On January 18, 2006, the OIG issued the Independent Public Accountant or IPA’s management letter in Audit Report 6-10, Audit of SBA’s FY 2005 Financial Statements—Management Letter. The management letter includes information related to non-reportable findings discovered during the Audit of SBA’s FY 2005 financial statements. The IPA noted 17 areas for improvement, four of which were reported last year.
According to the IPA, these four areas were repeated in this report because the conditions, as well as the need for implementing enhanced controls, continued to exist. The four repeated conditions related to: (1) accountable property controls, (2) untimely recording of obligations, (3) entry to align Statement of Financing with Statement of Net Cost, and (4) monitoring of SBIC participating securities reimbursement assumptions.
In addition, the IPA noted several other areas for improvement that included: (1) operating expenses recorded in the incorrect period, (2) guarantee and disaster loan charge-off controls, (3) failure to retain supporting documentation to substantiate loan transactions, (4) noncompliance with the Prompt Payment Act , (5) obligation controls, (6) guarantee loan purchase controls, (7) inadequate travel expense controls, (8) validation of source data used in model, (9) Intragovernmental Activity and Balances classification, confirmation and reconciliation, (10) noncompliance with the Single Audit Act, (11) Improper Payments Information Act Report missing required disclosures, (12) subsidy realignment entry, and (13) SOP related to accounting structure.