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X 8.` hp x (#8   \RX` hp x (#\S\  `&Times New RomanS%2A`Arial< :Outline001_1   GAKr`WingdingsG  ;1 4 <D x (#;   YOX` hp x (#YXXXS\  `&Times New RomanS  Kr`Wingdings:+ 8List Bullet23  ..<+ :List Bullet123  ..<+ :List Bullet 23  ..:+ 8List Number23  ..<+ :List Number323  ..<+ :List Number223  ..<+ :List Number123  ..<+ :List Number 23  ..<* :Normal (Web) S =jS    =jS:  8Body Text 2  ,*Date< :Comment TextXXX2 0Quick    CO<6X9`(CourierC  8. ` hp x (#8   8.` hp x (#8S\  `&Times New RomanS  <6X9`(Courier<:Footnote Ref.PY ,Style   8.44` hp x (#8  A7X` hp x (#A  2 0Quick P   CO<6X9`(CourierC  8.` ` hp x (#8   8.` hp x (#8S\  `&Times New RomanS  .[[,TOC 2    8.` ` hp x (#8   8.` hp x (#8  0oo.Title2S\  `&Times New RomanS XXXS\  `&Times New RomanS <$$ :Footnote Tex    XXX<DD :Normal Inden X 8.` hp x (#8  8.` hp x (#8:)) 8Body Text 3 {dXXX {d< :Body Text Fi d  d    Z'..      lXXXlXXXXlX  _K\(XXK (#XoXXMarch2004Q(_CWSRF_Ԉ " "H(#EPAXXo(2$ jDM!..      lXXXlXXXXlX  'Single1 d[=Thin Bottomdxd  ^)..      lXXXlXXXXlX  _K_(XXK0p x (#X0oXXA133ComplianceSupplement6p x (#X(#6Q466.458  1  XXo(2$ jDM!..      lXXXlXXXXlX  [)1dxd t Z'..      lXXXlXXXXlX  _0p x (#X0K\(XXK$ (#X(#$oXXMarch2004Q(_DWSRF_Ԉ " "H(#EPA X K((XKB.` hp x (#(#BXXo  ^)..      lXXXlXXXXlX  _0p x (#X0K_(XXK6p x (#X(#6oXXA133ComplianceSupplement6p x (#X(#6Q466.468  8  XXohttp://www.epa.gov/safewater/dwsrf.html_Hlt66674452_Hlt66674453_Hlt64877314_Hlt64877315_Hlt64877316#|x(O$(rDM$..      lX4XXlXX4XXlX40&d9 Z6Times New Roman RegularlX/k0 }0:i+00 U jDM!..      lXXXlXXXXlX  _       _Y_]XXXX  ENVIRONMENTALPROTECTIONAGENCY   $   ?+ hp x (#X?_CFDA_Ԁ66.458 CAPITALIZATIONGRANTSFORCLEANWATERSTATE ^ REVOLVINGFUNDS  D  $ XK.` hp x (#  X(#K I.  PROGRAMOBJECTIVES  B   XE.` hp x (#X(#ECapitalizationgrantsareawardedtoStatestocreateandmaintainCleanWaterStateRevolving   Funds(_CWSRFs_)to:(1)enableStatestoencourageconstructionofwastewatertreatment   facilitiestomeettheenforceablerequirementsoftheCleanWaterAct(Act);(2)increasethe l  emphasison_nonpoint_Ԁsourcepollutioncontrolandprotectionofestuaries;and(3)establish R  permanentfinancinginstitutionsineachStatetoprovidecontinuingsourcesoffinancingto 8  maintainwaterquality.The_CWSRF_Ԁprovidesloansandothertypesoffinancialassistance(but n  notgrants)toqualifiedcommunitiesandlocalagencies.The_CWSRF_Ԁisapermanentrevolving T  fundtoprovideloansandotherassistance(40_CFR_Ԁsection35.3115). :    XE.` hp x (#X(#E II.  PROGRAMPROCEDURES      XE.` hp x (#X(#EThe_CWSRF_ԀprogramisestablishedineachStatebycapitalizationgrantsfromthe F  EnvironmentalProtectionAgency(EPA).Sincetheenablinglegislationwasenactedin1987, ,| capitalizationgrantshavebeenavailabletoStatesinmostyears.EPAimplementsthe_CWSRF_ b inamannerthatpreservesahighdegreeofflexibilityforStatesinoperatingtheirrevolving H fundsinaccordancewitheachStatesuniqueneedsandcircumstances. . Statesarerequiredtoprovideanamountequalto20percentofthecapitalizationgrantasState  matchingfundsinordertoreceiveagrant.Capitalizationgrantapplicationsshallinclude:(1)an r IntendedUsePlan(_IUP_),whichlistsproposedprojectseligibleforfinancingfrom_CWSRF_ X loans;(2)anidentificationofthesourceofthematchingamount;(3)aproposedpayment > schedule;and(4)certaincertificationsanddemonstrations.Statesmaytransferanamountupto $t 33percentofitsDrinkingWaterStateRevolvingFund(_DWSRF_)(_CFDA_Ԁ66.468)capitalization  Z granttothe_CWSRF_Ԁoranequivalentamountfromthe_CWSRF_Ԁtothe_DWSRF_Ԁprogram. @ TheStateshallprovideanannualreporttoEPAonits_CWSRF_Ԁprogram.    SourceofGoverningRequirements  L" The_CWSRF_ԀprogramisauthorizedunderTitleVIoftheCleanWaterAct(33_USC_Ԁ1381etseq) #J andtheimplementingregulationsarefoundin40_CFR_Ԁpart35,subpartK.Guidanceoncross $0  collateralizationarefoundinthepolicystatementtitledTransferandCrossCollateralizationof %! CleanWaterRevolvingFundsandDrinkingWaterStateRevolvingFundspublishedinthe &!  October13,2000,FederalRegister(65FR60940). '"   XE.` hp x (#X(#E&   III.  COMPLIANCEREQUIREMENTS     XE.` hp x (#X(#E IndevelopingtheauditprocedurestotestcompliancewiththerequirementsforaFederal ^ program,theauditorshouldfirstlooktoPart2,MatrixofComplianceRequirements,to D identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are *z applicableandthenlooktoParts3and4forthedetailsoftherequirements.   ` TheauditfocusisonaStates_CWSRF_Ԁprogram,ratherthanindividualcapitalizationgrants   awardedtoStatesbyEPA.     XE.` hp x (#X(#E A.  ActivitiesAllowedorUnallowed '  R   XE.` ` hp x (#X(#E1. ` FinancialAssistance P   E. ` hp x (#` X(#Ea. The_CWSRF_Ԁmayprovidefinancialassistance:(1)tomunicipalities,inter   municipal,interstate,orStateagenciesfortheconstructionofpublicly   ownedtreatmentworks,asdefinedinsection212oftheActthatareon z  theStatesprojectprioritylist;(2)forimplementing_nonpoint_Ԁsource `  managementprogramsundersection319oftheAct;and(3)for F  developingandimplementingestuarymanagementplansundersection ,| 320oftheAct(33_USC_Ԁ1383(c)). b b. Theallowabletypesoffinancialassistanceare(33_USC_Ԁ1383(d)):   ` E.` hp x (# X(#E(1)  Makingloans(notgrants)foreligibleprojects; n (2)  Buyingorrefinancingofdebtobligationsofmunicipal, l _intermunicipal_,andinterstateagenciesincurredafterMarch7, R 1985; 8 (3)  Guaranteeingorpurchasinginsuranceforlocaldebtobligations;  (4)  Usingasasourceofrevenueorsecurityfor_CWSRF_Ԁdebt D  obligations(providingthatthenetproceedsofthesaleofsuch *!z bondsaredepositedinthe_CWSRF_);and "` (5)  Guaranteeingloanguaranteesforsimilarrevolvingfunds # establishedbymunicipalitiesor_intermunicipal_Ԁagencies. $  ` E.` ` hp x (#X(#E2. ` _CWSRF_ԀfundsmaybeusedbyStatesforthereasonablecostsofadministering R&!  andmanagingthe_CWSRF_Ԁ(33_USC_Ԁ1383(d)(7)). 8'"  XE.` hp x (#` X(#E&   C.  CashManagement    TheStatemaydrawcashfromEPAthroughtheAutomatedClearinghouse(_ACH_)orthe ^ AutomatedStandardApplicationforPayments(ASAP)systemfor: D   XE.` ` hp x (#X(#E1. ` Loans󀄀whenthe_CWSRF_Ԁreceivesarequestfromaloanrecipient,basedon B incurredcosts,includingprebuildingandbuildingcosts.'Z   ( 2. ` RefinanceorPurchaseofMunicipalDebt󀄀generally,whenataratenogreater   thanequalamountsoverthemaximumnumberofquartersthatpaymentscanbe l  made,anduptotheamountcommittedtotherefinancingorpurchaseofthelocal R  debt. 8  3. ` PurchaseofInsurance󀄀wheninsurancepremiumsaredue. 6  4. ` GuaranteesandSecurityforBonds󀄀immediately,intheeventofimminent   defaultindebtservicepaymentsontheguaranteed/secureddebt;otherwise,upto z  anamountdedicatedfortheguaranteeorsecuritybasedonincurredconstruction `  costs. F  5. ` AdministrativeExpenses󀄀cashcanbedrawnbasedonaschedulethatcoincides D withtherateatwhichadministrativeexpenseswillbeincurred(40_CFR_Ԁsection * 35.3160).   XE.` hp x (#` X(#E G.  Matching,LevelofEffort,Earmarking  n  XE.` ` hp x (#X(#E 1. ` Matching  l  Statesarerequiredtodepositintothe_CWSRF_ԀfromStatemonies,anamount  equalto20percentofeachgrantpayment.IftheStateprovidesamatchinexcess  oftherequiredamount,theexcessbalancemaybebankedtowardsubsequent  matchrequirements.Statesgenerallyreportthetotalamountoftheirmatching | foracapitalizationgrantinanannual_CWSRF_ԀreporttoEPA.Thematchis b  requiredtobemadeonorbeforethetimethatEPAfundsaredrawn(40_CFR_ H! section35.3135(b)). ."~   2. ` LevelofEffort 󀄀NotApplicable #,  3. ` Earmarking  %   Themaximumamountallowableforadministeringandmanagingthe_CWSRF_Ԁis 8'" 4percentofthecumulativeamountofcapitalizationgrantawardsreceived. (n# Whentheadministrativeexpenseofthe_CWSRF_Ԁexceeds4percent,theexcess )T$  mustbepaidfromsourcesoutsidethe_CWSRF_Ԁ(40_CFR_Ԁsection35.3120(g)). ):%   XE.` hp x (#` X(#E& F  H.  PeriodofAvailabilityofFederalFunds     Grantpaymentsfromacapitalizationgrantshallbegininthequarterinwhichthegrant ^ isawarded,andendnolaterthaneightquartersafterthegrantisawarded,nottoexceed D 12quartersfromthedateofallotmentofgrantfundstotheStates(40_CFR_Ԁsection *z 35.3155(c)).'F.  `  &  L.  Reporting     XE.` ` hp x (#X(#E 1. ` FinancialReporting  l   E. ` hp x (#` X(#Ea. SF269,FinancialStatusReport󀄀Applicable j  b. SF270,RequestforAdvanceorReimbursement󀄀NotApplicable' 10   c. SF271,OutlayReportandRequestforReimbursementforConstruction v  Programs󀄀NotApplicable \  d. SF272,FederalCashTransactionsReport󀄀Applicable  Z   E.` ` hp x (# X(#E 2. ` PerformanceReporting 󀄀NotApplicable    3. ` SpecialReporting  f   TheStatemustprovideanAnnualReporttoEPAaccordingtothescheduleinthe d grantagreement(OMBNo.20400118)(40_CFR_Ԁsections35.3165(a)and(b)). J   XE.` hp x (#` X(#E N.  SpecialTestsandProvisions    XE.` ` hp x (#X(#E 1. ` EnvironmentalReviewRequirements  V   XE.` hp x (#` X(#E ComplianceRequirement 󀄀TheStatemustconductreviewsofthepotential T environmentalimpactsofallSection212constructionprojectsreceivingassistancefrom : the_CWSRF_,including_nonpoint_Ԁsourcepollutioncontrolandestuaryprotectionprojects   thatarealsoSection212projects(40_CFR_Ԁsection35.3140). !  AuditObjective 󀄀DeterminewhethertheStateisperformingenvironmentalreviews d# beforeconstructionproceeds. J$  SuggestedAuditProcedures  %H!   XE.` ` hp x (#X(#Ea. ` Inquireof_CWSRF_Ԁmanagementabouttheenvironmentalreviewproceduresin '" place. (# b. ` Selectasampleofprojectsthatbeganduringtheyeartoascertainthatthe :*% decisionswererenderedpriortotheprojectproceedingandwereapprovedinthe  +p&  Stateenvironmentalreviewprocess. ,V' &   2. ` BindingCommitments     XE.` hp x (#` X(#E ComplianceRequirement 󀄀A bindingcommitmentisalegalobligationbyaStateto ^ alocalrecipientthatdefinesthetermsforassistanceunderthe_CWSRF_.Cumulative D bindingcommitmentsmustequalatleast120percentofcumulativecapitalizationgrant *z paymentsreceivedoneyearearlier.Bindingcommitmentsrequirementsareintendedto  ` helpensurethattheStateutilizesgrantfundsinatimelymanner.EPAmaywithhold  F futurepaymentsandrequireadjustmentstothepaymentschedulesbeforereleasing  , furtherpaymentsiftheStatedoesnotmeetthebindingcommitmentrequirement.States   generallyreportthetotalamountoftheirbindingcommitmentsinanannual_CWSRF_   reporttoEPA(40_CFR_Ԁsections35.3135(c)and35.3165(a)).' m;     AuditObjective 󀄀DeterminewhetherStateshavecompliedwiththerequirementto <  makebindingcommitmentsequaltoorgreaterthan120percentoftheamountofthe "r  capitalizationgrants. X  &  SuggestedAuditProcedures      XE.` ` hp x (#X(#Ea. ` ReviewbindingcommitmentsinconjunctionwithEPApaymentschedulesto d ascertainiftheStateenteredintocumulativebindingcommitmentsinanamount J atleastequalto120percentofthecumulativegrantpaymentsreceivedoneyear 0 earlier(i.e.,cumulativebindingcommitmentsinthecurrentyearshouldbeequal f toorgreaterthan120percentofcumulativegrantpaymentsmadethroughthe L previousyear).'3A 2 b. ` TestasampleofbindingcommitmentsreportedbytheStatetoverifythatthe  amountanddateagreewithsupportingdocumentation. v  3. ` FundEstablishment,LoanRepayments,andFundEarnings  $t   XE.` hp x (#` X(#E ComplianceRequirements TheStateshallestablishaseparateaccountorseriesof " accountsthatisdedicatedsolelytoprovidingloansandotherformsoffinancial  assistance.Allloanrepayments(includingprincipalandinterest),interestearningson   investments,capitalizationgrants,Statematch,andtransfersfromthe_DWSRF_Ԁmustbe ! crediteddirectlytothe_CWSRF_.Repaymentofloansshallbeginwithinoneyearafter j" projectcompletion,andloansshallbefullyamortizedovernotmorethan20yearsafter P# projectcompletion(40_CFR_Ԁsections35.3110(b)and35.3120(a)andthepolicystatement 6$ titledTransferandCrossCollateralizationofCleanWaterRevolvingFundsand %l  DrinkingWaterStateRevolvingFundspublishedintheOctober13,2000,Federal &R! Register(65FR60940)). &8"   AuditObjectives 󀄀DeterminewhethertheStatehasaseparateaccountorseriesof (#! accountsforthe_CWSRF_.Determinewhetherprincipalandinterestpayments,interest |)$" earningsoninvestments,capitalizationgrants,Statematch,andtransfersfromthe b*%#  _DWSRF_,wereproperlycreditedtothe_CWSRF_. H+&$ & z  SuggestedAuditProcedures     XE.` ` hp x (#X(#Ea. ` Ascertainifthe_CWSRF_Ԁisaseparateaccount,orseriesofaccounts,dedicated ^ solelytopurposesoftheprogram.'zK D b. ` Testasampleofprojectsfundedbythe_CWSRF_Ԁandforwhichrepaymentswere B dueduringtheyeartodeterminethatprincipalandinterestpaymentswere  ( properlycreditedtothe_CWSRF_Ԁaccounts.   c. ` Testasampleofloanagreementsandotherprojectrecordstoascertainifthe l  repaymentsbeganwithinoneyearofprojectcompletionandtheloansare R  scheduledforfullamortizationwithin20years. 8  d. ` Obtainalistofinvestmentsmadeduringtheyearandascertainifearningson 6  investmentswereproperlyrecordedinthe_CWSRF_.   & ( 4. ` _CWSRF_ԀasSecurityforBonds  z    XE.` hp x (#` X(#E ComplianceRequirement 󀄀Whenfundsfromthe_CWSRF_Ԁareusedassecurityorasa (x  sourceofrevenueforthepaymentofprincipalandinterestonrevenueorgeneral ^  obligationbondsissuedbytheState,thenetproceeds(i.e.,fundsraisedfromthesaleof D bondslessissuancecosts)ofthesaleofsuchbondsmustbedepositedinthe_CWSRF_ * (40_CFR_Ԁsection35.3120(d)).Generally,bondproceedsaredepositedinaccounts  establishedbythebondtrustindentureandidentifiedintheOfficialOfferingStatement.  ThisrequirementincludesthesituationwheretheStateemploysthecross  collateralizationprocesspermittedbythe_CWSRF_Ԁprogram.Crosscollateralization r allowsforcertainassetsofboththe_DWSRF_Ԁandthe_CWSRF_Ԁprogramstobepledgedas X collateralforasingleorjointbondissueinproportiontotheassetsofferedascollateral. > Proportionalitymaybeachievedatdifferentlevelsofsecurity:(1)atreservelevel;(2)at $t loanrepaymentlevel;or(3)usinganalternativestructureapprovedbyEPA(40_CFR_  Z section35.3530(d))andthepolicystatementtitledTransferandCrossCollateralization @ ofCleanWaterRevolvingFundsandDrinkingWaterStateRevolvingFundspublishedin & theOctober13,2000,FederalRegister(65FR60940).'(zoP    AuditObjective 󀄀DeterminewhethertheStateplacedthenetproceedsfromthesaleof j" bondsguaranteedbythe_CWSRF_Ԁintothe_CWSRF_. P#  SuggestedAuditProcedures  $N    XE.` ` hp x (#X(#Ea. ` Reviewbonddocumentationandtraceamountsqualifyingasnetproceedsto &! accountsinthe_CWSRF_. '" b. ` Ascertainthatthenetbondproceedsweredepositedintothe_CWSRF_. @)$  c. ` IftheStatehasemployedacrosscollateralizationtechnique,ascertainthatthenet *>&! proceedsdepositedintothe_CWSRF_Ԁwereproportionatetotheassetsofferedas +$'" collateral. , (#   E.` hp x (#` X(#E&  IV.  OTHERINFORMATION    XE.` hp x (#X(#E_Subrecipients_󀄀Inyearsafterthe_subrecipient_Ԁhasexpendedloanproceedsandcompleted ^ construction,andthe_subrecipient_sonlyongoingfinancialactivityoftheprogramisthe D paymentofprincipalandinterestonoutstandingbalances,thepriorloanbalancesatthe *z _subrecipient_Ԁlevelarenotconsideredtohavecontinuingcompliancerequirementsunder  ` OMBCircularA133___.205(d).Priorloansthatdonothavecontinuingcompliance  F requirementsotherthantorepaytheloansarenotconsideredFederalawardsexpended  , andthereforearenotrequiredtobeauditedunderOMBCircularA133.'\    X3p x (#X(#3  p  _`Y_a]  H.` hp x (#X(#H ENVIRONMENTALPROTECTIONAGENCY   $   B+ hp x (#X(#B_CFDA_Ԁ66.468 CAPITALIZATIONGRANTSFORDRINKINGWATERSTATE ^ REVOLVINGFUNDS  D  $ K.` hp x (#  X(#K I.  PROGRAMOBJECTIVES  B CapitalizationgrantsareawardedtoStatestocreateandmaintainDrinkingWaterState   RevolvingFunds(_DWSRF_)programs.Statescanusecapitalizationgrantfundstoestablisha   revolvingloanfund(_DWSRF_)toassistpublicwatersystemsfinancethecostsofinfrastructure l  neededtoachieveormaintaincompliancewithSafeDrinkingWaterAct(_SDWA_)requirements R  andprotectthepublichealthobjectivesoftheAct.The_DWSRF_Ԁcanbeusedtoprovideloans 8  andothertypesoffinancialassistanceforqualifiedcommunities,localagencies,andprivate n  entities.Statesmayalsosetasidecertainpercentagesoftheircapitalizationgrantorallotment T  forvariousactivitiesthatpromotesourcewaterprotectionandenhancedwatersystems :  management.    II.  PROGRAMPROCEDURES  ~  The_DWSRF_ԀprogramisestablishedineachStatebycapitalizationgrantsfromthe ,| EnvironmentalProtectionAgency(EPA)andStatematchequaling20percentoftheEPA b capitalizationgrants.EPAimplementsthe_DWSRF_Ԁprograminamannerthatpreserves H flexibilityforStatesinoperatingtheirprograminaccordancewiththeiruniqueneedsand . circumstances.Stateshavetheflexibilitytosetasideupto31percentoftheircapitalization  grantsforotherrelatedactivities.Statesmayalsotransferanamountupto33percentofits  _DWSRF_ԀcapitalizationgranttotheCleanWaterStateRevolvingFund(_CWSRF_)(_CFDA_  66.458)oranequivalentamountfromthe_CWSRF_Ԁtothe_DWSRF_Ԁprogram.AStatemay v transfercapitalizationgrantdollars,Statematch,investmentearnings,orprincipalandinterest \ repayments. B Capitalizationgrantagreementsinclude:(1)anapplication;(2)anIntendedUsePlan(_IUP_), @ whichdescribeshowtheStateintendstousefundsmadeavailabletoit,includingalistof & proposedprojectseligibleforfinancingandadescriptionofthefinancialstatusoftheprogram;   (3)aproposedpaymentschedule;(4)certaincertificationsanddemonstrationswhichcanbe ! includedinanoptionaloperatingagreement;and(5)_workplans_Ԁcontainingaleastageneral " descriptionoftheuseofsetasidefunds. n# TheStatemustannuallyprovidean_IUP_ԀwhichdescribeshowtheStatewilluseavailable %l  _DWSRF_Ԁprogramfundsfortheyeartomeettheobjectivesofthe_SDWA_Ԁandfurtherthegoalof &R! protectingpublichealth.The_IUP_Ԁexplainshowallofthefundsavailabletothe_DWSRF_ &8"  program(includingbondproceeds,interestearnings,loanrepayments,Federalcapitalization '#!  grants,Statematch,etc.)willbeexpended(40_CFR_Ԁsection35.3555). ($" & ,  TheStatealsomustprovideaBiennialReporttotheEPAcontainingdetailedinformationon  howtheStatemetthegoalsandobjectivesoftheprevioustwofiscalyearsasstatedinits_IUP_  andgrantagreement.SuchreportmustcovertheStatesentire_DWSRF_Ԁprogram,includingits | setasideactivities.EPAconductsAnnualReviewofStateprogramstoassessthesuccessof b eachprogram,includingactivitiesidentifiedinthe_IUP_ԀandBiennialReport. H  SourceofGoverningRequirements ',er  F ThisprogramisauthorizedunderSection1452ofthePublicHealthServiceAct(TitleXIV),   commonlyknownasthe_SDWA_Ԁ(42_USC_Ԁ300j12).Theimplementingregulationsforthe   programcanbefoundat40_CFR_Ԁpart35,subpartL. p   AvailabilityofOtherProgramInformation  n  OthergeneralinformationabouttheprogramisavailableontheEPADrinkingWaterState   RevolvingFundhomepage(4b iO  5  +  http://www.e% c %c'x% d pa.gov%dEx% e %eix% f %fx% g /safewater/dwsrf.html+wal  6wiwnsa  7anw).     XE.` hp x (#X(#E III.  COMPLIANCEREQUIREMENTS  `    XE.` hp x (#X(#E IndevelopingtheauditprocedurestotestcompliancewiththerequirementsforaFederal ^  program,theauditorshouldfirstlooktoPart2,MatrixofComplianceRequirements,to D identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are * applicableandthenlooktoParts3and4forthedetailsoftherequirements.   TheauditfocusisonaStates_DWSRF_Ԁprogram,ratherthanindividualcapitalizationgrants n awardedtoStatesbyEPA. T   XE.` hp x (#X(#E A.  ActivitiesAllowedorUnallowed  R  XE.` ` hp x (#X(#E1. ` The_DWSRF_Ԁprogrammayprovidethefollowingfinancialassistancetopublicly  orprivatelyownedcommunitywatersystemsandnonprofitnoncommunity  watersystemsforeligibledrinkingwaterinfrastructureprojects(40_CFR_Ԁsections | 35.3520and35.3525): b   E. ` hp x (#` X(#Ea. Makingloansforeligibleprojects(40_CFR_Ԁsection35.3520(b). "` b. Purchasingorrefinancingexistingdebtobligationsofmunicipal, # _intermunicipal_ԀandinterstateagenciesenteredintoonorafterJuly1, $ 1993. %  c. Guaranteeoforpurchasinginsuranceforlocaldebtobligations. 8'" d. Providingasourceofrevenueorsecurityfor_DWSRF_Ԁdebtobligations, (6$ providedthatthenetproceedsofthesaleofsuchdebtobligationsare )%  depositedinthe_DWSRF_. *&  E.` ` hp x (# X(#E& z  2. ` AStatemaysetasidefundsforthefollowingdesignatedsetasideactivities  (40_CFR_Ԁsection35.3535):   E. ` hp x (#` X(#Ea. Administrativeexpenses(includingtechnicalassistance).'z- D b. Technicalassistancetosmallwatersystemsthatregularlyserve10,000or B fewerpersons(40_CFR_Ԁsection35.3505).  ( c. Stateprogrammanagement.   d. Localassistanceandotherstateprograms. 4   E.` ` hp x (# X(#E3. ` The_DWSRF_Ԁmaynotprovideassistancefor(40_CFR_Ԁsections35.3520(d) 2  through(f)):    E. ` hp x (#` X(#Ea. Damsorreservoirs,waterrights,laboratoryfeesformonitoring,system v  operationandmaintenance,orprojectsthatareprimarilyfireprotection. \  b. Expansionprojectspursuedsolelyinanticipationoffuturegrowth.  Z    E.` hp x (# X(#E C.  CashManagement     XE.` hp x (#X(#ETheStatemaydrawcashthroughtheAutomatedClearingHouse(_ACH_)orthe f  AutomatedStandardApplicationforPayments(ASAP)systemfor(40_CFR_Ԁsections L 35.3560and35.3565): 2   XE.` ` hp x (#X(#E1. ` Loans󀄀whenthe_DWSRF_Ԁreceivesarequestfromaloanrecipient,basedon 0 incurredcosts,includingprebuildingandbuildingcosts.  2. ` RefinanceorPurchaseofMunicipalDebt󀄀generally,ataratenotgreaterthan t equalamountsoverthemaximumnumberofquartersthatpaymentscanbemade, Z anduptotheamountcommittedtotherefinancingorpurchaseofthelocaldebt. @ AStatemayimmediatelydrawcashforuptothegreaterof$2millionor5 & v percentofeachfiscalyearscapitalizationgranttorefinancecosts.  !\ 3. ` PurchaseofInsurance󀄀wheninsurancepremiumsaredue. "  4. ` GuaranteesandSecurityforBonds󀄀immediately,intheeventofimminent h$ defaultindebtservicepaymentsontheguaranteed/secureddebt;otherwise,upto N%  theamountdedicatedfortheguaranteeorsecuritybasedonactualconstruction 4&! cost. 'j" 5. ` SetAsides󀄀generally,onanincurredcostbasisafter_workplans_Ԁhavebeen ($  approvedbyEPA(40_CFR_Ԁsection35.3560(e)). )$   E.` hp x (#` X(#E&   G.  Matching,LevelofEffort,Earmarking     E.` ` hp x (#X(#E 1. ` Matching  ^  E. ` hp x (#` X(#Ea. Statesarerequiredtodepositintothe_DWSRF_ԀfromStatemoniesan  \ amountequalto20percentofeachgrantpayment.Thematchisrequired B tobemadeonorbeforethetimethatEPAfundsaredrawn.Whenaletter  ( ofcredit(LOC)mechanismorsimilarfinancialarrangementisusedfor   theStatematch,paymentstotheLOCaccountmustbemade   proportionallyonthesamescheduleaspaymentsforthecapitalization   grant.MoniesfromthisStatematchLOCmustbedrawnintothe p  _DWSRF_ԀasmoniesaredrawnontheFederalautomatedclearinghouse V  account.AStatemayissuegeneralobligationorrevenuebondstoderive <  theStatematch.IftheStateprovidesamatchinexcessoftherequired "r  amount,theexcessbalancemaybebankedtowardsubsequentmatch X  requirements(40_CFR_Ԁsection35.3550(g)). >  b. InthecaseoftheStateProgramManagementsetaside,theStatemust  alsoprovideanamountequalto100percentofsaidpayments.AStateis  authorizedtousetheamountofStatefundsexpendedonitsPublicWater h SystemSupervision(_PWSS_)programinfiscalyear1993(including N _PWSS_Ԁmatch)asacredittowardmeetingitsmatchrequirement.The 4 valueofthiscreditcanbeupto,butnotgreaterthan,50percentofthe j amountofmatchthatisrequired.AStatemustprovidetheadditional P fundsnecessarytomeettheremainderofthematchrequirement.The 6 sourcesoftheseadditionalfundscanbeStatemonies(excluding_PWSS_  match)ordocumentationofinkindservices.Althoughrequired_PWSS_  matchcannotbeusedasasourceofadditionalStatemonies,State  overmatchcanbeused(40_CFR_Ԁsections35.3535(d)(2)and35.3550(h)).'# ~ c. ForgrantpaymentstotheStatefromfundsappropriatedinFederalfiscal ,| year1997,theStatecoulddeferdepositofthematchingamountuntilno  b laterthanSeptember30,1999.  H  E.` ` hp x (# X(#E 2. ` LevelofEffort NotApplicable "  X E.` hp x (#` X(#E 3. ` Earmarking  T$  X E.` ` hp x (#X(#EUpto31percentoftheallotmentcanbeearmarkedforsetasideactivitiesas &R! follows: &8"    E. ` hp x (#` X(#Ea. AdministrativeExpenses󀄀Nottoexceed4percentofthecumulative (#! allotment(40_CFR_Ԁsection35.3535(b)). |)$" b. TechnicalAssistancetoSmallSystems󀄀Nottoexceed2percentofthe *+z&#  cumulativeallotment(40_CFR_Ԁsection35.3535(c)). ,`'$ c. StateProgramManagement󀄀Nottoexceed10percentofthecumulative   allotment(40_CFR_Ԁsection35.3535(d)).  d. LocalAssistanceandOtherStatePrograms󀄀Nottoexceed15percentof D thecapitalizationgrantandnomorethan10percentisusedonanyoneof *z thedefinedactivities(40_CFR_Ԁsection35.3535(e)).  `   E.` ` hp x (# X(#EAStatecannotusemorethan30percentofanyparticularfiscalyears   capitalizationgranttoprovidesubsidiesintheformofprincipalforgivenessor   negativeinterestrateloanstocommunitiesmeetingtheStatesdefinitionof   disadvantaged,orcommunitiestheStateexpectstobecomedisadvantagedasa p  resultoftheproject(40_CFR_Ԁsection35.3525(b)). V    XE.` hp x (#` X(#E H.  PeriodofAvailabilityofFederalFunds  T   Grantpaymentsfromacapitalizationgrant,whichincreasetheceilingoffundsfrom   whichaStatemaydrawcashforeligiblecosts,shallbeginnoearlierthanthequarterin   whichthegrantisawarded,andgenerallyendnolaterthaneightquartersafterthegrant ~  isawarded,nottoexceed12quartersfromthedateofallotmentofgrantfundstothe d States.Statemustobligatefundsforeligibleprojectswithinoneyearofacceptinga J payment.Statesdisburse,orliquidate,grantfundsforprojectsinaccordancewith 0 constructionschedules.Fundsaredisbursedforsetasideactivitiesinaccordancewith f costsbeingincurredunderapproved_workplans_Ԁ(40_CFR_Ԁsections35.3550(e)and L 35.3560). 2  XE.` hp x (#X(#E J.  ProgramIncome    XE.` hp x (#X(#ETheStatemaychargefeestoprocess,manage,orreviewanapplicationforFederal > assistance.Suchfeesmaybecollectedinanaccountoutsidethe_DWSRF_Ԁandusedto $t supplementadministrativeexpensesandforotherallowablepurposesforwhichagrantis  Z awardedunder42_USC_Ԁ300j12.However,ifthesefeesaredepositedintothe_DWSRF_, @ theyaresubjecttotheusesofthe_DWSRF_,whichdonotincludetheuseoffundsfor & administrativepurposes(40_CFR_Ԁsection35.3530(b)).     L.  Reporting  j"  X XE.` hp x (#X(#E 1. ` FinancialReporting  $h  Xa. SF269A,FinancialStatusReport󀄀Applicable %! b. SF270,RequestforAdvanceorReimbursement󀄀NotApplicable t'"   E. ` hp x (#X(#Ec. SF271,OutlayReportandRequestforReimbursementforConstruction ")r$ Programs󀄀NotApplicable *X%  d. SF272,FederalCashTransactionsReport󀄀Applicable +'!  X E.` hp x (# X(#E 2. ` PerformanceReporting 󀄀NotApplicable d-("  3. ` SpecialReporting 󀄀NotApplicable   X&  N.  SpecialTestsandProvisions  ^   E.` ` hp x (#X(#E 1. ` EnvironmentalReviewRequirements   \   XE.` hp x (#` X(#E ComplianceRequirement 󀄀TheStatemustconductreviewsofthepotential   environmentalimpactsofallinfrastructureprojectsandthosesetasideactivitiesthat   impactthequalityofthehumanenvironmentreceivingassistancefromthe_DWSRF_   program.AStateEnvironmentalReviewProcess(_SERP_)thatisequivalenttoaNational l  EnvironmentalPolicyAct(NEPA)reviewmustbeperformedonprojectsandactivities R  withcumulativecostsequaltotheannualcapitalizationgrant.Otherprojectsmustbe 8  reviewedunderanalternative_SERP_Ԁ(40_CFR_Ԁsection35.3580).' ^ n   AuditObjective 󀄀DeterminewhethertheStateperformedenvironmentalreviewsbefore   projectsandactivitiesproceeded.    X XE.` hp x (#X(#E SuggestedAuditProcedures  `   X E.` ` hp x (#X(#Ea. ` Inquireof_DWSRF_Ԁmanagementabouttheenvironmentalreviewproceduresin ^  place. D b. ` Selectasampleofprojectsthatbeganduringtheyeartoascertainthatdecisions  wererenderedpriortotheprojectproceedingandwerereviewedinaccordance  withthe_SERP_. n  X E.` hp x (#` X(#E 2. ` BindingCommitments  l  X XE.` hp x (#X(#E ComplianceRequirement A bindingcommitmentisalegalobligationbyaStateto  alocalrecipientthatdefinesthetermsforassistanceunderthe_DWSRF_Ԁprogram.  Cumulativebindingcommitmentsmustbemadeinanamountequaltotheamountof  eachgrantpaymentplustherequiredStatematchthatisdepositedintothe_DWSRF_ | withinoneyearafterthereceiptofeachgrantpayment.Paymentsforsetasidesarenot b  includedinthebindingcommitmentcalculation.Bindingcommitmentrequirementsare H! intendedtohelpassurethattheStateutilizesgrantfundsinatimelymanner.AState ."~ mayinitiateanadjustmenttopaymentschedulesiftheStatebelievesthatitwillnotmeet #d thebindingcommitmentrequirement.Statesgenerallyreportthetotalamountoftheir #J bindingcommitmentsintheBiennialReporttoEPA(40_CFR_Ԁsection35.3550(e)). $0   AuditObjective DeterminewhethertheStatecompliedwiththerequirementstomake &! bindingcommitmentsinanamountequaltotheamountofeachgrantpaymentplusthe t'" requiredStatematchdepositedintothe_DWSRF_Ԁwithinoneyearafterthereceiptofeach Z(#  grantpayment. @)$  _&   SuggestedAuditProcedures     XE.` ` hp x (#X(#Ea. ` ReviewbindingcommitmentsinconjunctionwiththeEPApaymentschedulesto ^ ascertainiftheStateenteredintobindingcommitmentsinanamountequaltothe D cumulativeamountofgrantpaymentsplusthecumulativerequiredStatematch *z depositedintotheFund,lesscumulativesetasidefunds,withinoneyearafterthe  ` receiptofeachgrantpayment.  F b. ` TestasampleofbindingcommitmentsreportedbytheStatetoverifythatthe   amountanddateagreewithsupportingdocumentation.'   &  3. ` DepositstoDWSRF  8    XE.` hp x (#` X(#E ComplianceRequirements 󀄀TheStateshallestablishaseparateaccount,orseriesof 6  accounts,thatisdedicatedsolelytoprovidingloansandotherformsoffinancial   assistancefromtheDWSRF.Allloanrepayments(includingprincipalandinterest)   interestearningsoninvestments,capitalizationgrants(exceptthatportiontheState   intendstouseassetasides),StatematchandtransfersfromtheCWSRFmustbecredited ~  directlytotheDWSRF.AStatemustmaintainseparateandidentifiableaccountsforthe d portionofthecapitalizationgranttobeusedforsetasideactivities(40CFRsections J 35.3550(f)and(g)).'8& 0 TransfersbetweentheDWSRFandCWSRFmustbeapprovedbytheStateGovernor . (40CFRsection35.3530(c)).Repaymentofloansshallbeginwithinoneyearafter  projectcompletion,andloansshallbefullyamortizedovernotmorethan20yearsafter  projectcompletion,withtheexceptionthatloanstoqualifieddisadvantagedcommunities  canbeamortizedover30years(40CFRsections35.3525(a)and(b)(3)). v  AuditObjectives 󀄀DeterminewhethertheStatehasaseparateaccountorseriesof $t accountsfortheDWSRFprogram.Determinewhetherprincipalandinterestpayments,  Z interestearningsoninvestments,setasidefunds,applicableportionsofcapitalization @ grants,andStatematchwerecreditedtotheappropriateaccounts. &  X XE.` hp x (#X(#E SuggestedAuditProcedures  !  X E.` ` hp x (#X(#Ea. ` AscertainiftheDWSRFisaseparateaccount,orseriesofaccounts,dedicated 2# solelytopurposesoftheprogramandthatthesetasidefundsaredepositedintoa $h separateaccountsidentifiedfortheuseofsetasideactivities. $N  b. ` TestasampleofprojectsfundedbytheDWSRFandforwhichrepaymentswere &! dueduringtheyeartodeterminethatprincipalandinterestpaymentswere '" properlycrediteddirectlytotheDWSRF. x(#  c. ` Testasampleofloanagreementsandotherprojectrecordstoascertainifthe &*v%! repaymentsbeganwithinoneyearofprojectcompletionandtheloansare  +\&" scheduledforfullamortizationwithin20years,or30yearsforloansto +B'# disadvantagedcommunities._ ,(($ d. ` Obtainalistofinvestmentsmadeduringtheyearandascertainifearningson  investmentsweredirectlycreditedtothe_DWSRF_Ԁaccount.  e. ` ObtaincashdrawrecordsorreportsfromtheEPARegionalofficeandascertainif D cashdrawsweredirectlycreditedtothe_DWSRF_Ԁaccountandtheappropriate *z Statematchwasdeposited.  ` f. ` Ascertainifatransferoffundsbetweenthe_DWSRF_Ԁand_CWSRF_Ԁprograms   occurredandifthetransferwasapprovedbytheStateGovernor.    X E.` hp x (#` X(#E& \ 4. ` _DWSRF_ԀasSecurityforBonds  R   X XE.` hp x (#X(#E ComplianceRequirement 󀄀Whenfundsfromthe_DWSRF_Ԁareusedassecurityorasa P  sourceofrevenueforthepaymentofprincipalandinterestonrevenueorgeneral 6  obligationbondsissuedbytheState,thenetproceeds(i.e.,fundsraisedfromthesaleof   bondslessissuancecosts)ofthesaleofsuchbondsmustbedepositedinthe_DWSRF_   (40_CFR_Ԁsection35.3525(e)).Generallybondproceedsaredepositedinaccounts   establishedbythebondtrustindentureandidentifiedintheOfficialOfferingStatement. ~  ThisrequirementincludesthesituationwheretheStateemploysthecross d collateralizationprocesspermittedbythe_DWSRF_Ԁprogram.Crosscollateralization J allowsforcertainassetsofboththe_DWSRF_Ԁandthe_CWSRF_Ԁprogramstobepledgedas 0 collateralforasingleorjointbondissueinproportiontotheassetsofferedascollateral. f Proportionalitymaybeachievedatdifferentlevelsofsecurity:(1)atreservelevel;(2)at L loanrepaymentlevel;or(3)usinganalternativestructureapprovedbyEPA(40_CFR_ 2 section35.3530(d)).'\ R    AuditObjective 󀄀DeterminewhethertheStateproperlydepositedandrecordedthenet v proceedsfromthesaleofbondsguaranteedbythe_DWSRF_Ԁintothe_DWSRF_. \  X XE.` hp x (#X(#E SuggestedAuditProcedures   Z  X E.` ` hp x (#X(#Ea. ` Reviewbonddocumentationandtraceamountsqualifyingasnetproceedstothe  appropriateaccountsinthe_DWSRF_.   b. ` Ascertainthatthenetbondproceedsweredepositedintothe_DWSRF_. L" c. ` IftheStatehasemployedacrosscollateralizationtechnique,ascertainthatthenet #J proceedsdepositedintothe_DWSRF_Ԁwereproportionatetotheassetsofferedas $0  collateral. %!  X E.` hp x (#` X(#E 5. ` RepaymentofSetAsideLoans t'"  X XE.` hp x (#X(#EComplianceRequirement AssistancefromtheLocalAssistanceandOtherState ")r$ Programssetasideforassistanceforlandacquisitionorconservationeasementsfor *X%  sourcewaterprotectionofapublicwatersystemorforimplementationofvoluntary, *>&! incentivebasedsourcewaterqualityprotectionmeasuresforacommunitywatersystem +$'" mustbemadeintheformofaloanwhichmustberepaidwithin20yearsafter , (# completionoftheproject.Principalandinterestpaymentsontheseandothersetaside -($ loansmustbeplacedinthe_DWSRF_Ԁorinaseparatededicatedaccountoraccountsfor  useofthesamesetasideactivityinaccordancewith40_CFR_Ԁsection35.3535(e)(2).   AuditObjective 󀄀Determinewhetherprincipalandinterestpaymentsonsetasideloans D directlycreditedtothe_DWSRF_Ԁoraseparateaccounttobeusedforthesamesetaside *z activity.  `  X XE.` hp x (#X(#E& ` SuggestedAuditProcedures     X XE.` hp x (#X(#ETestasampleofsetasideloanrepaymentstoascertainthattheywerecreditedtothe l  _DWSRF_Ԁorinaseparatededicatedaccountoraccountsforloansmadeundertheset R  asides.'`  8   XE.` hp x (#X(#E IV.  OTHERINFORMATION  6  _Subrecipients_󀄀Inyearsafterthe_subrecipient_Ԁhasexpendedloanproceedsandcompleted   construction,andthe_subrecipient_sonlyongoingfinancialactivityoftheprogramisthe z  paymentofprincipalandinterestonoutstandingbalances,thepriorloanbalancesatthe `  _subrecipient_ԀlevelarenotconsideredtohavecontinuingcompliancerequirementsunderOMB F  CircularA133___.205(d).Priorloansthatdonothavecontinuingcompliancerequirements ,| otherthantorepaytheloansarenotconsideredFederalawardsexpendedandthereforearenot b requiredtobeauditedunderOMBCircularA133. H