Finding Text
2024-006 ALN 14.850 – Public Housing Operating Fund – Special Test - Depository Agreements
Condition and Criteria:
In accordance with the Annual Contributions Contract (ACC) and supporting HUD regulations like 24 CFR, part 990, Public Housing Authorities are required to maintain depository agreements (HUD-51999) with financial institutions that hold their funds.
During our audit, it was determined that the Authority was unable to locate depository agreements with the two financial institutions that hold their funds.
Amount of Questioned Costs:
None
Context:
The Authority was unable to locate depository agreements with the two financial institutions that hold their funds.
Cause:
Due to recent personnel changes, the Authority's current management was unable to successfully locate Form HUD-51999 with the financial institutions that hold their funds.
Effect or Potential Effect:
Depository agreements include provisions ensuring that the deposited funds are secured or collateralized. The lack of depository agreements could result in improper collateralization of HUD funds.
Auditor’s Recommendation:
We recommend that the Authority's management take the necessary steps to obtain depository agreements from the two financial institutions that hold their funds. We also recommend that the Authority implement internal controls to detect when required HUD documentation is not present.
Grantee Response:
Management acknowledges the finding and will follow the auditor’s recommendation.