Finding Text
USDA Community Facilities Loan Reserve Accounts
Significant Deficiency
U.S. DEPARTMENT OF AGRICULTURE ALN #: 10.766 Community Facilities Loans and Grants Cluster
Federal Award Identification #: 0000008718001CFL, 0000009560402CFL, 0000009560403CFL
Condition: Under multiple USDA Community Facilities loan agreements, the College is required to administer a loan reserve account in which monthly deposits are to be made for the first 10 years of the loan or until the loan minimum reserve amount is obtained.
Criteria: 7 CFR 1942.17(i)
Questioned Costs: $0
Context: The College was not properly administering the loan reserves as outlines in their USDA loan agreements.
Cause: Due to changes in management since the loans originated, there was a lack of oversight of the continuing loan reserve requirements across the various loan agreements.
Effect: The College did not make reserve contributions as required during the fiscal year-ended June 30, 2023.
Identification as repeat finding, if applicable: 2022-002.
Recommendation: We recommend the College work with their USDA loan representative to understand their USDA loan reserve requirements for all active and future loan agreements. Additionally, the College should establish the minimum reserve funds that have not been established as of June 30, 2023, and make monthly payments to the reserve account, as outlined in their loan agreements.
Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.