Finding 976332 (2023-005)

U.S. Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Community Facilities Loans and Grants Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance and Noncompliance Not Considered Material Criteria: Article IV of the Authority's Supplemental Bond Indenture agreement dated June 1, 2006, requires the Authority to establish a reserve fund. As approved by the USDA Community Programs Director, the Authority was required to make monthly deposits of $1,350 into the reserve fund beginning in April 2021, until the fund reaches $162,000. Condition: While deposits were made during the year to the debt reserve fund, certain payments were not considered to be made timely. In addition, as of June 30, 2023, the debt reserve fund was required to have a balance of $36,450, however, the balance was $36,041. Cause: The Authority did not have an internal control in place to ensure timely deposits were made to the debt reserve fund, as required. Effect: The Authority's reserve account was not in compliance with the Supplemental Bond Indenture and program requirements as a result of missing or late payments which continue to result in noncompliance with the program. Questioned Costs: None reported. Context: We sampled 4 monthly bank statements and identified there were two monthly deposits during the months of October and June. Repeat Finding from Prior Years: Yes Recommendation: The Authority needs to establish a monthly process to ensure the reserve deposit is made and posted by the bank on a timely basis. Additionally, the Authority should monitor to ensure the reserve fund has an adequate balance based on the requirements. Views of Responsible Officials: Management agrees with the finding.