Finding 1160204 (2023-001)

Information on the Federal Program: Federal Agency: U.S. Department of Agriculture (USDA) Program Name: Community Facilities Direct Loan and Grants AL: 10.766. Specific Requirement: In accordance with the loan terms, the Organization is required to annually fund a capital asset replacement reserve of $100,000, debt payment reserve in the amount of $111,696, and a resident asset depletion reserve and facility fill reserve each for $50,000. Condition Found: The Organization did not make the required annual deposits into the debt payment reserve, capital asset replacement reserve, resident asset depletion reserve and the facility fill reserve. Context: We confirmed the balances of the four reserve accounts and identified that all four reserve accounts were not funded in accordance with the USDA loan agreement. Questioned Costs: $209,941. Cause and Effect: The Organization was unable to make required deposits due to cash flow issues. Recommendation: We recommend the Organization make the required deposits into the reserve accounts on an annual basis. Views of Responsible Official and Corrective Action Plan: Management agrees with the finding and recommendation. See Corrective Action Plan attached.