(a)

1. (1) The borrower's annual audits must comply with the provisions of the United States Office of Management and Budget’s Circular No. A-133, “Audits of States, Local Governments, and Non-Profit Organizations”.
2. (2) This is only for those fiscal years in which the federal financial assistance received from the CWRLF program is equal to or greater than three hundred thousand dollars ($300,000).
3. (3) CWRLF participants or their independent auditors should contact the financial analyst in the Arkansas Natural Resources Commission staff for the information regarding the federal financial assistance received.

(b)

1. (1) The borrower must establish and maintain separate sewer system accounts for the term of the loan agreement.
2. (2) This must be done according to the generally accepted accounting principles as determined by the Governmental Accounting Standards Board (GASB).
3. (3) The federal regulations governing the state CWRLF program require this as specified in 40 C.F.R. pt. 35.

4. (4)

   1. (A) The GASB specifies that all enterprise funds must use accrual accounting.
   2. (B) Therefore, governmental fund accounting is not an acceptable type of accounting for the accounting records of a sewer system.

(c)

1. (1) Following project completion, the final loan disbursement and the completion of Circular No. A-133 audit requirements, the borrower shall have independent annual audits done on the sewer system.
2. (2) These audits must be according to generally accepted accounting principles as determined by GASB for the term of the loan agreement.