Finding Text
United States Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Special Tests and Provisions Significant Deficiency in Internal Control over Compliance Criteria: The Center must establish and maintain effective internal control over the reserve fund account that is maintained in accordance with the loan resolution dated and the workout agreement. The Loan Resolution Security Agreement requires a monthly amount to be set aside in a reserve fund until the specified account balance is reached. During 2025, a Community Programs Workout Agreement was signed allowing for withdrawals from April 2025 through November 2025 totaling $61,375 to be utilized to make monthly mortgage payments with monthly deposits of $11,000 to be resumed in December 2025 until the specified account balance is reached. Condition: For eight of the twelve months, the Center did not document an independent review of the monthly reserve fund account balance as compared to the required minimum balance. Cause: The Center did not present the balance of the reserve account or compliance of the reserve account per the Loan Resolution Security Agreement or the Community Programs Workout Agreement for balances during January through August. Effective September, the balance of the reserve account, minimum required reserve balance and compliance of the reserve was presented to the board with formal documentation of review and approval being retained. Effect: With no formal review or approval in place for eight of twelve months, the risk increases for employees participating in the federal award administration to not detect and correct noncompliance in a timely manner. Questioned Costs: None reported. The required reserve balance was appropriately funded as of December 31, 2025. Context/Sampling: Sampling was not used. Repeat Finding from Prior Years: Yes, prior year finding 2024-004. Recommendation: No recommendations at this time as management properly implemented a process of review and approval over the required reserve balance effective September 2025. Views of Responsible Officials: Management agrees with the finding.