Finding Text
Federal agency: U.S. Department of Agriculture Federal program title: Communities Facilities Loans & Grants Assistance Listing Number: 10.766 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: September 1, 2024 through August 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Compliance Requirement: Special Provisions Criteria or specific requirement: The Foundation has certain reserves with minimum funding requirements related to their USDA loan. Condition: The Foundation's internal controls over compliance were not effective. The calculation for the Replacement and Extension Account was not done so they were not able to determine if the account was properly funded. Questioned costs: None Context: During the audit, it was discovered that the Foundation was not calculating the required funding level for the Replacement and Extension Account nor funding the reserves in accordance with the Security Agreement. The reserve accounts were underfunded by approximately $43,000 for the year ended August 31, 2025. Cause: Management oversight. Effect: The Foundation could be out of compliance with the covenants of the Loan and Security Agreement. Repeat finding: Y Recommendation: We recommend the Foundation design controls to ensure that calculation is completed in accordance with the loan agreement and funded in full prior to the end of each fiscal year. Views of responsible officials: There is no disagreement with the audit finding. A waiver of the funding requirement was obtained for the year ended August 31, 2025. Management will incorporate the funding calculation for the Replacement and Extension Account into the reconciliations to be performed and reevaluated monthly.