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I <br /> Report of The Colorado State Auditor 13 <br /> executed within three years of the project's approval. At that time the Board may seek <br /> deauthorization for idle monies in the next annual construction fund bill unless the Board <br /> specifically approves a time extension. Although the new policy is a good start, we noted <br /> that it needs to be more comprehensive. Specifically, the policy addresses only those <br /> situations where absolutely no action has been taken on a project and is silent in regard to <br /> other situations that might also call for a deauthorization of funds (e.g., cases of completed <br /> projects with residual funding). <br /> Because the policy became effective only on October 1, 1999,we were unable to test its use <br /> or effectiveness in every type of situation that might call for a deauthorization of project <br /> funds (e.g., cases where project funds remained idle for several years). However, we did <br /> review the Board's actions in regard to 14 projects that were finished between June 1998 and <br /> June 1999. Five of these projects had residual funding totaling nearly $820,000. In each of <br /> these five cases,residual funding was unencumbered through a contract amendment reducing <br /> the final amount due. Thus, even though the new policy does not specifically address <br /> residuals,it appears that the Board is making efforts to ensure these situations are dealt with <br /> appropriately. <br /> Ensure Feasibility of Projects Prior to Loan Approval <br /> When an entity applies for a project loan, it must submit an application and conduct a feasibility <br /> study. Feasibility studies must be prepared in sufficient detail to allow the Board to make an <br /> informed decision about whether or not to fund a particular project. During the 1998 audit we found <br /> the Board approved many projects before a feasibility study was completed. Of the 54 project loans <br /> approved from March 1995 to January 1998, about 76 percent (i.e., 41 loans) did not have a <br /> completed feasibility study at the time they were approved. In addition, there were four cases in <br /> which a project feasibility study was completed after or during the same month that the project itself <br /> was completed. We also found that some completed feasibility studies did not contain key data on <br /> the applicant's ability to repay the loan. <br /> Recomme nd ation No. 6 (September 1998). <br /> The Water Conservation Board should improve its methods for ensuring the feasibility of projects <br /> prior to loan approval by: <br /> a. Requiring that projects have a completed feasibility study before a funding request is <br /> considered. In those cases where it is impractical to complete the study prior to approval <br /> and/or General Assembly authorization, the Board may want to consider conditional <br /> approval pending completion of a feasibility study by a certain date while ensuring the study <br /> is completed before any funds are disbursed. <br /> I <br />