Finding Text
2022-002 ? Reporting of Loan Proceeds and Balances on Schedule of Expenditures of Federal Awards Condition: In 2016 the Agency closed on a U.S. Department of Agriculture Rural Development (?USDA-RD?) loan. In 2018 and 2019 the Agency borrowed a total of $143,098 under this loan. These loan proceeds should have been recorded as a liability in the Agency?s financial records and included as federal expenditures on the Schedule of Expenditures of Federal Awards (?SEFA?) for 2018 and 2019, as loan proceeds were expended. The loan balance as of the beginning of each year should have been included in each subsequent SEFA. Criteria: Provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (?Uniform Guidance?) Cause: The liability associated with the USDA-RD note payable was not recorded in the Agency?s financial records. Therefore, those funds were not identified as federal funds to be included on the SEFA. Effect: As a result of this condition, the Agency?s financial records did not include the liability associated with the USDA-RD loan and its SEFA for 2018 and 2019 did not include the receipt and expenditure of the loan funds. Further, the SEFA for 2020 and 2021 did not include the appropriate disclosure of the beginning balance of the loan amount, as required by Uniform Guidance. Recommendation: The Agency should ensure that its financial records include all of its liabilities incurred and its Schedule of Expenditure of Federal Awards is accurately and completely presented. Response: The Agency is committed to presenting its Schedule of Expenditure of Federal Awards is presented in accordance with Uniform Guidance.