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Report of the State Auditor 1993
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Report of the State Auditor 1993
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Last modified
3/26/2010 3:55:23 PM
Creation date
9/30/2006 10:13:49 PM
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Template:
Publications
Year
1993
Title
CWCB CF Performance Audit Report of the State Auditor February 1993
CWCB Section
Finance
Author
State Auditor
Description
Performance Audit February 1993
Publications - Doc Type
Other
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<br />.4 <br /> <br />Water Conservation Board Construction Fund Performance Audit-February 1993 <br /> <br />Colorado Water Conservation Board Response: <br /> <br />Agree. The CWCB is in the process of developing and implementing a short- and <br />long-term financial projection, as well as a managerial accounting system, <br />consistent with fund statutory requirements, CWCB fund policy and procedure, <br />and the CWCB long-tenn development plan. <br /> <br />Setting Subsidized Loan Interest Rates <br /> <br />In 1981, statutes authorized the Board to charge a minimum of 5 percent on loans from the <br />Construction Fund. The Board could have charged higher rates, when appropriate; However, <br />the Board charged the minimum interest rate on almost all of its loans. In 1992, legislation was <br />passed authorizing the Board to set interest rates between ~ and 7 percent. <br /> <br />Loan interest rates have not reflected changing market conditions. We recognize it was the <br />Legislature's intent to provide subsidized interest rates. However, the Board had the option to <br />charge interest at a higher level and still provide a subsidized rate to project sponsors. Cash <br />inflows to the Construction Fund were reduced. As a result, fewer funds were available for other <br />projects. <br /> <br />For example, we developed an "alternative interest rate" based on tax-exempt municipal bond <br />rates. This alternative rate ,reflected market conditions while still providing a subsidy. We <br />estimated that Construction Fund inflows d~ring Fiscal Year 1992 could have been $500,000 <br />more if this method were used to set rates on contracts executed between Fiscal Years 1982 and <br />1990. <br /> <br />The Board should establish guidelines for its loan rates to reflect market conditions. The <br />guidelines should be reflected in the projects that will be, authorized during the upcoming <br />legislative session. <br /> <br />Colorado Water Conservation Board Response: <br /> <br />Partially agree. The CWCB is in the process of implementing procedures <br />establishing loan interest rates and terms that reflect market conditions to be used <br />as a standard against which all projects will be measured. Actual rates and terms <br />for individual projects may vary depending on market conditions and other <br />considerations. ' <br /> <br />Interest on Construction Cash Advances <br /> <br />A project sponsor, ~uch as a municipality, water district, or irrigation company, is the entity <br />building the project. During the construction phase of a project, a project sponsor is responsible <br />for covering costs incurred in the first month. For the remainder of the construction period, the <br />project sponsor may request monthly reimbursements from the Board. <br />
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