FAC Explorer

Audit 6449

FY End
2023-06-30
Total Expended
$95.59M
Findings
4
Programs
7
Organization: Vermont Economic Development Authority (VT)
Year: 2023 Accepted: 2023-12-13
Auditor: Berry Dunn McNeil & Parker LLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
4141 2023-002 Significant Deficiency - N
4142 2023-002 Significant Deficiency - N
580583 2023-002 Significant Deficiency - N
580584 2023-002 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
10.407 Farm Ownership Loans $29.19M - 0
21.027 Coronavirus State and Local Fiscal Recovery Funds $18.50M Yes 0
10.767 Intermediary Relending Program $16.43M - 0
21.031 Coronavirus State Small Business Credit Initiative $10.10M Yes 0
10.406 Farm Operating Loans $9.47M Yes 1
10.768 Business and Industry Loans $7.89M Yes 1
59.012 7(a) Loan Guarantees $4.01M Yes 0

Contacts

Name Title Type
TYPJCLTTGHZ1 Thad Richardson Auditee
8028285719 Robert Smalley Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimis indirect cost rate. The accompanying Schedule of Expenditures of Federal Awards (the Schedule or SEFA) includes the federal grant activity of Vermont Economic Development Authority ("the Authority") for the year ended June 30, 2023. The information in this Schedule is presented in accordance with requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a portion of the operations of the Authority, it is not intended to and does not present the financial position, changes in net position or cash flows of the Authority.
Title: Loan Guarantee Programs Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimis indirect cost rate. The Authority participates in a variety of loan guarantee programs through its component units, the Vermont Agriculture Credit Corporation (VACC), the Vermont 504 Corporation (VT504) and the Vermont Jobs Fund (VJF). Outstanding loan balances and activity under guaranteed loan programs for the period June 30, 2022 through June 30, 2023 are as follows: See the Notes to the SEFA for chart/table.
Title: Intermediary Relending Program Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimis indirect cost rate. The Authority has borrowed funds under AL 10.767, Intermediary Relending Program (IRP) through its blended component units, the Vermont Small Business Development Corporation (VSBDC) and VT 504. The VSBDC and VT 504 make small business loans in Vermont. The total outstanding payable balance of the notes was $10,659,225 at June 30, 2023. Outstanding loan balances receivable and activity under the IRP for the period of June 30, 2022 through June 30, 2023 is as follows: See the Notes to the SEFA for chart/table.
Title: State Small Business Credit Initiative Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimis indirect cost rate. The Authority participates in the State Small Business Credit Initiative (SSBCI) starting in July 2022. The Authority uses these funds to help support private financing to small Vermont businesses. Outstanding loan balances receivable and activity under the SSBCI for the period of June 30, 2022 through June 30, 2023 is as follows: See the Notes to the SEFA for chart/table.

Finding Details

Finding 2023-002
Information on the Federal Program: Federal Agency: United States Department of Agriculture Program Names: Farming Operating Loans; Business and Industry Loans ALs: 10.406; 10.768 Federal Award Year: 2023 Criteria: In accordance with Title 2 U.S. Code of Federal Regulations Part 200, Subpart D, Section 200.303a, the Authority is required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition Found: During our tests of controls relating to the review of loan file maintenance (i.e. Other Business items (OB's)), BerryDunn noted that there is no secondary review of maintenance changes made outside of the Authority's loan system. Context: We noted these conditions while obtaining an understanding of internal control for the respective transaction cycles listed in the findings. Questioned Costs: None noted Cause and Effect: There are no formal procedures documented for a secondary review of changes made to loan information outside the loan system. Maintenance changes are currently tracked in a SharePoint document, but there is no review of changes once they are made. Repeat Finding, if applicable: N/A Recommendation: To reduce the risk of potential errors or fraud, we recommend that management implement a control to complete a secondary, independent review of all loan file maintenance changes, including those made outside the loan system. This control should include documentation to provide evidence the review was completed by an individual that did not make the maintenance change. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding and the recommendation. See Corrective Action Plan on Page 70.
Finding 2023-002
Information on the Federal Program: Federal Agency: United States Department of Agriculture Program Names: Farming Operating Loans; Business and Industry Loans ALs: 10.406; 10.768 Federal Award Year: 2023 Criteria: In accordance with Title 2 U.S. Code of Federal Regulations Part 200, Subpart D, Section 200.303a, the Authority is required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition Found: During our tests of controls relating to the review of loan file maintenance (i.e. Other Business items (OB's)), BerryDunn noted that there is no secondary review of maintenance changes made outside of the Authority's loan system. Context: We noted these conditions while obtaining an understanding of internal control for the respective transaction cycles listed in the findings. Questioned Costs: None noted Cause and Effect: There are no formal procedures documented for a secondary review of changes made to loan information outside the loan system. Maintenance changes are currently tracked in a SharePoint document, but there is no review of changes once they are made. Repeat Finding, if applicable: N/A Recommendation: To reduce the risk of potential errors or fraud, we recommend that management implement a control to complete a secondary, independent review of all loan file maintenance changes, including those made outside the loan system. This control should include documentation to provide evidence the review was completed by an individual that did not make the maintenance change. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding and the recommendation. See Corrective Action Plan on Page 70.
Finding 2023-002
Information on the Federal Program: Federal Agency: United States Department of Agriculture Program Names: Farming Operating Loans; Business and Industry Loans ALs: 10.406; 10.768 Federal Award Year: 2023 Criteria: In accordance with Title 2 U.S. Code of Federal Regulations Part 200, Subpart D, Section 200.303a, the Authority is required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition Found: During our tests of controls relating to the review of loan file maintenance (i.e. Other Business items (OB's)), BerryDunn noted that there is no secondary review of maintenance changes made outside of the Authority's loan system. Context: We noted these conditions while obtaining an understanding of internal control for the respective transaction cycles listed in the findings. Questioned Costs: None noted Cause and Effect: There are no formal procedures documented for a secondary review of changes made to loan information outside the loan system. Maintenance changes are currently tracked in a SharePoint document, but there is no review of changes once they are made. Repeat Finding, if applicable: N/A Recommendation: To reduce the risk of potential errors or fraud, we recommend that management implement a control to complete a secondary, independent review of all loan file maintenance changes, including those made outside the loan system. This control should include documentation to provide evidence the review was completed by an individual that did not make the maintenance change. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding and the recommendation. See Corrective Action Plan on Page 70.
Finding 2023-002
Information on the Federal Program: Federal Agency: United States Department of Agriculture Program Names: Farming Operating Loans; Business and Industry Loans ALs: 10.406; 10.768 Federal Award Year: 2023 Criteria: In accordance with Title 2 U.S. Code of Federal Regulations Part 200, Subpart D, Section 200.303a, the Authority is required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition Found: During our tests of controls relating to the review of loan file maintenance (i.e. Other Business items (OB's)), BerryDunn noted that there is no secondary review of maintenance changes made outside of the Authority's loan system. Context: We noted these conditions while obtaining an understanding of internal control for the respective transaction cycles listed in the findings. Questioned Costs: None noted Cause and Effect: There are no formal procedures documented for a secondary review of changes made to loan information outside the loan system. Maintenance changes are currently tracked in a SharePoint document, but there is no review of changes once they are made. Repeat Finding, if applicable: N/A Recommendation: To reduce the risk of potential errors or fraud, we recommend that management implement a control to complete a secondary, independent review of all loan file maintenance changes, including those made outside the loan system. This control should include documentation to provide evidence the review was completed by an individual that did not make the maintenance change. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding and the recommendation. See Corrective Action Plan on Page 70.