Report of the State Auditor 1993

• 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

26

Water Conservation Board Construction Fund Performance Audit-February 1993

We reviewed the files of some recently completed projects between 1982 and July
1992. The Board charged 5 percent interest on these loans. We applied the
Board's interest rate of 5 percent to the cash advances, using a simple interest
calculation. Therefore, .the lost interest does not reflect the higher market rate of
interest. If it did. the amount of interest lost would be greater. The following
table shows the lost interest during the construction phase of three projects.

LOAN CONTRACT AMOUNT OF NUMBER CONSTRUCTION LOST
# DATE LOAN OF PERIOD IN INTEREST
DRA WS ' MONTHS
1 2/2 7 /90 5330,666 10 18 $ 12,777
2 4/16/90 5214.537 2 13 $ 1,724
3 7/24/91 53 10.000 1 4 $ 1,267
Total 5855,203 Total Lost Interest $ 15,768

As the table indicates, the Board lost over $15,000
during the construction phase of the three projects.
This practice results in an additional subsidy to the
borrower. Also, this means there was less money
available to fund other, projects. Based on
discussions with some Board members, we believe this practice may have been
inadvertently overlooked.

This practice results in
an additional subsidy
to the borrower.

Recommendation No. 4

The Board should charge interest on cash disbursements made to project sponsors
during the construction phase of projects. Interest charges could be added to the
principal amount of the loan and financed over the term of the loan.

Colorado Water Conservation Board Response:

Agree. The CWCB's contract guidelines will be revised during the
upcoming months to require the payment of interest during construction
on future projects recommended by the CWCB for assistance from the
Construction Fund.