Finding Text
Condition: A withdrawal from the replacement reserve account was not approved by the USDA.
Criteria: A good system of internal control requires proper controls in place to ensure all replacement reserve withdrawals have a proper USDA approval.
Cause: A withdrawal totaling $35,930 was used to pay for apartment renovations without prior approval from USDA.
Effect of Potential Effect: The replacement reserve account had a withdrawal without USDA’s approval.
Recommendation: We recommend that controls are implemented to ensure the proper approvals are received for all withdrawals.
View of Responsible Officials
and Planned Corrective
Action: Management agreed with the recommendation and will ensure all proper approvals are received prior to any withdrawals from the replacement reserve.