Audit Report 5-13: Audit of SBA’s FY 2004 Financial Statements—Management Letter
On February 23, 2005, the OIG issued the Independent Public Accountant or IPA’s (IPA) management letter in Audit Report 5-13, Audit of SBA’s FY 2004 Financial Statements— Management Letter. The management letter includes information related to non-reportable findings discovered during the IPA’s Audit of SBA’s FY 2004 financial statements. The IPA noted 16 areas of concern and made 16 recommendations. The following areas, which were reported last year, are repeated in this report because the conditions, as well as the need for implementing enhanced controls, continued to exist: (1) accountable property controls; (2) disaster area office centrally billed account; (3) Master Reserve Fund, cash held outside of Treasure; (4) recordation of allotment transactions; (5) entry to align Statement of Financing with Statement of Net Cost.
The management letter also noted areas for improvement, specifically: (1) retention of documentation to support Colson data validation; (2) surety bond guarantee liability documentation; (3) monitoring of the Small Business Investment Company (SBIC) participating securities; (4) separation of duties within the Office of the Chief Information Officer; (5) loan accrual methodology; (6) Activity-Based Costing model; (7) enhancements to footnote disclosures; (8) consistency of the Performance and Accountability Report; (9) accuracy and completeness of the budget briefing book; (10) completing the analysis of the 1996 Disaster Loan Program Cohort data and identify the cause for defective data to ensure and support the reasonableness of the 1996 cohort re-estimates; (11) Section 504 credit subsidy cash flow model. For example, the IPA stated that the “SBA could not fully reconcile net obligations to net cost of operations. Therefore, it used an unsupported entry to ensure that the Net Cost of Operations line items on the consolidated Statement of Financing and the consolidated Statement of net Cost equaled. The amount of the entry was $1,316,522.”