§ 1930.123 - Annual review.  

(a) Objective. The objective of the annual review is for the FmHA or its successor agency under Public Law 103-354 Servicing Official to determine the degree and adequacy of the borrower's achievement of operational compliance with the applicable FmHA or its successor agency under Public Law 103-354 loan and/or grant agreements and to provide followup consultation or supervision to the borrower in meeting program objectives.

(b) Annual review process. During the annual review process, the Servicing Official will consider the overall project financial and operational activity. Project strengths and weaknesses will be identified, based on review of various documents, and resultant conclusions will be incorporated into the annual budget planning process that should happen concurrently with the annual review process.

(c) Documents used in the review. (1) Form FmHA or its successor agency under Public Law 103-354 1930-7.

(2) Exhibit A-6 of subpart E of part 1944 of this chapter.

(3) Prior fiscal year annual audit report as prepared by a CPA or LPA, or when applicable, Form FmHA or its successor agency under Public Law 103-354 1930-8 prepared by a review verifier accompanied by Form FmHA or its successor agency under Public Law 103-354 1930-7 with actual income and expense data.

(4) Exhibit A-1 of this subpart prepared in conjunction with the prior year annual audit report.

(5) Applicable attachments required as part of any of the above documents (or other information as volunteered by the borrower or specifically requested by the FmHA or its successor agency under Public Law 103-354 Servicing Officer for the review at hand).

(6) Minutes of annual meeting for association type borrowers.

(7) Current energy audit with energy conservation implementation plan (from FmHA or its successor agency under Public Law 103-354 borrower casefile except when new energy audit is due with Form FmHA or its successor agency under Public Law 103-354 1930-7).

(8) Latest supervisory visit and physical inspection of property reports (from FmHA or its successor agency under Public Law 103-354 borrower casefile).

(d) Preparation for the annual review. Some documents needed are available in the borrower's casefile and the balance needed will be submitted with the annual budget review request. Therefore, annual review should occur within 30 days of receipt of all necessary documents. This should result in annual reviews being completed in the last 2 months of a fiscal year or the first 2 months of the next fiscal year. When determined necessary, the Servicing Officer should:

(1) Notify the borrower of the required management reports and their due dates, and provide the borrower with necessary guides and forms for use in preparing the reports.

(2) With a new nonprofit borrower organization, determine that the borrower is properly planning for its annual meeting for the correct date according to its organizational documents. The Servicing Official should plan to attend the annual meeting unless the borrower has progressed as described in § 1930.110(c) of this subpart.

(e) Timing, conducting, and completing the review. (1) The annual review process will be scheduled and performed concurrently with the budget planning process, normally in the last quarter of a project fiscal year (see illustration in paragraph (i) of this section). This process will occur separately from the annual audit review process (which will occur following close of a project fiscal year).

(2) The Servicing Official will use the applicable resource documents listed above when performing the review. The Servicing Official will conduct the annual review following the review and recording guidance of Form FmHA or its successor agency under Public Law 103-354 1930-10. The Form FmHA or its successor agency under Public Law 103-354 1930-10 will be completed during the prescribed last quarter review period.

(3) The Servicing Official may invite the borrower or its agent to participate in any part of the annual review.

(f) Distribution of reviewed documents. (1) A copy of the results of the annual review on Form FmHA or its successor agency under Public Law 103-354 1930-10 along with recommendations or compliance requirements will be sent to the borrower and/or its agent and to the State Director as soon as the review is completed.

(2) The individual items required to perform the annual review will be distributed according to appropriate FMI's as listed on exhibit B-7 of this subpart.

(g) State Director's review of annual reviews. Upon receipt of the items identified in this section, the State Director will:

(1) Review all submissions of Form FmHA or its successor agency under Public Law 103-354 1930-10 that are used by the Servicing Official to record summary results of an annual project review.

(2) Conduct a more detailed review of only those annual reviews that warrant further review. The State Director should provide summarized comment to Servicing Officials after completion of statewide review, otherwise the State Director will comment on any specific borrower and/or project annual review selected for further review.

(3) Will review Form 1930-7 and exhibit A-6 of subpart E of part 1944 for approval when the authority to approve budgets as part of the annual review is not delegated to the FmHA or its successor agency under Public Law 103-354 Servicing Official.

(4) Be prepared for a sample review of annual reviews by the National Office upon request during a combined assessment review or other specific need.

(h) On-farm LH annual review. For individual farm borrowers with on-farm LH unit(s), the objective of this section will be satisfied by completing the recordkeeping and reporting requirements of their farm and home planning with FmHA or its successor agency under Public Law 103-354 as outlined in subpart D of part 1944 of this chapter.

(i) Illustration of MFH budget planning, annual review, and annual audit review cycles.