Finding 574463 (2024-004)

United States Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Special Tests and Provisions Material Weakness in Internal Control over Compliance Criteria: The Center must establish and maintain effective internal control over the reserve fund account that is maintained in accordance with the loan resolution. The Loan Resolution Security Agreement requires a monthly amount to be set aside in a reserve fund until the specified account balance is reached. Condition: There was no documented independent review of the monthly reserve fund account balance as compared to the required minimum balance. Cause: The Center presented the balance of the reserve account to the Governing Board, however, there was no communication to the Governing Board of the required minimum balance per the Loan Resolution Security Agreement. Effect: With no formal review or approval in place, the risk increases for employees participating in the federal award administration to not detect and correct noncompliance in a timely manner. Questioned Costs: None reported. The required reserve balance was appropriately funded as of December 31, 2024. Context/Sampling: Sampling was not used. Repeat Finding from Prior Years: Yes, prior year finding 2023‐004. Recommendation: We recommend management implement procedures to include monitoring over special test and provisions related to federal expenditures including an independent review of the monthly reserve balance to ensure the activity is being monitored and the minimum reserve balance requirement is being met. Views of Responsible Officials: Management agrees with the finding.