Finding Text
2023-005 Special Tests and Provisions: Depository Agreements
Federal Program
U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency
Grant Award No.
ND014-Housing Choice Voucher
Federal Award Year
2023
Criteria
PHAs are required to enter into depository agreements with their financial institutions in the form
required by HUD (24 CFR section 982.156). The Authority is required to meet the terms of the
agreements.
Condition
The Authority did not meet all the terms set forth by the depository agreements. It was noted that one
account was not properly collateralized.
Questioned Costs
None
Context
We reviewed the depository agreements required by HUD for bank accounts holding HCV funds.
Effect
The Authority’s deposits are not covered by collateral and If the bank fails, deposits would be at risk
of being lost.
Cause
The pledged collateral did not exceed deposits over FDIC coverage at the point in time in which
deposits were highest.
Repeat Finding
Not a repeat finding.
Recommendation
We recommend the Authority reviews pledged collateral balances and deposits on a monthly basis to
ensure proper coverage is maintained.
Views of Responsible Officials
Management recognizes the deficiency and plans to implement the auditor’s recommendation.