Audit 401030

Finding Number: 2025-001 Information on the Federal Program: Federal Agency: United States Department of Agriculture Program Names: Community Facilities Loans and Grants AL: 10.766 Federal Award Year: 2024 Criteria: The Association was required to deposit $8,335 annually into a reserve account for a 10-year period beginning October 2, 2010, until the reserve account reached a balance of $100,020. Subsequent to the 10-year funding period, the Association is required to maintain a minimum balance of $100,020. Condition Found: During the audit we noted the Association has not maintained the reserve balance as required. Context The Community Facilities Loan and Grant was assumed by the Association through an acquisition of Sandcastle. It was also noted through the review of the original Loan Resolution and Letters of Conditions, two different amounts were noted for the required reserve balance of $11,152 and $111,516, respectively. Questioned Costs None. Cause and Effect: The Association intended to sell the property associated with the Community Facilities Loan and Grant and therefore decided not to fund the reserve to the required amount. The property was sold and the Association no longer held the loan as of December 31st, 2025. Identification as a Repeat Finding, if Applicable: Yes, 2024-001 Recommendation: Due to the sale of the property and repayment of the loan prior to December 31, 2025, there are no further actions to take on the Association’s part. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding and the recommendation. See Corrective Action Plan attached.