Finding Text
2022-003 ? Maintenance of Reserve Account Condition: In 2016 the Agency closed on a U.S. Department of Agriculture Rural Development (?USDA-RD?) loan. This loan requires that the Agency establish and maintain a Reserve Account, contributing to it until the account balance equals one annual payment amount. The balance as of December 31, 2022, should be $3,271.44. The Agency has not yet established such a Reserve Account. Criteria: Provisions of USDA-RD loan document Cause: The liability associated with the USDA-RD note payable was not recorded in the Agency?s financial records. Therefore, the Agency did not establish the required Reserve Account. Effect: As a result of this condition, the Agency did not have the Reserve Account required by the terms of its USDA-RD loan. Recommendation: The Agency should establish a Reserve Account, contribute an amount so as to meet the required balance at that date and continue monthly contributions until the maximum required balance is met. Response: The Agency will establish a Reserve Account and contribute the required amounts on a regular basis.