On February 27, 2002, the OIG issued the Independent Public Accountant or IPA’s findings in audit report number 2-04, Audit of SBA’s FY 2001 Financial Statements. The IPA documented four findings and made six recommendations. Two recommendations were repeated from the previous year. First, that the Chief Financial Officer continue SBA’s efforts to improve the financial reporting process by completing documentation for all aspects of the financial reporting process, including preparing journal vouchers; calculating loss allowances; preparing and updating trial balances; preparing financial statement and footnotes, and updating the chart of accounts, transaction descriptions, Standard Operating Procedures, and guidance for conducting quality assurance reviews. Second, was for the CFO to prepare consolidated agency-wide financial statements on a quarterly basis.
On January 6, 2003, the IPA issued an update to the report stating that that the financial statements for fiscal years 2000 and 2001 and related auditor’s reports, should no longer be relied upon. The IPA indicated that the SBA’s financial statements need “material adjustments for disaster loans sold, disaster loan subsidy expense, and other directly related accounts and footnotes corresponding with the SBA’s disaster loan program.” The SBA indicated its commitment to resolving the discrepancies, which involved its disaster loan cost models and related accounting.