to verify the existence of depository agreements and unable to determine if the Authority met the terms of the agreements.
Cause: There is a significant deficiency in internal controls over compliance for the special tests and provision type of compliance related to depository agreements. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls for their partnered management company that assures the program is in compliance.
Effect: The Public and Indian Housing and Section 8 Housing Choice Vouchers Programs are in non-compliance with the special tests and provisions type of compliance related to depository agreements.
Recommendation: We recommend that the Authority properly file HUD-51999 forms in accordance with HUD guidelines.
Authority Response: The Authority accepts the recommendation of the auditor and will properly file HUD-51999 forms in accordance with HUD guidelines.