Core Issue: The organization failed to fund the required debt service account of $99,820 as specified in the loan Letter of Conditions.
Impacted Requirements: Non-compliance with the loan agreement's stipulations regarding the establishment and funding of the debt service fund.
Recommended Follow-Up: Management should annually review the Letter of Conditions and loan agreement to ensure all requirements are met and implement necessary policy changes.
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 requires a separate debt service fund
to be established and funded up to $99,820.
Condition: Management did not fund the debt service account in accordance with the Letter of
Conditions.
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 going forward. Management is in the process of implementing changes to correct the
issue.
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 establish a debt service fund in accordance with 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