Finding 1152219 (2023-004)

Program Name: Community Facilities Loans and Grants Cluster Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions Questioned Costs: None Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The District did not establish a debt reserve fund as required by the federal award agreement. Cause: The District lacked a system of internal controls necessary to ensure the reserve fund balance was in compliance with the federal award agreement. Effect: The lack of adequate policies governing the monitoring of the required debt covenants and the establishment and funding reserves increases the risk that employees may not be able to detect and correct noncompliance in a timely manner. Recommendation: We recommend that management establish the required reserve fund. View of Responsible Management agrees with this finding and has committed the resources necessary to Officials: maintaining an adequate reserve fund.