Finding Text
Finding # 2024-003 – Special Tests and Provisions
AL# 10.415 U.S. Department of Agriculture - Rural Development
Questioned Cost: $40,486
Repeat Finding: Yes – 2023-002
Criteria: Deposits to the reserve account were not made in accordance with the
requirements of the program.
Condition: Owners, as required, shall establish a reserve for replacement account and
make deposits in accordance with RD requirements, usually the loan agreement or other
similar business agreement.
Cause: Staff missed setting up the recurring deposit but noted this prior to the audit and
made the catch-up payment as required in 2025.
Effect: The Project’s replacement reserve was underfunded for the year.
Auditor’s Recommendation: Reserve deposits should be made timely.
View of Responsible Officials: Management agrees with the finding and has implemented
a corrective action plan.