Finding 384231 (2023-003)

Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Significant Deficiency in Internal Control over Compliance Criteria 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Condition During our testing, there was no formal review separate from the preparer over the reserve fund reconciliations or debt service coverage ratio for the federal program. Cause The Organization did not have an adequate internal control policy in place to ensure review and approval over the reserve funds or debt service coverage ratio. Effect The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs None reported. Context Sampling was not used. Repeat Finding from Prior Years Yes, Finding 2022‐003 Recommendation We recommend the Organization enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials Management agrees with the finding