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1 <br /> Report of The Colorado State Auditor 23 <br /> Improve Loan Review and Recordkeeping Processes <br /> During our 1998 review of the Board's loan files we observed issues with the internal loan review <br /> process and recordkeeping. We found that many files were missing evidence that feasibility studies <br /> had been conducted or that sufficient liability insurance or collateral had been obtained. In addition, <br /> twe found that the Board did not have a centralized filing system for its loan records. We observed <br /> that many of these problems could have been identified and corrected if the Board had an internal <br /> review process and better file maintenance procedures. <br /> Recommendation No. 12 (September 1998): <br /> The Water Conservation Board should establish a process for reviewing each loan prior to disbursing <br /> project funds and at various times thereafter. The process should ensure that projects have sufficient <br /> collateral and liability insurance, evidence that the borrower has completed a feasibility study and <br /> met all other contingencies, correct amortization schedules,properly approved contracts, evidence <br /> of appropriate UCC-1 statement filings, and other required documentation. <br /> Water Conservation Board's Report Response <br /> (September 1998): <br /> Agree. The Department of Natural Resources and CWCB staff are in the process of <br /> reviewing the structure of similar programs at other public agencies and reevaluating <br /> Construction Fund Loan Program workload allocation and priorities. These reviews will be <br /> completed by June 30, 1999. <br /> Implementation Date: June 1999. <br /> Water Conservation Board's Update (October 1999): <br /> In progress. Draft procedures have been developed to ensure that prior to disbursement of <br /> loan funds,the projects have completed and submitted all required documentation and met <br /> all other contingencies. The procedure includes convening a pre-construction meeting,after <br /> a loan contract is completed and prior to any loan disbursements, to verify that loan <br /> documentation and contingency requirements have been met. These procedures are currently <br /> being tested and should be implemented by January 1, 2000. <br /> Office of the State Auditor's Evaluation of Actions Taken <br /> (December 1999): <br /> In progress. In response to our audit,the CWCB initiated a new procedure for what it calls <br /> a "pre-construction meeting." The purpose of this meeting is to review the loan contract <br /> I <br />