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 41
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Recommendation No. 10:
The Water Conservation Board should ensure that all security documents(e.g.,deeds
of trust and UCC-1 statements)are filed in a timely manner when a loan is made(i.e.,
within ten days of the contract execution date) and as needed during the life of the
loan (i.e., upon project completion and expiration of any previous UCC-1 filing).
This should include developing a reliable system for monitoring loans to ensure the
proper security documents are requested,obtained,and filed in a timely manner. The
Board should also review all active loan files to determine which ones need to have
security documents filed and then file the appropriate documents immediately. In
instances where the Board may no longer have a senior position in the collateral, it
should negotiate for this position to ensure the State's interests are protected to the
fullest extent possible.
Water Conservation Board Response:
Agree. We will assess our current capability to pay sufficient attention to
p
these responsibilities, especially in light of the size of the Fund and the
increasing number of projects we are supporting each year. In addition to the
discussions with other public agencies having similar responsibilities
(described in the attached letter from the Acting DNR Executive Director),
the CWCB staff is in the process of reevaluating Construction Fund Loan
Program workload allocation and priorities. These reviews will be completed
by June 30, 1999, and may result in a reallocation of staff assignments or in
the Board and DNR submitting a decision item to add this staff capability.
A Reliable System for Tracking
Compliance With Insurance
Requirements Is Needed
Since 1987 the Board has required borrowers to maintain general liability insurance
from the time of contract execution until their loan is repaid. Requiring borrowers
to maintain liability insurance protects the State's interests should an unforeseen
event at a project site impact a borrower's ability to pay its obligations. Board policy
requires borrowers to have liability insurance that covers the management,operation,
and maintenance of the project with minimum limits of$1 million per occurrence
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