MWPAT Loans may be federal awards
Many cities and towns throughout Massachusetts have received loans from the Massachusetts Water Pollution Abatement Trust (MWPAT) for a variety of capital projects. Until recently, it wasn’t clear that these communities were considered loan recipients of federal financial assistance.
Representatives of the Government Accounting and Auditing Committee of the Mass. Society of CPA’s sought clarification from the MWPAT regarding this issue. According to Scott Jordan of the MWPAT, the Trust recieves federal funds through the Clean Water and Drinking Water State Revolving Fund Program. These federal funds are invested and the MWPAT issues bonds, supported by the investments. From these bond issues the MWPAT then provides loans to local communities.
The MWPAT recently received guidance from the U.S. EPA indicating that this funding is subject to Single Audit requirements, and furthermore, sub-recipients (including loan recipients) would also be subject to Single Audit requirements. In order to more easily administer the MWPAT’s monitoring requirements and to minimize the impact on local communities the MWPAT has elected to specifically identify the federal funds loaned for fiscal year 2007 as those loans pertaining to the Massachusetts Water Resources Authority (MWRA).
It is expected that the MWPAT will take a similar position, if it is possible, in future years. However, if loans to the MWRA do not equal or exceed the amount of federal awards to the MWPAT in a particular year then the MWPAT will then have to specifically identify other loan sub-recipients as having received federal financial assistance subject to Single Audit requirements. As an alternative to the specific identification of the federal assistance loans, the MWPAT could elect to have the federal assistance allocated to all loans - although this does not seem to be an attractive option.
Because of the possibility of a MWPAT loan being at least partially funded by federal awards, MWPAT is expecting to add language to its loan documents notifiying the sub-recipient that a portion of the loan maybe federal financial assistance and the MWPAT will notify the community if there is a Single Audit requirement.
Local communities need to be aware of these new requirements and limitations from the MWPAT. Notification of the federal funding of any particular loan is likely not to occur until after the end of the fiscal year in which the loan was received. Posted by Rich Bienvenue.