(05-12-87) SPECIAL PN
RD Instruction 1924-A
§ 1924.13(e)(1)(iii)(B) (Con.)
(2) A current, dated, and signed financial statement of the contractor's operations indicating the payment status of accounts and any contingent liabilities that may exist. Rural Development personnel will be responsible for analyzing the financial statement as to the sufficiency of the contractor's financial capability to carry out construction. The financial strength must demonstrate the ability of the contractor to pay all bills prior to receiving periodic draws of funds from the lender. (Revised 03-16-94, SPECIAL PN.)
(3) A credit report (obtained at no expense to Rural Development) attesting to the contractor's credit standing.
(4) A listing of trade references that could be contacted to substantiate the contractor's experience and good standing.
(5) Statements from owners for whom the contractor has done similar work, indicating the scope of the work and the owner's evaluation of the contractor's performance.
(C) For loans or grants to applicants other than non-profit organization or public bodies that are in excess of the State Director's approval authority, the State Director may request National Office authorization to grant one of the exceptions to the surety requirements as indicated in §1924.6 (a)(3)(iii) of this subpart. The following information must be submitted with the request to the National Office:
(1) An explanation of why interim financing is not available.
(2) An explanation of why the proposed contractor cannot obtain surety bonds meeting the requirements of §1924.6 (a)(3)(ii) of this subpart.
(3) The information listed in paragraph (e)(1)(iii)(B) of this section.
(4) The drawings and specifications for the proposed project, together with the comments of the State architect/engineer.
§1924.13 (e)(1)(iii)(C) (Con.) RD Instruction 1924-A
(5) The applicant's written request for an exception.
(6) An explanation of why the requirements of §1924.6 (a)(3)(iii)(A) or (B) of this subpart cannot be met in those cases where the State Director requests authorization to grant an exception as indicated in §1924.6 (a)(3)(iii)(C) of this subpart. When such a request is made, the documentation must also be forwarded.
(7) The State Director's recommendation.
(D) Adequate steps will be taken to protect the interests of the borrower and the government in accordance with the payment provisions of § 1924.6(a)(12)(i) of this subpart and any alternative as outlined in §1924.6 (a)(3)(iii)(C) of this subpart.
(iv) Contract cost breakdown. In any case where the loan approval official feels it appropriate, and prior to the award or approval of any contract in which there is an identity of interest as defined in §1924.4 (i) of this subpart, the contractor and any subcontractor, material supplier or equipment lessor sharing an identity of interest must provide the applicant and Rural Development with a trade-item cost breakdown of the proposed contract amount for evaluation. The cost of any surety as required by §1944.222 (h) and (i) of Subpart E of Part 1944 of this chapter and §1924.6 (a)(3) of this subpart, or cost certification as required by §1924.13 (e)(1)(v) of this section, will be included in the proposed contract amount and shown under General Requirements on Form RD 1924-13, which is available in all Rural Development offices. Rural Development personnel will be responsible for reviewing the estimates on Form RD 1924-13 to determine if the dollar amounts total correctly, to assure that costs are categorized under their appropriate columns, and to confirm that the estimated costs for all line items are reasonable and customary for the State. (Revised 03-16-94, SPECIAL PN.)
(v) Cost certification. Whenever the State Director determines it appropriate, and in all situations where there is an identity of interest as defined in §1924.4 (i) of this subpart, the borrower, contractor and any subcontractor, material supplier, or equipment lessor having an identity of interest must each provide certification using Form RD
1924-13 as to the actual cost of the work performed in connection with the construction
(05-12-87) SPECIAL PN
RD Instruction 1924-A
§1924.13 (e)(1)(v) (Con.)
contract. The construction costs, as reported on Form RD 1924-13, must also be audited, in accordance with Government Auditing Standards, by a CPA, or LPA licensed on or before December 31, 1970. In addition, certain agreed upon procedures (available in any Rural Development office) will be performed in accordance with Attestation Standards. In some cases, Rural Development will contract directly with a CPA or LPA for the cost certification. In that event, documentation necessary to have the costs of construction certified by an Rural Development contractor that they were the actual costs of the work performed, as reported on Form RD 1924-13, will be provided. Funds which were included in the loan for cost certification and which are ultimately not needed because Rural Development contracts for the cost certification will be returned on the loan. Rural Development personnel will utilize Exhibit M of this subpart (available in any Rural Development office) and Form RD 1924-26, "Cost Certification Worksheet," to assist in the evaluation of the cost certification process. (Revised 03-16-94, SPECIAL PN.)
(A) Prior to the start of construction, the borrower, contractor and any subcontractor, material supplier, or equipment lessor sharing an identity of interest must submit, to the CPA or LPA, the accounting system that the borrower, contractor, subcontractor, material supplier, or equipment lessor and/or the CPA or LPA proposes to set up and use in maintaining a running record of the actual cost. In order to be acceptable, the borrower must provide a written assertion that it has an accounting system that is suitably designed to provide for a trade-item basis comparison of the actual cost as compared to the estimated cost submitted on Form RD 1924-13. Costs pertaining to a specific line item will be set up in the accounting system for that particular account. For instance, only costs of materials, supplies, equipment, and labor associated with concrete will be shown in the concrete account. The accounting system must also restrict costs to those pertaining to a specific project so that costs from multiple projects will not be co-mingled. The independent CPA or LPA shall report on the borrower's assertion in accordance with the Standards for Attestation Engagements of the American Institute of Certified Public Accountants (AICPA). The borrower's and the CPA or LPA's reports on the accounting system shall be provided to Rural Development by the borrower.