RD Instruction 1942-A
§ 1942.17(p)(4) (Con.)
is not being completed in accordance with the plans and specifications or that any other problems exist, the District Director should notify the State Director immediately and withhold all payments on the contract. (Revised 5-12-87, SPECIAL PN.)
(5) Payment for construction. Each payment for project costs must be approved by the borrower's governing body. Payment for construction must be for amounts shown on payment estimate forms. Form RD 1924-18, "Partial Payment Estimate," may be used for this purpose or other similar forms may be used with the prior approval of the State Director or designee. However, the State Director or designee cannot require a greater reporting burden than is required by Form RD 1924-18. Advances for contract retainage will not be made until such retainage is due and payable under the terms of the contract. The review and acceptance of project costs, including construction partial payment estimates by the agency, does not attest to the correctness of the amounts, the quantities shown, or that the work has been performed under the terms of agreements or contracts. (Revised 5-12-87, SPECIAL PN.)
(6) Use of remaining funds. Funds remaining after all costs incident to the basic project have been paid or provided for will not include applicant contributions. Applicant contributions will be considered as funds initially expended for the project. Funds remaining, with exception of applicant contributions, may be considered in direct proportion to the amounts obtained from each source. Remaining funds will be handled as follows:
(i) Agency loan and/or grant funds. Remaining funds may be used for purposes authorized by paragraph (d) of this section, provided the use will not result in major changes to the facility design or project and that the purpose of the loan and/or grant remains the same. (Revised 06-19-97, SPECIAL PN.)
(A) On projects that only involve an agency loan and no agency grant, funds that are not needed will be applied as an extra payment on the agency indebtedness unless other disposition is required by the bond ordinance, resolution, or State statute.
(B) On projects that involve an agency grant, all remaining agency funds will be considered to be grant funds up to the full amount of the grant. Grant funds not expended under paragraph (p)(6)(i) of this section will be deobligated.
(2-6-85) PN 956
RD Instruction 1942-A
§ 1942.17(p)(6) (Con.)
(ii) Funds from other sources. Funds remaining from other sources will be handled according to rules, regulations and/or the agreement governing their participation in the project.
(q) Borrower accounting methods, management reporting and audits.
(1) Accounting methods and records.
(i) Method of accounting and financial statements. Financial statements must be prepared on the accrual basis of accounting unless State statutes or regulatory agencies provide otherwise, or an exception is made by the agency. This requirement is for accrual basis financial statements and not for accrual basis accounting systems. Organizations may keep their books on an accounting basis other than accrual and then make adjustments so that the financial statements are presented on the accrual basis.
(ii) Approval requirement. Before loan closing or start of construction, whichever is first, each borrower shall provide to, and obtain approval from the agency loan approval official for its accounting and financial reporting system, including the agreement with its auditor, if an auditor is required.
(iii) Record retention. Each borrower shall retain all records, books, and supporting material for 3 years after the issuance of the audit reports and financial statements. Upon request, this material will be made available to the agency, the Comptroller General, or to their representatives. (Renumbered 02-24-05, SPECIAL PN.)
(2) Management reports. These reports will furnish the management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial conditions. In those cases where revenues from multiple sources are pledged as security for an agency loan, two reports will be required; one for the project being financed by the agency and one combining the entire operation of the borrower. In those cases where agency loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues will suffice. The following management data will be submitted by the borrower to the District Director.
§1942.17 (q) (2) (Con.) RD Instruction 1942-A
(i) Financial information.
(A) Form RD 442-2, "Statement of Budget, Income and Equity," which includes Schedule I, "Statement of Budget, Income and Equity," and Schedule 2, "Projected Cash Flow."
(B) Prior to the beginning of each fiscal year, two copies, with data entered in column three only of Schedule 1, page one, "Annual Budget," and all of Schedule 2, will be submitted to the District Director. Twenty (20) days after the end of each of the first three quarters of each year, two copies with all information furnished on Schedule 1 will be submitted. For the fourth quarter of each year, submit together with the year-end financial requirements of paragraphs (q)(4) and (5) of this section. More frequent submissions may be required by Rural Development when necessary. The submission dates to the District Director will be 90 days following year-end for audited statements and 60 days following year-end for unaudited statements. The fourth quarter submission may serve the dual purpose of management report and year-end financial requirement for Statement of Income. (Revised 3-1-88, SPECIAL PN.)
(ii) Additional information.
(A) A list of the names and addresses of all members of the governing body as appropriate, also indicating the officers and their terms of office, will be included with the other information required at the end of the year.
(B) Borrowers delinquent on payment to Rural Development or experiencing financial problems, will develop a positive action plan to resolve financial problems. The plan will be reviewed with Rural Development and updated at least quarterly. Guide 22 may be used for developing a positive action plan.
(3) Substitute for management reports. When Rural Development loans are secured by the general obligation of the public body or tax assessments which total 100 percent of the debt service requirements, the State Director may authorize an annual audit to substitute for other management reports if the audit is received within 90 days following the period covered by the audit. (Revised 3-1-88, SPECIAL PN.)