Finding Text
USDA Rural Development - Water and Waste Disposal Loans, Loan Guarantees, and Grants ALN 10.770 Federal Award Year 2022 - Material Weakness - Immaterial Non-Compliance - Failure to implement requirements in the letter of conditions provided by USDA related to funding. Criteria: The letter of condition dated July 31, 2017 and reiterated in the letter of condition dated March 11, 2022, provided that the District must establish a separate construction account that meets the requirements of 31 CFR Part 202, and that all funds be deposited into the account. Financial institutions or depositories accepting deposits of public funds are required to pledge adequate, acceptable securites as collateral. All funds in the account will be secured by a collateral pledge equaling at least 100% of the highest amount of funds expected to be deposited in the construction account at any one time. The letter also required position fidelity bonds for all persons entrusted with the receipt and/or disbursement of funds. The minimum coverage for each position to be bonded is to be at least one annual installment on the bond. Condition - The district did not secure collateral for the construction account, deposited bond proceeds into the general fund account which in turn paid for budgeted construction allowed under the federal funding and/or transfered the balance to the construction account. The position fidelity bonds were not obtained. Questioned costs - None. Repeat finding - No. Cause - The district did not assign any staff personnel to oversee compliance with these requirements. Recommendation - The district should immediately secure collateral for the construction account and obtain the required position fidelity bond. Some individual within the district managment, or some external contracted professional, should be appointed as compliance officer with respect to compliance matters not being handled by the district's engineering firm.