Report 8-11 – Withdrawal of Disaster Loan Applications to Individuals and Businesses Impacted by the Gulf Coast Hurricanes
Date Issued: Friday, March 28, 2008
Report Number: 8-11

WITHDRAWAL OF DISASTER LOAN
APPLICATIONS TO INDIVIDUALS AND
BUSINESSES IMPACTED BY THE GULF
COAST HURRICANES

Report Number: 08-11

Date Issued: March 28, 2008

Prepared by the
Office of Inspector General
U.S. Small Business Administration

U.S. Small Business Administration Office Inspector General
Memorandum
Date: March 28, 2008

To: Herbert L. Mitchell, Associate Administrator Office of Disaster Assistance
From: Debra S. Ritt Assistant Inspector General for Auditing

Subject: Audit of the Withdrawal of Disaster Loan Applications to Individuals and Businesses Impacted by the Gulf Coast Hurricanes Report No. 08-11

This report summarizes the results of our audit of disaster loan applications to victims of the Gulf Coast Hurricanes that were withdrawn by the Small Business Administration (SBA) during calendar year 2006. We initiated the audit in response to complaints by two former SBA employees that the Agency unnecessarily withdrew loan applications to meet production standards. Our audit objectives were to determine (1) whether SBA inappropriately withdrew loan applications prior to loan approval, and (2) the impact that withdrawals has on the applicants.

We focused our analysis on 9,348 of the 30,325 withdrawn loan applications that were identified as missing documents needed for processing, and statistically sampled 96 for review. We analyzed data entries in SBA’s Disaster Credit Management System (DCMS) associated with the 96 loan applications, and interviewed loan officers at SBA’s Processing and Disbursement Center (PDC) in Fort Worth, Texas to determine the reasons why loan applications were withdrawn and whether proper procedures were followed. To determine how the withdrawals impacted loan applicants, we were able to reach and interviewed 34 of the 96 applicants. We conducted the audit from August to September 2007 in accordance with Government Auditing Standards prescribed by the Comptroller General of the United States.

 

To view the complete report, please see the attached document.