Finding 619250 (2022-002)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-03-30

AI Summary

  • Core Issue: There is a lack of internal controls over compliance with USDA loan requirements, specifically regarding the debt service reserve account.
  • Impacted Requirements: This affects compliance with the USDA Letter of Conditions and government auditing standards, increasing the risk of noncompliance.
  • Recommended Follow-Up: Establish and adequately fund the reserve bank account, and ensure proper budgeting to meet USDA requirements.

Finding Text

Finding 2022-002: Lack of Internal Control over Compliance and Noncompliance with USDA Loan Requirements, USDA Rural Development, Community Facilities Loans and Grants, Award Listing 10.766, Special Tests and Provisions, continuation of 2021-002. Criteria: Government Auditing Standards require adequate internal controls over accounting functions. These internal controls should reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grant agreements that would be material in relation to a federal program being audited may occur and not be detected in the normal course of performing their assigned functions. In accordance with the USDA Letter of Conditions, an adequate reserve is required to be established and properly budgeted for. Condition: During the audit, it was noted the USDA debt service reserve account and balance were not maintained. Cause: Due to a lack of internal controls the reserve account was not established or adequately funded. Potential Effect: Noncompliance with the USDA Letter of Conditions dated March 30, 2011 and with the Special Tests and Provisions of the OMB Compliance Supplement. Questioned Costs: None Recommendation: We recommend establishing and properly funding a reserve bank account and to budget appropriately to maintain the required debt service reserve account balance in accordance with USDA conditions.

Categories

Special Tests & Provisions Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 42808 2022-002
    Material Weakness Repeat
  • 42809 2022-002
    Material Weakness Repeat
  • 619251 2022-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
10.766 Community Facilities Loans and Grants $18,795