Peggy E. (Peg) Gustafson was sworn in as the Inspector General of the U.S. Small Business Administration on October 2, 2009. Ms. Gustafson previously served as General Counsel to Senator Claire...
Audit Report 3-10: Audit of 504 Loan Program Oversight
On February 6, 2003, the OIG issued Audit Report 3-10, Audit of 504 Loan Program Oversight. The objective of this audit was to determine if SBA’s oversight of the 504 Loan Program provided a thorough and reliable evaluation of Certified Development companies (CDCs) to assess and anticipate financial risk to the loan portfolio.
Although the 504 Loan Program appeared to be operating efficiently, as evidenced by a low default rate, the OIG identified areas of program oversight that could be improved. Specifically, (1) the SBA’s oversight did not adequately address financial risk, (2) incomplete annual reports were used in compliance reviews, and (3) lender oversight reviews were not tracked to ensure accomplishment once every three years. The OIG recommended that the SBA design a separate review guide for the 504 Loan Program, ensure annual reports submitted by CDCs are complete, and implement a review tracking system.