Core Issue: The organization failed to obtain required fidelity bond coverage for individuals handling loan funds.
Impacted Requirements: Compliance with the loan Letter of Conditions, specifically regarding fidelity bonds.
Recommended Follow-Up: Annually review the Letter of Conditions and loan agreements to ensure all requirements are met.
Finding Text
Federal Agency: U.S. Department of Agriculture (USDA)
Federal Program Name: Community Facilities Loans and Grants
Assistance Listing Number: 10.766
Federal Award Identification Number and Year: CF27087L136368-2013
Pass-Through Agency: N/A
Pass-Through Number(s): N/A
Award Period: 2022
Type of Finding: Material Weakness in Internal Control and Compliance
Criteria or specific requirement: The loan Letter of Conditions of requires position fidelity bonds are
carried on individuals entrusted with receipt and/or disbursements.
Condition: Management did not obtain an insurance policy that carried the required fidelity bond
coverage.
Questioned costs: None
Cause: The loan was issued under previous management and the requirements were not known by
management.
Effect: The Organization was not in compliance with the letter of conditions.
Repeat Finding: No
Recommendation: The Organization should review the Letter of Conditions and loan agreement to
ensure all requirements are being met on an annual basis.
Views of responsible officials: Management will review policies and procedures to ensure
compliance is met
Corrective Action Plan
Material Weakness in Internal Control and Compliance
Recommendation: The Organization should review the Letter of Conditions and loan agreement to ensure all requirements are being met on an annual basis.
Explanation of disagreement with audit finding: There is no disagreement with the audit finding.
Action taken in response to finding: Management will review policies and procedures to ensure compliance is met going forward and will obtain required insurance coverage as noted in the Letter of Conditions.
Name(s) of the contact person(s) responsible for corrective action: Lori Guenther, CFO
Planned completion date for corrective action plan: Q2 of 2023
Categories
Questioned CostsMaterial WeaknessMatching / Level of Effort / EarmarkingInternal Control / Segregation of Duties