Finding Text
Finding Number: 2022-006 Information on the Federal Program: Federal Agency: United States Department of Agriculture Program Name: Intermediary Relending Program CFDA: 10.767 Federal Award Year: 2022 Specific Requirement: In accordance with Loan Agreement under the Intermediary Relending Program dated March 16, 1995, the Intermediary (VEDA) will require Ultimate Recipients (the borrowers) to provide life insurance, which may be decreasing term insurance, such life insurance will be assigned or pledged to the Intermediary and subsequently to the Government. Condition Found: We noted that VEDA does not require the Ultimate Recipients to maintain appropriate life insurance, nor do they request documentation to verify that adequate cover and assignments are in existence for all loans. Context: We noted these conditions for all four of the seven new loans that were entered into with Ultimate Recipients during the grant year Questioned Costs: None noted Cause and Effect: The Authority was aware of the requirement to obtain support from the borrowers of life insurance that was adequate cover and assignments are in existence for all loans, but they did not have a process to request or maintain these documents. As a result, there is a risk that a borrower does not have adequate life insurance as required under the federal guidelines. Repeat Finding, if Applicable: N/A Recommendation: We recommend that management implement a process to request and maintain the documentation to support that each borrower under the IRP has adequate cover and assignments are in existence for all applicable loans.