Redhill Forest Property Owners, Mutual Water and Cattle Association

Finding 2021-002: U.S. Department of Agriculture - Water and Waste Disposal Systems For Rural Communities - ARRA Assistance Listing # 10. 781. Reporting, Significant Deficiency Criteria: The loan conditions require the annual budget and projected cash flow, current rate schedule, and current listing of the Board of Directors (collectively the "Required Reports") be submitted thirty days prior to the beginning of each fiscal year. Condition: The Required Reports were not filed in a timely manner. Effect: Failure to submit reports on time could cause a negative impact on any future financial assistance requests. Questioned Costs: None. Cause: The Association did not submit the Required Reports on time. Recommendation: We recommend that the Association review its procedures to ensure reports are remitted on time in accordance with the terms outlined by the agreement.

U.S. Department of Agriculture - Water and Waste Disposal Systems For Rural Communities - ARRA Assistance Listing# 10. 781. Reporting, Material Weakness Criteria: Per Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart F, section 200.501(a), a non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single audit or program specific audit conducted for that year. Furthermore, per Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Subpart F, section 200.502(d), loans, the proceeds of which were received and expended in prior years, are not considered Federal awards expended under this part when the Federal statutes, regulations, and the terms and conditions of Federal awards pertaining to such loans impose no continuing compliance requirements other than to repay the loans. Additionally, per the loan conditions, the Association does have additional compliance requirements in addition to repayment of the loan until the loan balance is less than $1,000,000. Condition: The Association did not have Single Audits performed for the years ended December 31, 2020 and 2019. Effect: The Association was not in compliance with this requirement and accordingly, the Data Collection Form packages were not submitted to the Federal Audit Clearinghouse for the years ended December 31, 2020 and 2019. The Association did communicate this issue to their cognizant agency and the requirement was waived for these two years. Questioned Costs: None. Cause: The Association changed property management companies, auditors and had significant turnover in the Board of Directors. The Board of Directors and management during this time period was unaware of this requirement. Recommendation: We recommend that the Association continue to have Single Audits performed and Data Collection Forms filed with the Federal Audit Clearinghouse to be in compliance with Uniform Guidance and the loan conditions.