Report of State Auditor 1998

• Year: 1998
• Title: Report of the State Auditor
• CWCB Section: Finance
• Description: Colorado Water Conservation Board Construction Fund Loan Program Department of Natural Resources Performance Audit 1998
• Publications - Doc Type: Tech Report

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Report of The Colorado State Auditor 31
pending completion of a feasibility study by a certain date. In all cases,however,the
study should be completed before the Board disburses funding in order to ensure the
borrower has the means to repay its loan.
Studies Often Contain Incomplete Repayment Information
We also found that some ro'ects with completed feasibility studies were approved
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by the Board, even though the studies were missing key information specifically
related to the applicant's ability to repay the loan. We reviewed 34 feasibility studies
that were completed between June 1992 and February 1998 and found that in nine
cases key data on the applicant's ability to repay the loan were missing (e.g.,
information on the applicant's revenues, expenditures, or both). This type of
financial information is needed for the Board to have a comprehensive picture of the
applicant's creditworthiness.
Recommendation No. 6:
The Water Conservation Board should improve its methods for ensuring the
feasibility of projects prior to loan approval by:
a. Requiring that projects have a completed feasibility study before a funding
request is considered. In those cases where it is impractical to complete the
study prior to approval and/or General Assembly authorization, the Board
may want to consider conditional approval pending completion of a
feasibility study by a certain date while ensuring the study is completed
before any funds are disbursed.
b. Ensuring that all studies contain sufficient information upon which to assess
the project's benefit and the applicant's ability to pay its loan obligations.
Water Conservation Board Response:
Agree. Beginning immediately, the CWCB staff will be more diligent in
assuring that all pending and future feasibility studies are completed before
the project is presented to the Board and that they contain the information
needed to assess the applicant's ability to repay the proposed loan.
Requiring that all studies be completed before the Board can consider them
may cause unreasonable delay for a limited number of projects. It might also
prevent the General Assembly from adding projects during the legislative
process. The Board has only recommended authorization for project loans
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