Finding 1155697 (2024-003)

USDA Community Facilities Loan Reserve Accounts Material Weakness U.S. Department of Agriculture ALN #: 10.766 Community Facilities Loans and Grants Cluster Federal Award Identification #: CPAP000001205294 Condition: Under the District's USDA Community Facilities loan agreement, the District is required to administer a loan reserve account and a capital asset replacement reserve in which monthly deposits are to be made until the minimum reserve amounts are reached. Criteria: 37 CFR 1942.17(i) Questioned Costs: $0 Context: The District was not properly administering the loan and capital asset replacement reserve accounts as outlined in their USDA loan agreement. Cause: There was oversight by management of the applicable reserve requirements as contained in the loan agreement. Effect: The District did not fund the applicable reserve accounts for the year ended December 31, 2024. Recommendation: We recommend the District review the requirements and establish the minimum reserve funds in future periods as outlined in the loan agreement. View of Responsible Offical and Planned Corrective Action: Management agrees with the finding. See corrective action plan.