Audit 370637

Information on the Federal Program: Federal Agency: U.S. Department of Agriculture (USDA) Program Name: Community Facilities Direct Loan and Grants AL: 10.766 Specific Requirement:In accordance with the loan terms, the Organization is required to annually fund a capital asset replacement reserve of $100,000, debt payment reserve in the amount of $1,116,960, and a resident asset depletion reserve and facility fill reserve each for $50,000. Condition Found: The Organization did not make the required annual deposits into the debt payment reserve, capital asset replacement reserve, resident asset depletion reserve, and the facility fill reserve. Context: We confirmed the balances of the four reserve accounts and identified that all four reserve accounts were not funded in accordance with the USDA loan agreement. Questioned Costs: $515,095 Cause and Effect: The Organization was unable to make required deposits due to cash flow issues. Recommendation: We recommend the Organization make the required deposits into the reserve accounts on an annual basis. Views of Responsible Official and Corrective Action Plan: Management agrees with the finding and recommendation. See Corrective Action Plan attached.

Information on the Federal Program: U.S. Department of Agriculture (USDA) Program Name: Community Facilities Direct Loan and Grants AL: 10.766 Specific Requirement: Per 2 CFR § 200.512(a), the auditee must submit the data collection form (DCF) and reporting package to the Federal Audit Clearinghouse within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the auditee’s fiscal year. Condition Found: The audit for the year ended December 31, 2023, was not submitted to the Federal Audit Clearinghouse until October 8, 2025, after the required submission deadline of September 30, 2024. Questioned Costs: None. Cause and Effect: The Organization was unable to make submit the DCF and reporting package to the Federal Audit Clearinghouse before the submission deadline due to delays in the audit of the consolidated financial statements due to a delay in the debt workout plan from USDA. The late submission placed the auditee in noncompliance with Uniform Guidance reporting requirements. This could impact the auditee’s eligibility for future federal funding and may be considered in the federal agency’s risk assessment Recommendation: Management should implement procedures to help ensure the timely completion of future audits and submission of the reporting package to the Federal Audit Clearinghouse. Views of Responsible Official and Corrective Action Plan: Management agrees with the finding and recommendation. See Corrective Action Plan attached.