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APR, 211982 4 Accounts, Records, and Audit Reports Required: 49: FAUE 426► , The Entity will be required to keep accounts and records on the operation of the facility separate and apart from other records in accordance with the bond ordinance. We suggest the Entity and auditing firm develop a set of records for this particular purpose, unless adequate records are already in use. The person responsible for maintaining such records of,,accounts will be selected prior to loan closing. It is imperative the Entity establish and maintain adequate business manage- ment practices through a system of records, reports, and audits, which will assist the governing body in making effective decisions, thus helping insure a successful operation. Farmers Home Administration will be furnished management reports as outlined in Appendix A of FmHA Instruction 1942-A. A copy of this appendix is attached along with copies of our forms to be used for periodic and annual reports. Prior to loan closing the Entity will enter into a contract with a qualified auditor to conduct the annual audit.--3Requirements pertaining to audit reports are contained in a booklet, "FmHA Instructions t�o:Independent Certified Public Accountants and Licensed Public Accountants". Two copies of this booklet are attached. Please refer to page 10 of the booklet for an -example of an auditor/ borrower written agreement. FmHA will approve the Entity accounting financial reporting system prior to loan closing or commenging construction, whichever occurs first. All forms needed for required FmHA reports will be furnished by this office. Construction Contract Documents and Bidding: Appendix B of FmHA Instruction 1942-A and "Contract Documents for Construction - of Federally Assisted Water and Sewer Projects" will be followed by the Entity and engineer and architect 'for all construction. Three copies of each of these documents are attached and one copy is to be delivered to your engineer and/or architect, and attorney. A pre -construction conference will be held after bid opening at a convenient time scheduled by FmHA. Attending will be the designated representatives of the Entity, the consulting engineer, contractors' representatives and FmHA personnel. Insurance and Bonding: Property insurance, fire and extended coverage, and flood insurance., if applicable, will be required on all aboveground structures including equipment and machinery, in an amount equal to the replacement value as recommended by the project engineer and approved by FmHA. No insurance will be required on water reservoirs, standpipes and elevated tanks. Requirements as outlined in Appendix B of FmHA Instruction 1942-A and Item 21 of "Contract Documents for Federally Assisted Water and Sewer Projects" will be followed by the Entity's engineer or architect for all construction.