Finding Text
Federal agency: U.S. Department of Agriculture
Federal program title: Communities Facilities Loans & Grants
Assistance Listing Number: 10.766
Pass-Through Agency: N/A
Pass-Through Number(s): N/A
Award Period: September 1, 2023 through August 31, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters
Compliance Requirement: Special Provisions
Criteria or specific requirement: The Foundation has certain reserves with minimum funding
requirements related to their USDA loan.
Condition: The Foundation's internal controls over compliance were not effective. The calculation for
the Replacement and Extension Account was not done so they were not able to determine if the
account was properly funded.
Questioned costs: None
Context: During the audit, it was discovered that the Foundation was not calculating the required
funding level for the Replacement and Extension Account nor funding the reserves in accordance with
the Security Agreement. The reserve accounts were underfunded by approximately $38,000 for the
year ended August 31, 2024.
Cause: Management oversight.
Effect: The Foundation could be out of compliance with the covenants of the Loan and Security
Agreement.
Repeat finding: Y
Recommendation: We recommend the Foundation design controls to ensure that calculation is
completed in accordance with the loan agreement and funded in full prior to the end of each fiscal year.
Views of responsible officials: There is no disagreement with the audit finding. A waiver of the
funding requirement was obtained for the year ended August 31, 2024. Management will incorporate
the funding calculation for the Replacement and Extension Account into the reconciliations to be
performed and reevaluated monthly.