Audit Report number 5-05: Audit of SBA’s FY 2004 Financial Statements
On February November 15, 2004, the OIG issued the Independent Public Accountant or IPA’s findings in Audit Report number 5-05, Audit of SBA’s FY 2004 Financial Statements. The IPA issued an unqualified opinion on the FY 2004 combined statement of budgetary resources and the FY 2003 consolidated balance sheet (restated); and issued a qualified opinion on the FY 2004 consolidated balance sheet and statements of net costs, changes in net position, and financing. The auditor’s qualification stemmed from their inability to satisfy themselves as to the reasonableness of (1) SBA’s FY 2004 subsidy re-estimates pertaining to its Section 7(a), 504, Small Business Investment Company (SBIC) Participating Securities and SBIC Debenture programs; (2) the value of Credit Program Receivables and Related Foreclosed Property, and (3) the value of Liabilities for Loan Guarantees for these four programs.
The IPA’s Report on Internal Control discusses three matters considered reportable conditions: (1) Financial Management and Reporting Controls; (2) Credit Reform Controls, and (3) Agency-Wide information system Controls. Their Report on Compliance with laws and Regulations disclosed that the SBA was not in substantial compliance with the Federal Financial Management Improvement Act (FFMIA) because: (1) the SBA was not in substantial compliance with federal financial system requirements; (2) the SBA financial system was not in substantial compliance with federal accounting standards; and (3) the SBA was not in substantial compliance with the United States Standard General Ledger at the transaction level.